EPS Jumps Nearly 44% as Margins Rebound—Solidifying Dollar General’s Recovery Story
Dollar General’s third-quarter numbers show a company firing on all cylinders. EPS soared 43.8% to $1.28, supported by a substantial 31.5% leap in operating profit to $425.9 million. A revitalized margin profile was a clear highlight, with gross profit margins improving by 107 basis points to 29.9%—reflecting a favorable mix of inventory markups and reduced shrink.
Balanced Sales Growth with Strong Category Performance
Net sales grew 4.6% to $10.6 billion for the quarter, bolstered by 2.5% growth in same-store sales. The gains were driven not by price hikes but by higher customer traffic—every merchandise category contributed to the improvement. Notably, consumables rose 4.5%, while seasonal, home, and apparel categories posted 5.5%, 5.4%, and 2.4% increases, respectively.
| Category | Q3 2025 Sales ($M) | Q3 2024 Sales ($M) | % Change |
|---|---|---|---|
| Consumables | 8,824.58 | 8,445.66 | 4.5% |
| Seasonal | 992.23 | 940.23 | 5.5% |
| Home Products | 550.72 | 522.36 | 5.4% |
| Apparel | 281.91 | 275.18 | 2.4% |
Operating Efficiency and Cash Flow Highlight Underlying Strength
Year-to-date operating cash flow rose 28.4% to $2.8 billion, demonstrating improved capital discipline. Merchandise inventories declined by 8.2% on a per-store basis, signaling greater efficiency in inventory management. Interest expenses also fell by 17.6%, boosting net income to $282.7 million, a 43.8% improvement from last year.
| Key Metric | Q3 2025 | Q3 2024 | % Change |
|---|---|---|---|
| Operating Profit ($M) | 425.85 | 323.80 | 31.5% |
| Diluted EPS ($) | 1.28 | 0.89 | 43.8% |
| Operating Cash Flow YTD ($B) | 2.80 | 2.19 | 28.4% |
| Gross Profit Margin (%) | 29.9 | 28.8 | +107bps |
| SG&A as % of Sales | 25.9 | 25.7 | +25bps |
| Net Income ($M) | 282.66 | 196.53 | 43.8% |
Upgraded 2025 Outlook Underscores Management Confidence
Given this strong performance, management raised guidance across the board: Net sales growth for the year is now seen between 4.7% and 4.9% (previously 4.3% to 4.8%), while same-store sales are targeted at 2.5% to 2.7%. Full-year EPS guidance climbs to $6.30-$6.50, from a previous high of $6.30. Capital expenditures are expected to land toward the low end of the $1.3 to $1.4 billion range, with no share repurchases anticipated in 2025.
| Metric | Previous Guidance | Updated Guidance |
|---|---|---|
| Net Sales Growth | 4.3% - 4.8% | 4.7% - 4.9% |
| Same-Store Sales Growth | 2.1% - 2.6% | 2.5% - 2.7% |
| Diluted EPS ($) | 5.80 - 6.30 | 6.30 - 6.50 |
| CapEx ($B) | 1.3 - 1.4 | Toward low end |
Real Estate Plans and Dividends Show Focus on Long-Term Value
Dollar General’s expansion strategy remains ambitious but targeted. The company will execute about 4,885 real estate projects in 2025 and 4,730 in 2026, prioritizing remodels and new store openings in both the U.S. and Mexico. This real estate discipline, coupled with a declared quarterly cash dividend of $0.59 per share, highlights ongoing commitment to shareholder returns and growth.
Key Takeaway for Investors
Dollar General’s Q3 results and improved guidance reflect broad-based sales gains, rising operating leverage, and a sharpened focus on profitable growth. While macro uncertainties remain, management’s readiness to raise outlook and accelerate store initiatives suggests confidence in both near- and long-term potential. For investors and analysts, tracking ongoing margin expansion, capital allocation, and store growth execution will be key to understanding whether this rebound is sustainable.
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