The buck stops at Dollar General

Posted Dec 10th 2009 3:20PM by Tom Taulli
Filed under: Earnings Reports

About a month ago, Dollar General (DG) pulled off a successful IPO, selling 34.1 million shares at $21 each. Investors were attracted to the company's long-term growth path as well as the trend for bargain-hunting for consumers.

This week, Dollar General reported its quarterly results. No surprise, the good times haven't gone away.

In the quarter, Dollar General posted a profit of $75.6 million, or $0.24 per share. This compares to a loss of $7.3 million, or $0.02 per share in the same period a a year ago. What's more, sales increased 12.7% to $2.93 billion and same-store sales were up a healthy 9.2%.

True, with the IPO, the private equity backers sucked up a lot of cash (there was also a slug that went to pay down debt). Then again, Dollar General really does not need extra capital to continue its growth efforts. All in all, the company has a strong business model.

In fact, Dollar General has an ambitious plan to add 12,000 more stores over the long haul. And, as for next year, the company wants to open 600 new stores as well as remodel or relocate another 500 stores.

Perhaps because of all this, Dollar General's main private equity sponsor, KKR, still has 88% of the outstanding shares of the company.

Tom Taulli is the author of various books, including The Complete M&A Handbook.

Tags: Dollar General, dollar stores, DollarGeneral, DollarStores, ipo, kkr