Dollar General (DG) raised its full-year earnings outlook on Tuesday, while the discount retailer's fiscal first-quarter bottom line topped estimates but revenue missed expectations.
The company now expects per-share earnings to come in between $7.20 and $7.45 for fiscal 2026, up from its previous guidance of $7.10 to $7.35. The current consensus on FactSet is for $7.24. The stock gained 4.6% in the most recent premarket activity.
Dollar General continues to project sales to grow by 3.7% to 4.2% for the ongoing fiscal year and same-store sales to increase by 2.2% to 2.7%. The Street is looking for sales of $44.39 billion and same-store sales growth of 2.4%.
"We believe the essential nature of our offering and our expansive footprint position us well to navigate the current macroeconomic environment," Chief Executive Todd Vasos said in a statement. "Overall, we remain confident in our ability to deliver on the goals outlined in our long-term financial framework, while creating sustainable long-term shareholder value."
Dollar General reported sales of $10.79 billion for the quarter ended May 1, up from $10.44 billion the year before, but below the average analyst estimate for $10.82 billion. EPS improved 12% to $2, ahead of the Street's view for $1.89.
"We are pleased with our first-quarter EPS performance, which exceeded our expectations as strong operating margin expansion more than offset the impact of severe winter weather and higher fuel costs," according to Vasos. "Our topline results were highlighted by positive customer traffic and balanced category growth, while continued progress on our key initiatives drove another quarter of strong operating profit growth."
Same-store sales inclined 2%, in line with the Street's estimate. The metric was buoyed by gains of 1.4% and 0.5% in customer traffic and average transaction amount, respectively. Same-store sales grew in each of the consumables, seasonal, home products and apparel categories, according to the company.
Gross profit as a percentage of sales rose by 65 basis points year over year to 31.6% in the quarter, boosted mainly by lower shrink and inventory damages, as well as higher inventory markups, Dollar General said.
In an emailed client note, Truist Securities said it has a "cautious" view on the company due to its exposure to pressured low and middle-income consumers, as well as competition from Walmart (WMT). The brokerage has a hold rating on the retailer's stock.
Last week, fellow discount retailer Dollar Tree (DLTR) lifted its full-year earnings outlook on the back of better-than-expected fiscal first-quarter results.
