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Dollar General reports Q1 2007 earnings
08 Jun '07
3 min read
These factors were partially offset by lower average markups on our beginning inventory in the 2007 period as compared with the 2006 period and an increase in our shrink rate.
The gross profit rate was also unfavorably impacted by higher markdowns in the 2007 period, which were partially offset by a reduction of the lower of cost or market inventory impairment estimate at the end of the first quarter of 2007.
Selling, general and administrative (“SG&A”) expenses increased from the prior year period by $74.7 million, to 25.4 percent of sales in the 2007 period from 23.4 percent in the 2006 period.
This increase includes approximately $29.6 million of expenses relating to the Company's previously announced strategic real estate initiatives, including lease contract termination costs, incremental store labor and other expenses associated with the closing of 153 stores in the first quarter of 2007.
In addition, SG&A in the 2007 period includes approximately $6.1 million of expenses, primarily legal and consulting fees, associated with the proposed Merger, discussed below.
Also contributing to the increase in SG&A in 2007 over 2006, as a percent of sales, were store rent expense, hurricane-related insurance recoveries during the prior year period, health benefits costs due primarily to increased claims, store repairs and maintenance, and incentive compensation expense.
These increases were partially offset by a reduction in workers' compensation insurance costs, primarily related to the impact of changes in estimates of loss development factors, and a decrease in depreciation expense.
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The gross profit rate was also unfavorably impacted by higher markdowns in the 2007 period, which were partially offset by a reduction of the lower of cost or market inventory impairment estimate at the end of the first quarter of 2007.
Selling, general and administrative (“SG&A”) expenses increased from the prior year period by $74.7 million, to 25.4 percent of sales in the 2007 period from 23.4 percent in the 2006 period.
This increase includes approximately $29.6 million of expenses relating to the Company's previously announced strategic real estate initiatives, including lease contract termination costs, incremental store labor and other expenses associated with the closing of 153 stores in the first quarter of 2007.
In addition, SG&A in the 2007 period includes approximately $6.1 million of expenses, primarily legal and consulting fees, associated with the proposed Merger, discussed below.
Also contributing to the increase in SG&A in 2007 over 2006, as a percent of sales, were store rent expense, hurricane-related insurance recoveries during the prior year period, health benefits costs due primarily to increased claims, store repairs and maintenance, and incentive compensation expense.
These increases were partially offset by a reduction in workers' compensation insurance costs, primarily related to the impact of changes in estimates of loss development factors, and a decrease in depreciation expense.
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