Dollar General (DG) Q2 2025 earnings summary

Executive summary

• Net sales rose 4.2% year-over-year to $10.21 billion in Q2, driven by new stores and a 0.5% same-store sales increase, with average sales per square foot at $263.

• Operating profit declined 20.6% to $550 million, and net income fell 20.2% to $374.2 million ($1.70 per diluted share).

• Gross margin decreased by 112 basis points to 30.0%, mainly due to higher markdowns, damages, increased shrink, and a higher mix of consumables.

• SG&A expenses rose to 24.6% of sales, up 57 basis points, due to higher labor, depreciation, occupancy, and utilities.

• Cash flow from operations increased 127% year-to-date to $1.7 billion.

Financial highlights

• Net sales for the 26 weeks ended August 2, 2024, increased 5.1% to $20.12 billion; same-store sales up 1.4%.

• Operating profit for the half-year dropped 23.5% to $1.10 billion; net income declined 25.0% to $737.5 million.

• Diluted EPS for the half-year was $3.35, down from $4.47 in the prior year.

• Merchandise inventories declined 7% year-over-year to $7 billion, with per-store inventories down 11%.

• Inventory turnover was 3.9x on a rolling four-quarter basis.

Outlook and guidance

• FY24 net sales growth expected at 4.7%–5.3%, with same-store sales growth of 1%–1.6%; guidance lowered from previous forecasts.

• Gross margin to remain pressured by elevated promotions, consumables mix, and shrink; improvement possible in Q4 and 2025.

• EPS guidance updated to $5.50–$6.20, assuming a 23% effective tax rate.

• Capital expenditures projected at $1.3–$1.4 billion, with 2,435 real estate projects planned, including 730 new stores.

• No share repurchases planned for 2024 to preserve investment grade credit rating.