Dollar General says it's getting the 'value' thing right, but its customers may face tougher times ahead

By Steve Gelsi

Visits to Dollar General stores increased during the latest quarter, and shoppers spent slightly more money

Dollar General's stock is up after the company raised its profit outlook and said its value offerings are bearing fruit.

Dollar General Corp. said its efforts to appeal to consumers looking for value continue to bear fruit, as it hiked its earnings outlook on Thursday.

The discount retailer also said it remains cautious about the possibility of tougher times ahead for its customers.

The Tennessee-based company boosted its outlook to reflect its expectation of a stronger-than-expected back half of 2025, after its second-quarter profit topped analysts' estimates.

But Dollar General (DG) also pointed out that its forecast was "taking into consideration the potential for uncertainty related to consumer behavior."

Dollar General's stock price was rising by 0.3% in recent trading Thursday.

As of Wednesday's close, the stock was up 47% on the year, well ahead of the 10.2% jump in the S&P 500 SPX over that span.

Dollar General Chief Executive Todd Vasos said his company's second-quarter results "significantly exceeded expectations."

Dollar General's improved execution and initiatives are "resonating with both existing and new customers as we further enhance our value and convenience proposition," he added.

In a sign of healthy sales in the third quarter, Vasos said Dollar General's back-to-school offerings have been "solid and in good shape," along with its Halloween offerings.

Meanwhile, midrange-department-store operator Kohl's Corp. (KSS) said a day earlier that it's seeing healthy back-to-school sales activity in August.

Also read: Kohl's stock is soaring. Here's how the chain is winning over cautious consumers.

Dollar General now expects fiscal 2026 earnings of $5.80 a share to $6.30 a share, up from its earlier estimate of $5.20 a share to $5.80 a share.

Analysts had been looking for $5.78 a share, according to FactSet data.

For the fiscal second quarter, Dollar General's net income climbed to $411.43 million, or $1.86 a share, from $374.19 million, or $1.70 a share, in the year-ago quarter.

The retailer beat the FactSet consensus of $1.58 a share.

Revenue rose 5.1% to $10.73 billion from $10.21 billion and was above the Wall Street analyst projection of $10.68 billion.

Second-quarter same-store sales rose 2.8%, which beat the analyst estimate of 2.6%.

Dollar General said more people came into its stores during the period and spent slightly more money as they shopped. The chain reported a 1.5% increase in store traffic, while the average transaction amount edged up by 1.2%.

Consumables, seasonal items, home products and apparel all contributed to higher same-store sales, according to the company.

Dollar General also said it was losing less money from lost or stolen merchandise, which in the industry is referred to as "shrink."

The company was also able to mark up retail prices by a wider margin from its wholesale inventories, but distribution costs rose and it ended up lowering some prices on merchandise.

Vasos said the company has maintained a core strategy of a $1 price for everyday as well as seasonal offerings, with at least 2,000 items at or below that price point on shelves.

"I would characterize the customer, number one, as resilient, and number two, seeking value," Vasos said. "We're seeing that in ... our core customer, mid and high-end customers."

Dollar General remains one of the only retail giants to "really push that $1 price point," he said.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

08-28-25 1432ET

Copyright (c) 2025 Dow Jones & Company, Inc.