Dollar General’s third quarter saw a positive market reaction, reflecting strong execution in key areas highlighted by management. The company attributed its performance to increased customer traffic, particularly from higher-income households, and ongoing market share gains in both consumable and non-consumable categories. CEO Todd Vasos emphasized the importance of Dollar General’s value proposition, especially its offering of over 2,000 products at or below the $1 price point, and credited operational improvements, such as shrink reduction and inventory optimization, for supporting the quarter’s results. Management pointed to broad-based category sales growth and a robust digital presence as additional contributors to the balanced performance.
Is now the time to buy DG? Find out in our full research report (it’s free for active Edge members).
Dollar General (DG) Q3 CY2025 Highlights:
- Revenue: $10.65 billion vs analyst estimates of $10.62 billion (4.6% year-on-year growth, in line)
- EPS (GAAP): $1.28 vs analyst estimates of $0.93 (37.6% beat)
- Adjusted EBITDA: $692.2 million vs analyst estimates of $598 million (6.5% margin, 15.7% beat)
- EPS (GAAP) guidance for the full year is $6.40 at the midpoint, beating analyst estimates by 4.5%
- Operating Margin: 4%, in line with the same quarter last year
- Locations: 20,901 at quarter end, up from 20,523 in the same quarter last year
- Same-Store Sales rose 2.5% year on year (1.3% in the same quarter last year)
- Market Capitalization: $27.71 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 Q3 Earnings Call
- Rupesh Parikh (Oppenheimer): Asked about gross margin drivers and confidence in further improvement. CFO Donnie Lau emphasized shrink reduction and damages as key contributors, and CEO Todd Vasos noted ongoing opportunities in product mix and retail media to support margins.
- Zihan Ma (Bernstein): Inquired about the remodel program’s sales lift and competitive landscape. Vasos explained the early-stage but promising results from Project Elevate and Project Renovate, and highlighted lower competition as supportive of long-term growth opportunities.
- Matthew Boss (JPMorgan): Queried on low- and middle-income customer health and the sustainability of recent traffic trends. Vasos discussed ongoing pressures on core customers but noted that increased traffic and retention initiatives should drive sustainable growth.
- Seth Sigman (Barclays): Asked about the digital channel’s value proposition and its contribution to sales growth. Vasos cited strong incrementality, larger baskets, and high delivery speeds in rural markets, while Lau confirmed digital is both sales and profit accretive.
- Michael Lasser (UBS): Questioned whether comp growth of 2% is sustainable amid potential SNAP headwinds. Vasos and Lau both highlighted confidence in the comp trajectory, supported by store remodels and new customer acquisition, without expecting to increase promotional activity.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely monitor (1) the pace and performance of store remodels and new store openings, (2) further improvements in gross margin from shrink reduction and supply chain efficiencies, and (3) the scaling of digital and retail media initiatives, including DG Media Network and third-party delivery partnerships. Execution on these fronts will be key to assessing Dollar General’s ability to sustain its current momentum amid a dynamic consumer environment.
Dollar General currently trades at $124.26, up from $109.89 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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