Dollar General (DG) investor relations material

Executive summary

• Net sales for Q1 2026 increased 3.4% year-over-year to $10.8 billion, driven by new store openings and same-store sales growth, with EPS up 12.4% to $2.00 and net income rising 13.3% to $444.1 million, exceeding expectations despite higher fuel costs and severe weather.

• Same-store sales rose 2.0%, supported by 1.4% customer traffic growth and a 0.5% increase in average basket size, marking the fourth consecutive quarter of traffic growth.

• Market share grew in both consumable and non-consumable categories, with non-consumables outpacing consumables for the fifth straight quarter.

• The Value Valley $1 price point program saw an 18.4% comp sales increase, with notable penetration across all income segments, especially among households earning over $100,000.

• The company opened 195 new stores (including 5 in Mexico), remodeled 1,370 stores, and closed 33 stores during the quarter.

Financial highlights

• Gross profit margin rose 65 basis points to 31.6%, driven by higher inventory markups, lower shrink, and reduced damages, partially offset by increased markdowns and transportation costs.

• SG&A as a percentage of sales increased 25 basis points to 25.7%, mainly due to higher depreciation, utilities, and property taxes, offset by lower incentive compensation.

• Operating profit grew 10.8% to $638.5 million, with operating margin up 40 basis points to 5.92%.

• Net interest expense decreased to $47.2 million from $64.6 million year-over-year.

• Cash flow from operations was $716.2 million in Q1.

Outlook and guidance

• Fiscal 2026 guidance: net sales growth of 3.7%-4.2%, same-store sales growth of 2.2%-2.7%, and EPS of $7.20-$7.45, assuming a 24.5% tax rate.

• Plans for 2026 include opening approximately 450 new stores (10 in Mexico), remodeling 4,250 stores, and relocating 20 stores.

• Capital expenditures for 2026 are projected at $1.4–$1.5 billion, funded by cash flow, cash balances, and available credit.

• Guidance does not include share repurchases or potential tariff refunds.

• Gross margin expansion expected for the full year, with modest SG&A leverage despite increased investment in AI and other initiatives.