Dollar General: Misses 2021 Consensus, Beats 2022 Outlook, Declares 31% Dividend Increase

It’s a rollercoaster for investors of Dollar General Corporation (NYSE: DG) after the company released its fiscal 2021 financials today before the opening bell rang. The store chain recorded quarterly revenue of US$8.65 billion for fiscal Q4 2021 ended January 28, 2022.

The quarterly revenue missed the street consensus of US$8.71 billion, but it is an increase from Q4 2020’s US$8.41 billion.

The company also missed the consensus estimates for its gross margin. It also saw a decline in annual net income to US$597.4 million this fiscal year from US$642.7 million last year.

However, the company’s stocks rallied pre-market–even jumping by as much as 6%–as the earnings release also announced a 31% increase in the quarterly cash dividend.

“[The] Company’s Board of Directors declared a quarterly cash dividend of $0.55 per share on the Company’s common stock, payable on or before April 19, 2022 to shareholders of record on April 5, 2022,” said the company statement.

To add to this, the firm provided its fiscal 2022 outlook, headlined by a projected 10% growth in net sales, beating the consensus estimate of 8%.

For same-store sales, the company is estimating 2.5% growth year-on-year. It is also planning for share repurchases of approximately US$2.75 billion in 2022, a jump from the US$2.5 billion worth of common share repurchases done in fiscal 2021.

“We feel very good about the underlying strength of the business, as reflected in our full-year outlook for fiscal 2022,” said CFO John Garratt. “While we anticipate a challenging first quarter due to elevated cost pressures, ongoing supply chain disruptions, and the prior year sales and gross margin comparison, both of which were positively impacted by stimulus payments, we are confident in our full-year plan, including our outlook for sales and EPS growth.”

The company is estimating a 12-14% growth in diluted earnings per share after recording a 4.2% year-on-year decrease in fiscal 2021.

The US$2.5 share repurchase program in fiscal 2021 is the primary driver of the cash burn for the year, leading the firm to end with US$344.8 million in cash and cash equivalents from a balance of US$1.38 billion at the start of the year.

This puts the balance of the current assets at US$6.30 billion while current liabilities ended at US$5.98 billion.

The earnings release came with the rising inflation in the background. Even before the current increases in prices of basket of goods, back in November 2021, the company announced that Dollar Tree will be implementing a price hike from US$1 to US$1.25.

Dollar General last traded at US$212.49 on the NYSE.

Information for this briefing was found via CNN Business and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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