A Dollar General store in Germantown, New York, on Nov. 30, 2023.
Angus Mordant/Bloomberg via Getty Images
Dollar General on Thursday reported fiscal fourth-quarter revenue that narrowly beat Wall Street estimates, while a store portfolio review cut into the chain’s profit.
As part of the reevaluation, the dollar-store chain said it will close 96 Dollar General stores and 45 Popshelf stores and will convert six other Popshelf stores into flagship banner locations in the first quarter. Popshelf stores cater to higher-income shoppers seeking inexpensive products.
On the company’s earnings call, CEO Todd Vasos warned consumers “only have enough money for basic essentials” and that the macro environment isn’t likely to improve this year.
Shares of the company closed up nearly 7% on Thursday.
Here’s how the discounter did compared with what Wall Street was expecting for the quarter ended Jan. 31, based on a survey of analysts by LSEG:
- Earnings per share: 87 cents. That may not compare with an estimate of $1.50.
- Revenue: $10.3 billion vs. $10.26 billion expected
Fourth-quarter revenue rose 4.5% from $9.86 billion during the same quarter in 2023. Revenue for the full year came in at $40.61 billion, up almost 5% from $38.69 billion in 2023.
For fiscal 2025, the chain forecasts revenue to grow between 3.4% and 4.4%, while Wall Street was expecting annual growth of 4.1%, according to LSEG. Dollar General expects earnings per share for the year to come in between $5.10 and $5.80, slightly under the $5.85 anticipated by analysts, according to LSEG.
Dollar General reported fourth-quarter net income of $191 million, or 87 cents per share, compared with net income of $402 million, or $1.83 per share, during the same quarter a year prior.
The discounter said its portfolio review impacted earnings per share by 81 cents.
Operating profit for the quarter fell over 49% year over year to $294 million. The company attributed $232 million in charges to the store closures from the portfolio review as well as Popshelf impairment charges.
“As we look to build on the substantial progress we made on our Back to Basics work in fiscal 2024, we believe this review was appropriate to further strengthen the foundation of our business,” said Vasos in a news release. “While the number of closings represents less than one percent of our overall store base, we believe this decision better positions us to serve our customers and communities.”
Same-store sales, which Dollar General defines as revenue from stores open for at least 13 months, grew 1.2% year over year for the quarter. They’re expected to grow 1.2% to 2.2% for the coming fiscal year, the company said.
Dollar General announced in December that it was testing same-day delivery for customers. As inflation takes a toll on lower-income consumers, dollar stores like Dollar General and Dollar Tree have faced increased competition from retailers like Walmart with greater e-commerce presences.
In January, Dollar General said it would begin selling about 100 new private-brand products, most of which will fall under its Clover Valley label and includes items such as honey mustard and cinnamon rolls, in the first quarter.
