Dollar(DG) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales increased by 6.1% to $9.91 billion, driven primarily by new stores and a 2.4% increase in same-store sales[89] - Operating profit decreased by 26.3% to$ 546.1 million in the 2024 period compared to $740.9 million in the 2023 period[93] - Net income was$ 363.3 million, or $1.65 per diluted share, in the 2024 period, down from$ 514.4 million, or $2.34 per diluted share, in the 2023 period, representing a decrease of 29.4%[94] - Cash generated from operating activities increased by$ 472.7 million, or 247.3%, to $663.8 million in the 2024 period compared to the 2023 period[93] Profitability Metrics - Gross profit as a percentage of net sales decreased to 30.2% in 2024 from 31.6% in 2023, a decline of 145 basis points, mainly due to increased shrink and markdowns[89] - Gross profit increased by 1.2% but as a percentage of net sales decreased by 145 basis points to 30.2% in the 2024 period[96] - SG&A expense as a percentage of net sales increased to 24.7% in 2024 from 23.7% in 2023, an increase of 97 basis points due to higher retail labor and other costs[92] - Selling, General & Administrative expenses (SG&A) increased to 24.7% of net sales in the 2024 period from 23.7% in the 2023 period[96] Store Operations - The company opened 197 new stores, remodeled 463 stores, and relocated 21 stores in the first quarter of 2024, with plans to open approximately 730 new stores in fiscal 2024[77] - Average sales per square foot for all stores over the 52-week period ended May 3, 2024, were$ 264[89] Inventory Management - Inventory turnover was 3.8 times on a rolling four-quarter basis, with inventories per store decreasing by 9.5% compared to the previous year[89] - The company continues to face significant inventory shrink, which is expected to materially pressure financial results in 2024[74] - The company is focused on enhancing margins through various initiatives, including pricing optimization and inventory reduction efforts[73] Tax and Interest - Interest expense decreased by $10.6 million to$ 72.4 million in the 2024 period due to higher cash balances[96] - The effective income tax rate increased to 23.3% in the 2024 period from 21.8% in the 2023 period[97] Capital Expenditures and Dividends - Capital expenditures for 2024 are projected to be approximately $1.3 billion to$ 1.4 billion, focusing on store growth and supply chain enhancements[109] - Cash dividends paid during the 2024 period totaled $129.7 million, slightly up from$ 129.4 million in the 2023 period[110] Market Risk - There have been no material changes to the disclosures relating to market risk from the Annual Report on Form 10-K for the fiscal year ended February 2, 2024[112] Other Considerations - The "DG Fresh" initiative has positively contributed to sales and gross margin performance since its rollout in 2021, with ongoing optimization planned[76] - The conclusion of the COVID-19 pandemic student loan forbearance program has not had a material impact on the company's business, but future effects remain uncertain[69]