Dollar General Corporation (DG) has reported a 7.11 percent fall in profit for the quarter ended Oct. 28, 2016. The company has earned $235.32 million, or $0.84 a share in the quarter, compared with $253.32 million, or $0.86 a share for the same period last year. Revenue during the quarter grew 4.99 percent to $5,320.03 million from $5,067.05 million in the previous year period. Gross margin for the quarter contracted 49 basis points over the previous year period to 29.84 percent. Total expenses were 92.61 percent of quarterly revenues, up from 91.63 percent for the same period last year. That has resulted in a contraction of 98 basis points in operating margin to 7.39 percent.
Operating income for the quarter was $392.99 million, compared with $423.86 million in the previous year period.
"The challenging retail environment that we experienced in the 2016 second quarter continued into the third quarter, contributing to weakness in our same-store sales and our financial performance. In the 2016 third quarter, we invested in gross margin with the goal of driving traffic and sales over time. Many of these actions are gaining traction with our core customers, and we are encouraged by the early results. As expected, the full benefit on our same-store sales will not be immediate. In addition, we saw an acceleration in headwinds from average unit retail price deflation and reductions in SNAP benefits in the 2016 third quarter as compared to the 2016 second quarter. We are focused on efforts to drive traffic in our stores and to control the factors we can control as we look to overcome the issues impacting our results, many of which we believe are macroeconomic and transitory in nature," said Todd Vasos, Dollar General's chief executive officer.
Operating cash flow improves significantly
Dollar General Corporation has generated cash of $1,124.41 million from operating activities during the nine month period, up 38.97 percent or $315.30 million, when compared with the last year period. The company has spent $401.57 million cash to meet investing activities during the nine month period as against cash outgo of $386.07 million in the last year period. It has incurred net capital expenditure of $401.57 million on net basis during the nine month period, up 4.01 percent or $15.49 million from year ago period.
The company has spent $680.56 million cash to carry out financing activities during the nine month period as against cash outgo of $820.35 million in the last year period.
Cash and cash equivalents stood at $200.24 million as on Oct. 28, 2016, up 9.71 percent or $17.72 million from $182.51 million on Oct. 30, 2015.
Debt moves up marginally
Dollar General Corporation has witnessed an increase in total debt over the last one year. It stood at $3,174.69 million as on Oct. 28, 2016, up 2.19 percent or $68 million from $3,106.69 million on Oct. 30, 2015. Total debt was 26.64 percent of total assets as on Oct. 28, 2016, compared with 27.52 percent on Oct. 30, 2015. Debt to equity ratio was at 0.59 as on Oct. 28, 2016, up from 0.58 as on Oct. 30, 2015. Interest coverage ratio deteriorated to 16.46 for the quarter from 19.81 for the same period last year.
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