Dollar General stock jumps on earnings beat and raised guidance

Investing.com -- Dollar General Corporation (NYSE: DG) reported second-quarter results that exceeded analyst expectations, with the stock surging 8.4% premarket as the company also raised its full-year financial guidance.

The discount retailer posted adjusted earnings per share of $2.48 for the second quarter, beating the analyst consensus of $2.00 by $0.48. Revenue increased 5.2% to $11.3 billion, surpassing the estimate of $11.19 billion and up from $10.7 billion in the same quarter last year.

Same-store sales rose 3.5%, driven by a 2.0% increase in customer traffic and a 1.5% increase in average transaction amount. The company noted this marked its fifth consecutive quarter of customer traffic growth.

Operating profit jumped 29.2% to $769.2 million compared to $595.4 million in the prior-year quarter. Gross profit margin expanded 127 basis points to 32.6%, primarily due to tariff refunds, a lower LIFO provision, and reduced distribution costs. The company estimated the gross margin benefit from tariff refunds, after related reinvestments, was approximately 81 basis points, or about $0.25 per share.

"We are pleased with our second quarter performance, which included balanced topline growth, healthy operating margin expansion and strong double-digit EPS growth," said Todd Vasos, Dollar General's chief executive officer. "These results, which exceeded our expectations even before considering the benefit from tariff refunds after related reinvestments, are a testament to the strong execution, strategic direction, and continued dedication of our team."

Dollar General raised its fiscal 2026 guidance, now expecting diluted EPS in the range of $7.80 to $8.00, compared to its previous range of $7.20 to $7.45. The midpoint of $7.90 exceeds the analyst consensus of $7.39. The company also increased its net sales growth outlook to 4.0% to 4.3% from 3.7% to 4.2%, and raised same-store sales growth expectations to 2.5% to 2.9% from 2.2% to 2.7%.

The company's Board of Directors declared a quarterly cash dividend of $0.59 per share, payable on or before October 20, 2026.

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