Dollar General, the discount general merchandise retailer, posted a weaker-than expected set of financial results for the fourth quarter of 2021. However, the company hiked the dividend 31% and provided positive guidance which saw the stock gain in post-announcement trade.
Net sales for the period rose 2.8% to $8.7 billion, primarily thanks to positive sales contributions from new stores. Sales were impacted by store closures as well as by a decline in same-store sales. Same-store sales decreased 1.4% y/y due to lower customer traffic which was partially offset by higher average spending per basket.
The Gross profit margin fell to 31.2% in Q4 2021 from 32.5% in Q4 2020 as result of higher transportation and distribution costs, increased product prices, and more lower margin sales. These costs were partially offset by price increases and fewer discounts.
Higher expenses in the form of retail labour and store occupancy costs were offset by lower hurricane-related expenses, a reduction in incentive compensation, and lower incremental costs related to Covid-19. This left expenses flat year-over-year.
Dollar General reported a net income decrease of 7% to $597.4 million for Q4 2021. Diluted EPS decreased 1.9% to $2.57. The company repurchased $2.5 billion of its common stock for the full year, at an average price of $211.45 per share, and has $2.1 billion in authorized share purchase capacity remaining. The board declared a quarterly cash dividend of $0.55 per share.
Dollar General expects net sales growth of approximately 10% (including 2% from the 53rd week) for fiscal 2022. It also sees same-store sales growing around 2.5%, with diluted EPS growth in a range between 12% and 14% (including 4% from the 53rd week).