Retailer forecasts net sales will rise about 9% in fiscal 2018
Same-store sales increased 3.3% for the fourth quarter ended February 2, beating Wall Street forecasts, and increased 2.7% for the fiscal year. Same-store sales were driven by gains in the consumables and seasonal categories, which were partially offset by negative results in the apparel and home categories, the company said.
Net sales increased 2.0% to $6.1 billion in the 2017 fourth quarter compared to $6.0 billion in the 2016 fourth quarter. The company notes that last year’s quarter included net sales of $398.7 million for the 2016 fiscal year’s 53rd week. That extra week’s net sales negatively impacted the 2017 fourth quarter growth rate by approximately seven percentage points, according to Dollar General, which notes that the 2% net sales increase in the 2017 fourth quarter was positively affected by sales from new stores, which were modestly offset by sales from closed stores.
The company reported net income of $712 million, or diluted earnings per share of $2.63, for the 2017 fourth quarter, compared to net income of $414 million, or diluted EPS of $1.49, in the 2016 fourth quarter. That is an increase in diluted EPS of 76.5%.
“I am pleased with our overall fourth quarter performance, as we delivered strong same-store sales growth of 3.3%, while achieving a healthy rate of gross margin expansion,” said Todd Vasos, Dollar General’s chief executive officer. “For the year, we opened a record 1,315 new stores and delivered a same-store sales increase of 2.7%, marking our 28th consecutive year of positive same-store sales growth. At the same time, we proactively made significant investments in the business that we expect will contribute to sustainable sales and profit growth in the years ahead. As we move into 2018, we continue to build momentum behind initiatives that we believe will further enhance our strong value and convenience proposition with consumers and drive long-term success.”
For the 2018 fiscal year, Dollar General said it expects net sales to increase approximately 9%, with same-store sales growth estimated to be in the mid-two percent range. The company expects its operating margin rate to be relatively unchanged this year, and forecasts that diluted EPS will be in the range of $5.95 to $6.15. This diluted EPS guidance assumes an estimated effective tax rate of 22% to 23%, the company said.