Dollar General raises annual profit outlook as margins expand
The discount retailer reported first-quarter diluted earnings of $2.00 a share.
Dollar General (DG), the discount retailer, reported a rise in first-quarter diluted earnings per share to $2.00.
The results showed a deceleration in top-line momentum compared to the previous quarter, though the company leveraged margin expansion and lower interest costs to drive bottom-line growth.
Net sales rose 3.4% year-over-year to $10.8 billion. This growth slowed from the 5.9% increase reported in the fourth quarter of 2025. Same-store sales grew 2.0% year-over-year, a decline from the 4.3% growth seen in the prior quarter.
The slowdown in sales was mirrored by a dip in consumer activity. Customer traffic increased 1.4% in the first quarter, compared to a 2.6% increase in the fourth quarter of 2025. The average transaction amount rose 0.5%, down from a 1.7% increase in the previous period.
Operating profit increased 10.8% year-over-year to $638.5 million. The company said gross profit margin expanded 65 basis points to 31.6%. This gain helped offset a 25 basis point increase in SG&A as a percentage of net sales, which reached 25.7%.
Net interest expense decreased 26.9% year-over-year to $47.2 million. The effective income tax rate rose to 24.9% from 23.4% in the prior-year period, which the company attributed to expired federal tax credits.
Dollar General raised its full-year 2026 diluted EPS guidance to a range of $7.20 to $7.45, up from a previous range of $7.10 to $7.35. The company lowered its assumed effective tax rate for the year to approximately 24.5% from 25%.
The company reiterated its full-year net sales growth guidance of 3.7% to 4.2% and same-store sales growth of 2.2% to 2.7%. Capital expenditures for the year remain projected between $1.4 billion and $1.5 billion.
Merchandise inventories decreased 1.6% on an average per-store basis as of May 1, 2026, compared to the same date in 2025.