Dollar General Delivers 44% EPS Growth and Ups Guidance as Profit Margins Improve
Profitability Strengthens on Margin Expansion and Disciplined Operations
Dollar General (NYSE: DG) reported standout results for its fiscal third quarter, underscoring significant operational progress and financial momentum. The company saw diluted earnings per share jump 43.8% year-over-year to $1.28, as operating profit surged by 31.5% to $425.9 million. Management attributed these results to robust margin improvement and steady sales gains across all major categories, powered by higher inventory markups and a focus on cost discipline.
Key Third Quarter Metrics Highlight Broad-Based Strength
Sales momentum was solid, with net sales increasing 4.6% to $10.65 billion and same-store sales rising 2.5%, reflecting steady customer traffic growth. Notably, gross profit as a percentage of net sales improved by over 100 basis points to 29.9%—the highest in recent quarters—on improved inventory control and reduced shrink.
| Metric | Q3 2025 | Q3 2024 | Change (%) |
|---|---|---|---|
| Net Sales | $10.65B | $10.18B | +4.6% |
| Same-Store Sales | +2.5% | – | – |
| Operating Profit | $425.9M | $323.8M | +31.5% |
| Net Income | $282.7M | $196.5M | +43.8% |
| Diluted EPS | $1.28 | $0.89 | +43.8% |
| Gross Profit Margin | 29.9% | 28.8% | +110 bps |
| Operating Margin | 4.0% | 3.2% | +80 bps |
Management Raises Guidance on Strength Across Categories
Reflecting both outperformance and an improved sales outlook, Dollar General raised its fiscal 2025 net sales growth projection to 4.7%-4.9% (from 4.3%-4.8% previously) and same-store sales growth to 2.5%-2.7%. The company now expects full-year diluted EPS in the range of $6.30 to $6.50—up from its earlier outlook of $5.80 to $6.30. This is a direct response to solid margin gains and continued traffic growth, as management stays mindful of potential uncertainty in consumer behavior moving into next year.
Strong Category Performance Fuels Revenue
| Category | Q3 2025 Sales ($M) | Q3 2024 Sales ($M) | Growth (%) |
|---|---|---|---|
| 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% |
Cash Flow and Inventory Metrics Show Improved Efficiency
Cash flows from operations jumped 28.4% to $2.82 billion year-to-date, supporting capital expenditures of $1.0 billion focused on new store openings, remodels, and logistics upgrades. Management reported an 8.2% decrease in average per-store inventory levels, indicating improved efficiency and risk control, particularly notable amid a competitive retail landscape.
Expansion Plans Underpin Growth Story into 2026
The company reaffirmed plans to execute nearly 4,885 real estate projects in 2025, with continued momentum expected into 2026. In the latest quarter, Dollar General opened 196 new stores and remodeled over 1,100 existing locations, furthering its aim to deliver convenience and value at scale. Management's real estate outlook calls for roughly 450-575 new stores annually over the next two years.
Dividend Commitment Reflects Ongoing Shareholder Focus
The Board of Directors declared a quarterly cash dividend of $0.59 per share, maintaining its commitment to returning capital while supporting strategic investment. As of October 31, 2025, Dollar General operated 20,901 stores—up 1.8% in square footage from the previous year.
What Should Investors Watch Going Forward?
Dollar General’s quarter stands out for its blend of profit margin expansion, disciplined inventory management, and accelerated cash flow, all underpinning a more optimistic outlook for the remainder of the year and into 2026. While management acknowledged uncertainties in consumer behavior, their strategic investments and margin recovery put them on a stronger footing versus much of the retail sector.
With over 20,900 locations and further growth on deck, investors may want to watch for ongoing performance in store traffic, efficiency gains in inventory, and the impact of planned remodels and new store openings as management executes on its 2026 roadmap.
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