Dollar General reported lower earnings on higher sales for the fourth quarter, resulting from implementing the company’s Back to Basics strategy.
Same-store sales rose 1.2 percent from a year earlier, reflecting the mixed impact of a 2.3 percent increase in average ticket transactions and a decrease of 1.1 percent in customer traffic. For the quarter, sales were boosted by larger spending on consumables, but were partially offset by declines in seasonal categories such as home products and apparel.
Operating profit in the quarter declined by 49.2 percent, to $294.2 million, due to a $232 million charge for store closures.
“We were pleased with the underlying performance of the business in the fourth quarter, including improved execution and solid top-line results,” Todd Vasos, Dollar General’s CEO, said in a comment following the release of the company’s financial results.
“As we reflect on our full fiscal 2024 year, we believe our Back to Basics work is resonating with customers, as demonstrated by higher customer satisfaction scores and healthy market share gains.”
The strategy includes three initiatives. The first initiative targets store efficiency by making significant labor investments in stores to improve the execution of store standards, inventory management, and in-stock levels. In addition, it redeployed labor to ensure a more substantial associate presence at checkout and reduce turnover at the store manager position, which the company believes will benefit both the employee and customer experience.
The second initiative aims to improve the supply chain. It includes measures to address distribution center capacity constraints, reduce reliance on outside storage facilities, improve customer services, and ensure on-time deliveries to stores and customers.
The third initiative focuses on merchandising, offering products that deliver significant value to customers at competitive prices.
On the other hand, the company’s CEO is optimistic about its future.
“Looking ahead, we believe we are well-positioned to deliver our unique combination of value and convenience when our customers need it most,” Vasos said.
“We have fortified the foundation of this business over the last year and are confident in our plans and initiatives for 2025 and beyond, as we look to further build on this base and create sustainable long-term value for our shareholders.”
Elizabeth Lafontaine, director of research at Placer.ai, is optimistic about the company’s financial results and outlook for the remainder of 2025.
“Dollar General’s fourth-quarter comparable sales growth of 1.2 percent, with Placer.ai’s foot traffic estimates showing stronger growth in visitation during the same period, underscores the consumer desire for value across the retail industry,” she told The Epoch Times via email.
“The dollar and discount channel faced a deceleration in momentum in 2024, but chains such as Dollar General continue to provide consumers, particularly those in lower-income households, with a strong value proposition and more robust assortments.”
Looking ahead, Lafontaine said retailers “that can help the consumer through periods of further economic uncertainty and waning consumer sentiment” are well-positioned to attract new visitors and strengthen loyalty with existing customers.
John Zolidis, president of Quo Vandis Capital and a long-time observer of the retailing sector, is concerned about Dollar General’s diminished profitability.
“In fourth-quarter fiscal year 2024, the company recorded its eighth consecutive quarter of EBIT margin contraction and lower year-over-year earnings per share,” he told The Epoch Times via email.
“The company guided to further earnings declines and earnings before interest and taxation (EBIT) contraction in fiscal year 2025.”
EBIT is a broadly used measure by the investor analyst community to determine the profitability of a company’s core operations. A declining EBIT indicates that the company’s core operations become less profitable, making it a less appealing investment.
