Dollar General is reporting a year-over-year net sales increase of 11.1% to $9.5 billion for Q3.
Dollar General Corp. is reporting a strong third quarter, ended Oct. 28, despite challenges within its internal supply chain and higher-than-anticipated costs. The company executed nearly 800 real estate projects during the quarter and has thousands more in store for fiscal year 2023.
Year-over-year, the quarter brought a net sales increase of 11.1% to $9.5 billion, and a same-store sales increase of 6.8%. Operating profit rose 10.5% to $735.5 million, diluted EPS increased 12% to $2.33 and year-to-date cash flows from operations totaled $1.2 billion.
“We are thankful to our team for their continued dedication to serving others, particularly in a challenging economic and operating environment,” said Jeff Owen, Dollar General CEO. “We are pleased with our strong sales growth in the quarter, as well as a modest increase in customer traffic and continued share gains in both consumable and non-consumable product sales, all of which we believe are a testament to the strength of the value and convenience proposition we offer our customers."
Continued Owen: “Despite the cost pressures we experienced during the quarter, as well as challenges within our internal supply chain resulting in higher-than-anticipated distribution and transportation costs, our team was resilient and worked hard to deliver double-digit diluted EPS growth. We believe the majority of these and other gross margin pressures are largely temporary, and we are confident in our plans to drive greater supply chain efficiencies moving forward.”
Total additions to property and equipment in the fiscal year-to-date ended Oct. 28 were $1.1 billion, with $463 million for improvements, upgrades, remodels and relocations of existing stores; $279 million for distribution and transportation-related projects; $254 million related to store facilities; and $49 million for information systems upgrades and technology-related projects.
The company opened 268 new stores during Q3, remodeled 485 stores and relocated 45. As it moves into fiscal year 2023, Dollar General anticipates executing approximately 3,170 real estate projects in the U.S, including more than 1,000 new store openings, 2,000 remodels and 120 relocations. The company also plans to open new stores in Mexico, with a goal of operating up to 35 stores in the country by the end of FY23.
“We are excited about our plans to extend our ability to serve more customers, and believe we are well-positioned to continue delivering long-term sustainable growth and value for our shareholders,” Owen said.
Due to greater-than-anticipated gross margin pressures, however, Dollar General is lowering its financial guidance for the remaining quarter of FY22. The company now expects to see same-store sales growth of approximately 6%-7% and diluted EPS in the range of $3.15-$3.30. Previously stated net sales growth expectations of approximately 11% and share repurchases of approximately $2.75 billion for the full FY22 remain unchanged.