Dollar General profits surge in Q1
June 2, 2003-- Home Textiles Today,
First-quarter profits at Dollar General Corp. raced ahead by 31.4 percent, to $60.3 million from $45.9 million last year.
Helped by bargain-hunting shoppers, sales climbed by 12.9 percent, to $1.6 billion from $1.4 billion a year ago. Same-store sales improved by 4.2 percent.
Helping to fuel the big earnings gain, average gross margin expanded by 140 basis points, or 1.4 percentage points, to 28.8 percent from 27.4 percent. Gross margin dollars increased by 18.8 percent, to $451.89 million from $380.3 million.
Somewhat offsetting margin strength, costs climbed higher as well, rising by 80 basis points, or eight-tenths of a percentage point, to 22.2 percent of sales from 21.4 percent.
Chief executive David Perdue — until recently ceo of Pillowtex Corp. — said, "I am particularly encouraged by some of the systems improvements that have been made, giving us better information, which should help us improve gross margin and inventory management."
The company also noted "a higher average markup on inventory purchases and, to a lesser extent, a reduction in damaged product markdowns." The higher average markup stemmed from a combination of factors, "including increased purchases of higher-margin merchandise, a decrease in the percentage of lower-margin items purchased," as well as stepped-up off-shore sourcing of lower-priced product.
Inventories were kept well balanced with sales, rising just 5.8 percent vs. the 13 percent increase at the top line. The retailer said it has made inventory productivity a priority, with turns on a rolling 12-month basis increasing to 3.9 times from 3.5 times in the prior 12-month period.
Dollar General Corp.
|Qtr. 5/2 (x000)||2003||2002||% chg|
|Oper. income (EBIT)||102,951||82,988||24.1|
|Per share (diluted)||0.18||0.14||28.6|
|Average gross margin||28.8%||27.4%||—|