Dollar General Corporation (DG) stock fell 3% today after the American discount retailer, which operates 17,000 stores in 46 states, announced earnings for the third quarter of 2021.
Net sales increased 3.9% to $8.5 billion, while the company reported diluted EPS of $2.08, representing a two-year compound annual growth rate of 21%
New Stores Sales
Dollar General's sales increase was generated mostly by net sales contributions from new stores. These were offset by a slight decline in same-store sales and the impact of store closures.
Overall, same-store sales decreased 0.6% compared to the third quarter of 2020, driven by a decline in customer traffic.
Dollar General plans to build on their strong numbers with new stores by completing around 3,000 real estate projects in fiscal year 2022, including 1,110 new stores.
Todd Vasos, Dollar General’s CEO, commented, “We are also excited to announce our plans to expand our footprint internationally for the first time, with plans to open up to ten stores in Mexico by the end of fiscal 2022, as we continue to lay the foundation for future growth."
Supply Chain Pressure
Vasos stated that the company faced "a challenging operating environment in the quarter," despite achieving "meaningful progress advancing our key initiatives."
The supply chain difficulties impacted gross profit, which declined 57 basis points from the third quarter of 2020.
Overall, gross profit as a percentage of net sales was 30.8% in the third quarter of 2021, compared to 31.3% in the third quarter of 2020.
This gross profit rate decrease was attributable to an increased LIFO provision, increased transportation costs, and a greater proportion of sales coming from the consumables category.
