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DG Q2 Earnings Beat Estimates on Sales Growth and Margin Gains
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Key Takeaways
DG Q2 EPS rose 19.9% to $2.23 as net sales increased 5.2% to $11.29 billion.
Same-store sales gained 3.5% on higher traffic and transactions, with growth across all major categories.
Gross margin rose 127 bps to 32.6%, while DG lifted fiscal 2026 sales, comps and EPS guidance.
Dollar General Corporation (DG - Free Report) reported second-quarter fiscal 2026 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Both net sales and earnings increased year over year.
Dollar General posted quarterly adjusted earnings of $2.23 per share, which topped the Zacks Consensus Estimate of $2.00. The bottom line increased 19.9% from $1.86 reported in the year-ago quarter. On a GAAP basis, earnings were $2.48, up 33.3% from $1.86 in the year-ago quarter.
Dollar General Corporation Price, Consensus and EPS Surprise
Net sales of $11,290.4 million rose 5.2% year over year and beat the consensus estimate of $11,178 million. The increase was driven by positive contributions from new stores and growth in same-store sales, partially offset by store closures.
Same-store sales improved 3.5%, reflecting a 2% rise in customer traffic and a 1.5% increase in average transaction amount. The quarter marked positive comparable-sales growth across all major categories, including consumables, seasonal, home products and apparel.
DG’s Key Metrics & Margin Insights
Consumables sales increased 5% year over year to $9,263 million. Seasonal sales rose 7.4% to $1,187.7 million. Home products sales advanced 4.8% to $536.6 million, while apparel sales increased 4.5% to $303.1 million.
Gross margin expanded 127 basis points to 32.6%. The improvement primarily reflected tariff refunds, a lower LIFO provision and reduced distribution costs, partly offset by higher markdowns and transportation costs. Tariff refunds, after related reinvestments, contributed about 81 basis points to the gross margin.
SG&A expenses were essentially flat at 25.8% of sales. Higher depreciation and amortization expense was offset by lower rent as a percentage of sales.
Operating profit jumped 29.2% to $769.2 million, with operating margin reaching 6.8% compared with 5.6% a year ago.
DG’s Financial Snapshot
Dollar General ended the quarter with cash and cash equivalents of $1.59 billion, up from $1.28 billion a year earlier. Long-term obligations declined to $4.56 billion from $5.73 billion, while shareholders' equity increased to $9.29 billion from $8.01 billion.
For the first 26 weeks of fiscal 2026, net cash provided by operating activities was $1.50 billion compared with $1.81 billion in the year-ago period. Merchandise inventories were $6.6 billion at quarter-end, with average inventory per store down 2.7% year over year.
DG’s Store Updates
During the second quarter of fiscal 2026, DG opened 125 new stores in the United States and one in Mexico. It remodeled 665 stores through Project Renovate and 711 through Project Elevate, while relocating five stores. The company ended the quarter with 21,148 stores, and total selling square footage increased 1.9%.
Dollar General continues to plan about 4,730 real estate projects in fiscal 2026.
What to Expect From DG in Fiscal 2026?
Dollar General raised its fiscal 2026 net sales growth forecast to 4-4.3% from 3.7-4.2%. The same-store sales growth outlook increased to 2.5-2.9% from 2.2-2.7%.
The company also lifted EPS guidance to $7.80-$8.00 from $7.20-$7.45. The updated range includes an estimated $0.25 second-quarter benefit from tariff refunds after related reinvestments, while management does not expect a material tariff-refund impact in the second half.
Shares of this Zacks Rank #2 (Buy) company have gained 13.8% in the past three months compared with the industry’s growth of 0.4%.
The consensus estimate for Ross Stores’ current fiscal-year sales and earnings implies growth of 11.7% and 32.8%, respectively, from the year-ago reported figures. ROST delivered a trailing four-quarter earnings surprise of 11.2%, on average.
Dollar Tree, Inc. (DLTR - Free Report) operates retail discount stores under the Dollar Tree and Dollar Tree Canada brands in the United States and Canada. DLTR currently carries a Zacks Rank of 2. DLTR delivered a trailing four-quarter earnings surprise of 32.1%, on average.
The Zacks Consensus Estimate for Dollar Tree’s current fiscal-year sales and earnings calls for growth of 6.6% and 21.7%, respectively, from the year-ago reported figures.
Target Corporation (TGT - Free Report) operates as a general merchandise retailer in the United States. TGT currently carries a Zacks Rank of 2. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.
The Zacks Consensus Estimate for Target’s current fiscal-year sales and earnings calls for growth of 4.6% and 37.7%, respectively, from the year-ago reported figures.
