US' Dollar General Q2 sales up 5.1%, raises full-year forecast

Dollar General Corporation has reported financial results for its second quarter (Q2) of fiscal 2025 (FY25), ended August 1, 2025, with solid growth across key metrics. Net sales rose 5.1 per cent to $10.7 billion from $10.2 billion in the same quarter last year, driven by contributions from new stores and same-store sales growth of 2.8 per cent. The same-store performance reflected a 1.5 per cent increase in customer traffic and a 1.2 per cent rise in average transaction size, with gains recorded in consumables, seasonal items, home products, and apparel.

Gross profit as a percentage of sales improved to 31.3 per cent from 30 per cent, supported by lower shrink, higher inventory markups, and reduced damages, though partially offset by higher markdowns, distribution costs, and LIFO provision, the company said in a release.

Selling, general and administrative expenses increased to 25.8 per cent of sales compared to 24.6 per cent a year earlier, largely due to higher incentive compensation, maintenance, and employee benefits.

Operating profit increased 8.3 per cent to $595.4 million, while net income rose 10 per cent to $411.4 million. Diluted EPS climbed 9.4 per cent to $1.86 from $1.7 last year. Interest expense declined 15.3 per cent to $57.7 million, while the effective tax rate stood at 23.5 per cent compared with 22.3 per cent last year.

The company’s board declared a quarterly cash dividend of $0.59 per share. Merchandise inventories at cost fell 7.4 per cent on a per-store basis to $6.6 billion, compared with $7 billion last year. Year-to-date cash flow from operations increased 9.8 per cent to $1.8 billion.

Capital expenditures totalled $694 million in the first half of fiscal 2025, including $365 million for remodels, relocations, and upgrades, $151 million for distribution and transport projects, $143 million for new store facilities, and $32 million for IT and technology upgrades. During Q2 alone, Dollar General opened 204 new stores, remodelled 729 stores under Project Elevate, 592 under Project Renovate, and relocated 15 stores.

“We are pleased with our strong second-quarter results, including earnings growth that significantly exceeded our expectations. Our improved execution, along with our progress advancing key initiatives, is resonating with both existing and new customers as we further enhance our value and convenience proposition. I want to thank our team for their ongoing commitment and dedication to fulfilling our mission of Serving Others every day in more than 20,000 stores across the country,” said Todd Vasos, Dollar General’s chief executive officer.

Looking ahead, the company has raised its full-year guidance to reflect its second quarter outperformance and stronger outlook for the remainder of the year. It now expects net sales growth of 4.3–4.8 per cent, up from 3.7–4.7 per cent previously. Same-store sales growth is forecast at 2.1–2.6 per cent, compared with earlier guidance of 1.5–2.5 per cent.

Diluted EPS is expected in the range of $5.8 to $6.3, higher than the prior $5.2–$5.8 outlook, based on a tax rate assumption of 23.5 per cent. Capital expenditures remain forecast at $1.3–$1.4 billion. For fiscal 2025, the company plans to execute around 4,885 real estate projects, including 575 new US stores, up to 15 in Mexico, approximately 2,000 remodels under Project Renovate, 2,250 remodels under Project Elevate, and 45 relocations.

“Looking ahead, we believe we have ample opportunity to drive growth and further improve our operating and financial performance, as we continue to work toward achieving the goals laid out in our long-term financial framework. We are proud of our progress, confident in the future of this resilient business model, and excited about the opportunity to further create sustainable long-term value for our customers, associates, and shareholders,” Vasos added.

ALCHEMPro News Desk (HU)