Dollar General's Q2 Earnings Beat & Guidance Hike Signal Strong FY25

Dollar General Corporation DG reported second-quarter fiscal 2025 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year. The company delivered robust same-store sales growth, supported by gains across both consumable and non-consumable categories. The better-than-expected performance and resilient demand from value-seeking consumers prompted management to lift fiscal 2025 guidance.More on DG Stock’s Q2 PerformanceDollar General posted quarterly earnings of $1.86 per share, which came ahead of the Zacks Consensus Estimate of $1.56. The bottom line increased 9.4% from $1.70 in the prior-year period. Net sales of $10,727.7 million rose 5.1% year over year and surpassed the Zacks Consensus Estimate of $10,678 million. This increase was primarily driven by contributions from store openings and growth in same-store sales, though partially offset by the impact of store closures.Same-store sales grew 2.8%, reflecting a 1.5% increase in customer traffic and a 1.2% jump in the average transaction amount. Growth was recorded across all major categories, including consumables, seasonal, home products and apparel. We had anticipated same-store sales growth of 2.6% for the quarter.Dollar General Corporation Price, Consensus and EPS Surprise Dollar General Corporation price-consensus-eps-surprise-chart | Dollar General Corporation QuoteDG’s Key Metrics & Margin InsightsDG’s consumables category saw an increase of 5%, reaching $8,819.9 million. Net sales for the seasonal category totaled $1,106.1 million, a surge of 4.9% from the year-ago period. Home products sales grew 6.6% to $511.8 million, and apparel saw an increase of 4.2%, reaching $289.9 million.The gross margin expanded 137 basis points to 31.3%, primarily benefiting from lower shrink, higher inventory markups and reduced inventory damages. These gains were partially offset by a higher LIFO provision, increased markdowns and elevated distribution costs. We had envisioned a 50-basis-point increase in the gross margin.SG&A expenses, as a percentage of net sales, rose by 121 basis points to 25.8% in the quarter. The increase was caused by higher incentive compensation, repairs and maintenance and benefits. We anticipated 110 basis points of deleverage in SG&A expenses.Dollar General’s operating profit surged 8.3% year over year to $595.4 million.Dollar General’s Store Expansion & Remodeling PlansDuring the quarter, Dollar General opened 204 new stores, remodeled 729 stores through Project Elevate and 592 stores through Project Renovate, and relocated 15 stores. The company reaffirmed its fiscal 2025 real estate strategy, which includes about 4,885 projects. Plans call for opening roughly 575 new U.S. stores and up to 15 in Mexico, remodeling around 2,000 locations under Project Renovate and about 2,250 under Project Elevate, as well as relocating approximately 45 stores.DG’s Financial SnapshotThis Goodlettsville, TN-based company ended the quarter with cash and cash equivalents of $1,284.6 million, long-term obligations of $5,725.8 million and total shareholders’ equity of $8,012.1 million. Management incurred capital expenditures of $694 million in the 26 weeks ended Aug. 1, 2025. For fiscal 2025, Dollar General continues to anticipate capital expenditures in the band of $1.3-$1.4 billion. The company does not plan to repurchase shares in fiscal 2025.What to Expect From Dollar General in FY25?Dollar General now expects net sales growth of 4.3% to 4.8%, up from its prior outlook of 3.7% to 4.7%. Same-store sales are projected to increase 2.1% to 2.6%, up from the earlier range of 1.5%-2.5%. Earnings per share are anticipated to be between $5.80 and $6.30 compared with the previous estimate of $5.20 to $5.80.Shares of this Zacks Rank #3 (Hold) company have risen 14.6% in the past three months compared with the industry’s growth of 0.2%.3 Key PicksPost Holdings, Inc. POST, a consumer-packaged goods holding company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 21.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and EPS calls for growth of 3.1% and 10.9%, respectively, from the year-ago reported numbers.The Chefs' Warehouse, Inc. CHEF, a premier distributor of specialty food products in the United States, currently carries a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 11.3%, on average. The Zacks Consensus Estimate for CHEF’s current financial-year sales and earnings suggests growth of 6.4% and 19.1%, respectively, from the year-ago reported numbers.Grocery Outlet Holding Corp. GO, an extreme value retailer of quality, name-brand consumables and fresh products, carries a Zacks Rank #2. GO has a trailing four-quarter earnings surprise of 28.2%, on average. The Zacks Consensus Estimate for Grocery Outlet’s current fiscal-year sales indicates growth of 8.3% from the year-ago period’s reported figures.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dollar General Corporation (DG): Free Stock Analysis Report The Chefs' Warehouse, Inc. (CHEF): Free Stock Analysis Report Post Holdings, Inc. (POST): Free Stock Analysis Report Grocery Outlet Holding Corp. (GO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks