Dollar General Q1 beats Street, on track to open 575 U.S. stores
Dollar General Corp. got off to a strong start in fiscal year 2025 and is raising its guidance for the full year as it plans to mitigate any potential tariff impact.
On the earnings call, CEO Todd Vasos said that while Dollar General has relatively low exposure, it is "working diligently" to mitigate the impact of current tariffs on its business as much as possible using many of the same tactics that it used successfully in 2018 and 2019. These actions include working with the company's vendor partners to reduce cost on a variety of ways, such as negotiating cost concessions, shifting manufacturing to other countries where possible, reengineering products, or finding substitute products.
"While the tariff landscape remains dynamic and uncertain, we expect tariffs to result in some price increases as a last resort, though we intend to work to minimize them as much as possible," Vasos told analysts.
During the first quarter of 2025, the company opened 156 new stores, remodeled 668 stores through Project Elevate (an incremental remodel initiative aimed at mature stores that are not yet old enough to be part of the full remodel pipeline), remodeled 559 stores through its Project Renovate full remodel program and relocated 23 stores.
“Notably, the cost to build new stores has risen more than 40% since 2019, and these formats average approximately $500,000 to open, including both cap ex and inventory,” Vasos said on the earnings call. “Despite this increase, we continue to target healthy returns of approximately 17% on average for our portfolio.”
The discount retailer's net income grew 8% $391.93 million, or $1.78 per share, for the quarter ended May 2, compared with $363.32 million, or $1.65 per share, in the year-ago quarter. Analysts had projected earnings per share of $1.47.
Net sales increased 5.3% to $10.4 billion, topping Wall Street projections of $10.26 billion. Dollar General said the net sales increase was driven by positive sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures.
Same-store sales increased 2.4%, double the roughly 1.2% analysts had predicted. The average transaction amount increased 2.7%, and customer traffic inched down 0.3%. Same-store sales included growth in each of the consumables, seasonal, home products and apparel categories.
"We are pleased with our start to the year, including strong same-store sales and EPS results," Vasos stated in the earnings release. "Our efforts to improve execution and enhance the associate and customer experience are yielding positive outcomes in both our operational performance and our financial results. These efforts contributed to market share gains in sales of both consumables and non-consumables, and drove growth with both our core customer and trade-in customers during the quarter."
[READ MORE: Exclusive: Q&A with Dollar General CEO]
Dollar General’s first quarter 2025 financial results exceeded its internal expectations, but the company said that uncertainty exists for the remainder of the year regarding the potential impact of tariffs on the business, and particularly on consumer behavior.
However, Dollar General updated its guidance for fiscal year 2025 (fiscal year ending Jan. 30, 2026) as follows:
- Net sales growth of approximately 3.7% to 4.7%, compared to its previous expectation of approximately 3.4% to 4.4%.
- Same-store sales growth of approximately 1.5% to 2.5%, compared to its previous expectation of approximately 1.2% to 2.2%.
- Diluted EPS approximately $5.20 to $5.80, compared to its previous expectation of approximately $5.10 to $5.80, assume an effective tax rate of approximately 23.5%.
This updated fiscal guidance also assumes Dollar General will be able to mitigate a significant portion of the potential impact to its cost of goods from tariffs at currently implemented rates, but that consumer spending could be pressured by tariff-related price increases.
The updated guidance also assumes current tariff rates remain in place through mid-August 2025, and the company says it has plans in place to address the potential reversion to the tariff rates previously announced on goods from China on April 2, 2025.
