Dollar General Boosts Annual Outlook Despite Ongoing Tariff Uncertainty

Dollar General Corporation DG stock is trading higher after the company reported first-quarter 2025 earnings on Tuesday.

The general store operator said quarterly net sales increased 5.3% to $10.44 billion, barely missing the consensus of $10.64 billion.

The net sales increase was driven by positive sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures.

Same-store sales increased 2.4% compared to the first quarter of 2024, reflecting a 2.7% increase in average transaction amount and a 0.3% decrease in customer traffic.

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Same-store sales in the first quarter of 2025 included growth in consumables, seasonal, home products, and apparel categories.

The gross profit margin was 31.0%, an increase of 78 basis points from a year ago, primarily due to lower shrink and higher inventory markups, partially offset by increased markdowns.

Operating profit increased 5.5% to $576.1 million. The company reported net income of $391.9 million, up 7.9%, with earnings of $1.78 per share, compared to $1.65 a year ago, beating the consensus of $1.58.

As of May 2, 2025, total merchandise inventories, at cost, were $6.6 billion compared to $6.9 billion as of May 3, 2024, a decrease of 7.0% on an average per-store basis.

Guidance

Dollar General said while its first quarter 2025 earnings exceeded its internal expectations, uncertainty exists for the remainder of the year regarding the potential impact of tariffs on the business, particularly on consumer behavior.

The tariff environment remains highly dynamic, and the specific tariffs applicable to goods imported by the company and its suppliers into the U.S. continue to evolve.

The company is updating its expectations for the year, primarily to reflect its outperformance in the first quarter and the tariff uncertainty.

The company now expects fiscal year 2025 sales growth of approximately 3.7% to 4.7%, compared to its previous expectation of approximately 3.4% to 4.4%.

Same-store sales growth is expected to be approximately 1.5% to 2.5%, compared to its previous expectation of approximately 1.2% to 2.2%

Dollar General revised earnings guidance from $5.10-$5.80 per share to $5.20-$5.80 compared to the consensus of $5.62.

The company expects capital expenditures of $1.3 billion to $1.4 billion.

The company is also reiterating its plans to execute approximately 4,885 real estate projects in fiscal year 2025, including

• Opening approximately 575 stores in the U.S. and up to 15 new stores in Mexico.
• Remodeling approximately 2,000 and 2,250 stores through Project Renovate and Project Elevate, respectively.
• Relocating approximately 45 stores.

Price Action: At the last check on Tuesday, DG stock was up 10.30% at $107.14 during the premarket session.

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