Dollar General Q4 Earnings Top, Guides FY16, Ups Dividend

Dollar General Corporation (DG – Analyst Report) released a fourth straight quarter of positive earnings surprise with its fourth-quarter fiscal 2015 results. The company posted quarterly earnings of $1.30 per share that beat the Zacks Consensus Estimate of $1.27, and rose 11.1% from the year-ago period on the back of higher sales and share repurchase activity. The stock closed up around 10% yesterday.

Net sales came in at $5,286.9 million and increased 7% from the prior-year quarter. However, net sales came marginally below the Zacks Consensus Estimate of $5,293 million, thus missing on revenues for 10 quarters in a row.

Consistently increasing traffic and average transaction value led to 2.2% growth in comparable-store sales. Strength witnessed across tobacco products, perishables, candy and snacks, and seasonal and home categories was partially offset by the softness witnessed in apparel.

Sales in the Consumables category jumped 7.1% to $3,914.3 million, while the Seasonal category witnessed a 7.7% rise in sales to $738 million. Home products sales increased 7.9% to $364.1 million and Apparel category sales grew 3.3% to $270.5 million.

Gross profit increased 7.5% to $1,682.3 million, while gross margin expanded 12 basis points to 31.8% due to a better inventory shrink rate and lower transportation costs, partly offset by higher markdowns. Operating profit grew 8.1% to $612.4 million, whereas operating margin increased 11 basis points to 11.6%.

Other Financial Details

Dollar General ended the quarter with cash and cash equivalents of $157.9 million, long-term obligations of $2,969.2 million and shareholders’ equity of $5,377.9 million.

During fiscal 2015, the company incurred capital expenditures of $504.8 million. Management projects capital expenditures in the band of $550 million to $600 million for fiscal 2016.

The company bought back 17.6 million shares for $1.3 billion during fiscal 2015. Since the commencement of the share repurchase program in Dec 2011, the company has bought back 62 million shares aggregating $3.6 billion. The company still had approximately $920 million remaining under its share repurchase authorization.