Dollar General’s second quarter was defined by broad-based sales growth across both new and mature stores, with management pointing to increased market share in consumables and non-consumables as key contributors. CEO Todd Vasos highlighted that balanced growth in customer traffic and average basket size, along with improved execution in store operations, drove these results. Notably, the company achieved positive same-store sales in all major product categories, a sign of effective merchandising and value positioning. Management also credited ongoing efforts to enhance its value proposition, particularly the expansion of products priced at or below $1, as resonating with customers across all income brackets.
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Dollar General (DG) Q2 CY2025 Highlights:
- Revenue: $10.73 billion vs analyst estimates of $10.67 billion (5.1% year-on-year growth, 0.5% beat)
- EPS (GAAP): $1.86 vs analyst estimates of $1.57 (18.5% beat)
- Adjusted EBITDA: $852.2 million vs analyst estimates of $784.3 million (7.9% margin, 8.7% beat)
- EPS (GAAP) guidance for the full year is $6.05 at the midpoint, beating analyst estimates by 5%
- Operating Margin: 5.6%, in line with the same quarter last year
- Locations: 20,746 at quarter end, up from 20,345 in the same quarter last year
- Same-Store Sales rose 2.8% year on year (0.5% in the same quarter last year)
- Market Capitalization: $24.14 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Dollar General’s Q2 Earnings Call
- Michael Lasser (UBS) asked if shrink improvements could allow Dollar General to exceed its long-term operating margin targets. CFO Kelly Dilts said exceeding 80 basis points of improvement is possible but the 6–7% margin range remains the official target, emphasizing sustainability over short-term gains.
- Simeon Gutman (Morgan Stanley) questioned whether gross margin improvements are sustainable and what operational challenges remain. Dilts indicated gross margin gains are likely to persist, but highlighted Q4 as a tougher comparison, while CEO Todd Vasos noted late-stage progress in operational turnaround.
- Rupesh Parikh (Oppenheimer) inquired about incremental impact from new delivery partnerships. Vasos stated early results from Uber Eats are promising, with larger basket sizes and rapid expansion expected to drive incremental sales and further customer reach.
- Matthew Boss (JPMorgan) asked about consumer behavior among different income cohorts and the sustainability of value offerings. Vasos explained that value is resonating with all groups, and highlighted the importance of maintaining a strong $1 product assortment for both core and new customers.
- Seth Sigman (Barclays) pressed on SG&A normalization and cost control. Dilts responded that incentive compensation is a temporary headwind, with normalization expected next year, and outlined ongoing initiatives to simplify work and drive efficiency.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will closely monitor (1) the pace and impact of Project Elevate and Renovate remodels on comp sales growth, (2) further expansion and customer adoption of delivery and digital offerings, and (3) the sustainability of shrink reduction and its effect on operating margins. Execution on digital media and continued improvements in store operations will also be key indicators of Dollar General’s ability to maintain momentum.
Dollar General currently trades at $108.84, down from $111.28 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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