View the Zacks #1 Rank List
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DG Q2 Earnings Beat Estimates on Sales Growth and Margin Gains
Key Takeaways
Dollar General Corporation (DG - Free Report) reported second-quarter fiscal 2026 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Both net sales and earnings increased year over year.
Dollar General posted quarterly adjusted earnings of $2.23 per share, which topped the Zacks Consensus Estimate of $2.00. The bottom line increased 19.9% from $1.86 reported in the year-ago quarter. On a GAAP basis, earnings were $2.48, up 33.3% from $1.86 in the year-ago quarter.
Dollar General Corporation Price, Consensus and EPS Surprise
Dollar General Corporation price-consensus-eps-surprise-chart | Dollar General Corporation Quote
Net sales of $11,290.4 million rose 5.2% year over year and beat the consensus estimate of $11,178 million. The increase was driven by positive contributions from new stores and growth in same-store sales, partially offset by store closures.
Same-store sales improved 3.5%, reflecting a 2% rise in customer traffic and a 1.5% increase in average transaction amount. The quarter marked positive comparable-sales growth across all major categories, including consumables, seasonal, home products and apparel.
DG’s Key Metrics & Margin Insights
Consumables sales increased 5% year over year to $9,263 million. Seasonal sales rose 7.4% to $1,187.7 million. Home products sales advanced 4.8% to $536.6 million, while apparel sales increased 4.5% to $303.1 million.
Gross margin expanded 127 basis points to 32.6%. The improvement primarily reflected tariff refunds, a lower LIFO provision and reduced distribution costs, partly offset by higher markdowns and transportation costs. Tariff refunds, after related reinvestments, contributed about 81 basis points to the gross margin.
SG&A expenses were essentially flat at 25.8% of sales. Higher depreciation and amortization expense was offset by lower rent as a percentage of sales.
Operating profit jumped 29.2% to $769.2 million, with operating margin reaching 6.8% compared with 5.6% a year ago.
DG’s Financial Snapshot
Dollar General ended the quarter with cash and cash equivalents of $1.59 billion, up from $1.28 billion a year earlier. Long-term obligations declined to $4.56 billion from $5.73 billion, while shareholders' equity increased to $9.29 billion from $8.01 billion.
For the first 26 weeks of fiscal 2026, net cash provided by operating activities was $1.50 billion compared with $1.81 billion in the year-ago period. Merchandise inventories were $6.6 billion at quarter-end, with average inventory per store down 2.7% year over year.
DG’s Store Updates
During the second quarter of fiscal 2026, DG opened 125 new stores in the United States and one in Mexico. It remodeled 665 stores through Project Renovate and 711 through Project Elevate, while relocating five stores. The company ended the quarter with 21,148 stores, and total selling square footage increased 1.9%.
Dollar General continues to plan about 4,730 real estate projects in fiscal 2026.
What to Expect From DG in Fiscal 2026?
Dollar General raised its fiscal 2026 net sales growth forecast to 4-4.3% from 3.7-4.2%. The same-store sales growth outlook increased to 2.5-2.9% from 2.2-2.7%.
The company also lifted EPS guidance to $7.80-$8.00 from $7.20-$7.45. The updated range includes an estimated $0.25 second-quarter benefit from tariff refunds after related reinvestments, while management does not expect a material tariff-refund impact in the second half.
Shares of this Zacks Rank #2 (Buy) company have gained 13.8% in the past three months compared with the industry’s growth of 0.4%.
Image Source: Zacks Investment Research
Other Key Picks
Ross Stores, Inc. (ROST - Free Report) is one of the largest off-price apparel and home fashion chains in the United States. ROST currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus estimate for Ross Stores’ current fiscal-year sales and earnings implies growth of 11.7% and 32.8%, respectively, from the year-ago reported figures. ROST delivered a trailing four-quarter earnings surprise of 11.2%, on average.
Dollar Tree, Inc. (DLTR - Free Report) operates retail discount stores under the Dollar Tree and Dollar Tree Canada brands in the United States and Canada. DLTR currently carries a Zacks Rank of 2. DLTR delivered a trailing four-quarter earnings surprise of 32.1%, on average.
The Zacks Consensus Estimate for Dollar Tree’s current fiscal-year sales and earnings calls for growth of 6.6% and 21.7%, respectively, from the year-ago reported figures.
Target Corporation (TGT - Free Report) operates as a general merchandise retailer in the United States. TGT currently carries a Zacks Rank of 2. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.
The Zacks Consensus Estimate for Target’s current fiscal-year sales and earnings calls for growth of 4.6% and 37.7%, respectively, from the year-ago reported figures.