Dollar General Corporation
DG · NYSE
Next quarter
Reports Dec 3, 2026.
Consensus is $1.39 EPS for Oct 2026 across 12 estimates, ranging $1.36 to $1.43.
DG Jul 2026
- 11.50%
- -2.38%
- $2.00
- $2.23
- —
- $11.29B
Reported results
- $11.29B
- 32.60%
- $769.16M
- 6.81%
- $550.32M
- $2.48
Highlights
- Earnings beat: Diluted EPS was $2.48, up 33.3% year over year and above the supplied $2.00 consensus estimate; the release and filing report $2.48, despite the separate supplied reported-result field of $2.23.
- Broad sales growth: Net sales increased 5.2% to $11.29 billion, with same-store sales up 3.5% on 2.0% higher traffic and a 1.5% increase in average transaction value.
- Margin expansion: Gross margin rose 127 basis points to 32.6%, while operating margin increased 126 basis points to 6.81%; operating profit grew 29.2% to $769.2 million.
- Tariff refund benefit: Tariff refunds, after related customer reinvestments, contributed approximately 81 basis points to gross margin, 66 basis points to operating margin and $0.25 to EPS.
- Guidance raised: Fiscal 2026 sales-growth guidance increased to 4.0%-4.3%, same-store sales guidance to 2.5%-2.9% and EPS guidance to $7.80-$8.00 from $7.20-$7.45.
- All categories positive: Quarterly sales grew 5.0% in consumables, 7.4% in seasonal, 4.8% in home products and 4.5% in apparel.
- Store investment continued: Dollar General opened 126 stores, remodeled 1,376 stores and relocated 5 during the quarter; fiscal-year plans remain 4,730 real-estate projects.
- Cash generation and capital returns: Year-to-date operating cash flow was $1.50 billion against $758.5 million of capital expenditures, and the company expects to resume share repurchases of up to $700 million in the second half.
Analysis
Dollar General delivered a strong second quarter, with diluted EPS of $2.48 versus the supplied $2.00 consensus estimate and $1.86 a year earlier. Revenue of $11.29 billion rose 5.2% year over year and increased from $10.79 billion in the prior quarter, while operating profit reached $769.2 million, up from $595.4 million a year ago and $638.5 million in the prior quarter. Net income rose 33.8% year over year to $550.3 million, versus $444.1 million in the prior quarter.
The defining feature was the combination of healthy traffic-led sales growth and unusually strong margin expansion. Same-store sales rose 3.5%, with traffic up 2.0%, while gross margin expanded 127 basis points to 32.6%. Tariff refunds, net of reinvestment in promotions and lower prices, supplied approximately 81 basis points of gross-margin benefit and $0.25 of EPS, so the earnings quality includes a meaningful temporary tailwind. At the same time, lower LIFO provisions, distribution costs, shrink and damages supported margins, and net interest expense fell 25.7% to $42.9 million. Management raised full-year EPS guidance to $7.80-$8.00 and maintained an aggressive store-remodel and new-store program, while acknowledging that tariff refunds should not materially benefit the second half.
Sales and customer demand
Dollar General's top line accelerated from the prior quarter, supported by both traffic and basket growth. The company said same-store sales increased for the sixth consecutive quarter across all four merchandising categories, while non-consumables continued to outpace consumables on a comparable-sales basis.
- Comparable sales: Same-store sales rose 3.5% year over year, consisting of 2.0% traffic growth and 1.5% growth in average transaction amount. Higher prices lifted the basket, partly offset by fewer items per transaction.
- Category performance: Consumables grew 5.0% to $9.26 billion, seasonal increased 7.4% to $1.19 billion, home products rose 4.8% to $536.6 million and apparel grew 4.5% to $303.1 million.
- Store base: The company ended the quarter with 21,148 stores, up from 20,746 a year earlier. Year-to-date net new stores totaled 255, although total selling square footage grew 1.9%, slower than the 2.6% increase a year earlier.
Margin recovery
Profitability was the quarter's biggest financial swing. Gross profit grew 9.5%, well ahead of sales, while SG&A remained flat at 25.8% of sales. That combination drove operating profit up 29.2% to $769.2 million and lifted operating margin to 6.81% from 5.55% a year earlier.
- Gross margin drivers: The 127-basis-point increase to 32.6% reflected tariff refunds, a lower LIFO provision and lower distribution costs, partly offset by higher markdowns and transportation costs.
- Temporary contribution: Management estimated that tariff refunds, after reinvestment in targeted promotions and lower everyday prices, added 81 basis points to gross margin, 66 basis points to operating margin and approximately $0.25 to EPS.
- Operational progress: Lower inventory shrink and damages, higher inventory markups and lower distribution costs also supported the year-to-date margin improvement. SG&A dollars rose 5.3%, but the ratio was unchanged in the quarter.
Raised fiscal guidance
Management raised its fiscal 2026 outlook on the strength of the first half and a better view of the remaining year. The updated targets imply continued sales growth even though the company does not expect a material tariff-refund benefit in the second half.
- Sales outlook: Net sales growth is now expected at approximately 4.0%-4.3%, versus 3.7%-4.2% previously; same-store sales guidance moved to 2.5%-2.9% from 2.2%-2.7%.
- Earnings outlook: Diluted EPS guidance increased to $7.80-$8.00 from $7.20-$7.45. The range includes the estimated $0.25 tariff-refund benefit recorded in the second quarter.
- Investment plan: Capital expenditures remain projected at $1.4-$1.5 billion, with approximately 450 U.S. openings, 10 Mexico openings, 2,000 Project Renovate remodels, 2,250 Project Elevate remodels and 20 relocations planned.
Store productivity and inventory
The company continued to prioritize mature-store improvements while keeping inventory disciplined. It opened 126 stores in the quarter and completed 1,376 remodels, including 665 Project Renovate and 711 Project Elevate remodels.
- Productivity: Average sales per square foot increased to $273 from $266 a year earlier, while inventory turnover improved to 4.6 from 4.3.
- Inventory control: Merchandise inventory was $6.6 billion at quarter-end, essentially flat year over year and down 2.7% on an average per-store basis.
- pOpshelf: Dollar General operated 179 standalone pOpshelf stores at quarter-end and continues to take actions intended to improve their performance and profitability.
Cash flow and capital allocation
Dollar General generated substantial cash despite heavier investment and working-capital needs. Operating cash flow for the first 26 weeks was $1.50 billion, down from $1.81 billion a year earlier, while capital expenditures increased to $758.5 million from $693.9 million.
- Liquidity: Cash and equivalents ended the quarter at $1.59 billion, compared with $1.14 billion at the prior fiscal year-end. The company had no revolver borrowings and $2.375 billion of revolving-facility availability.
- Capital returns: The quarterly dividend remained $0.59 per share. No shares were repurchased during the first half, but management expects to resume repurchases in the second half, with fiscal-year repurchases of up to $700 million and approximately $1.38 billion of authorization remaining.
- Debt costs: Net interest expense declined 25.7% year over year to $42.9 million in the quarter, primarily because of lower average outstanding borrowings.
