Dollar General sales growth slows as shoppers pull back
Same-store sales rose 2% in the latest quarter, down from 4.3% in the prior period.
The discount retailer Dollar General (DG) reported a deceleration in sales growth as consumer demand softened. Net sales increased 3.4% year-over-year to $10.8 billion in the fiscal first quarter, marking a slowdown from the 5.9% growth recorded in the prior quarter.
The quarter underscored a shift in shopping behavior, with same-store sales growth easing to 2.0% from 4.3% in the fourth quarter of 2025. Customer traffic growth slowed to 1.4% from 2.6%, while average transaction amounts rose just 0.5%, down from 1.7% in the prior quarter. The company said the trends reflected a broader pullback in discretionary spending among its core customer base.
Revenue of $10.8 billion fell short of the $10.9 billion reported in the prior quarter, while diluted earnings per share rose 12.4% to $2.00, decelerating from a 121.8% jump in the fourth quarter of 2025, which had excluded an $0.81 per-share impact from store portfolio optimization. Operating profit grew 10.8% to $638.5 million, a sharp slowdown from the 106.1% surge in the prior quarter, which had been boosted by $232 million in impairment charges in the year-ago period.
Gross profit margin expanded 65 basis points to 31.6%, driven by higher inventory markups and lower shrink, though the rate of expansion slowed for the third consecutive quarter. Selling, general, and administrative expenses as a percentage of sales rose 25 basis points to 25.7%, reversing a 165-basis-point decline in the prior quarter, as higher depreciation, utilities, and property taxes weighed on margins. Net interest expense declined 26.9% to $47.2 million, accelerating from a 20.6% drop in the prior quarter.
The company opened 190 new stores in the quarter, up from 196 in the third quarter of 2025 but below the 581 opened in full-year 2025, reflecting a seasonal ramp-up in growth. Merchandise inventories on a per-store basis declined 1.6%, an improvement from the 7.0% drop in the prior quarter. Capital expenditures totaled $352 million, signaling a sequential increase from the $1.2 billion spent in fiscal 2025.
Dollar General raised its fiscal 2026 earnings guidance to a range of $7.20 to $7.45 a share, up from $7.10 to $7.35 previously, while lowering its effective tax rate assumption to 24.5% from 25%. The company reiterated its same-store sales guidance of 2.2% to 2.7%, unchanged from prior guidance but below the 3.0% growth achieved in fiscal 2025. Net sales growth for fiscal 2026 is expected to range between 3.7% and 4.2%, below the raised 4.7% to 4.9% guidance for fiscal 2025.
The company said it remains focused on expanding its store footprint and improving inventory efficiency amid a challenging consumer environment.
Source: company public filings.