Dollar General Corporation (NYSE: DG) has been reinvesting in the business as part of a broader turnaround plan, with a focus on optimizing its store footprint. The company has lost market share to competitors in recent years, which has pressured sales and margins. While the broader retail industry is exposed to the government’s new tariffs, Dollar General remains confident in its ability to mitigate its impact in the near term.
The discount store giant’s first-quarter 2025 earnings report is slated for release on Tuesday, June 3, at 6:50 am ET. Analysts’ consensus earnings estimate for Q1 is $1.48 per share, representing a decline from $1.65 per share in the comparable quarter of 2024. They predict a 3.6% year-over-year increase in revenues to $10.27 billion in the first quarter.
Stock Performance
In recent years, Dollar General’s stock has experienced a significant downtrend, losing around 60% in the past three years. However, it changed course recently and pared a part of those losses. The stock has traded near the $100 mark since last week. It looks like Dollar General has strong upside potential, given the effective execution of its turnaround plan and continued focus on delivering value to customers. That, combined with the relatively lower valuation, makes it an attractive investment.
From Dollar General’s Q4 2024 earnings call:
“As we enter 2025, we are optimistic about the pOpshelf banner and our opportunity to drive improvements in our sales results as customers’ feedback on the brand and shopping experience continues to be strong. Going forward, we plan to build on the strength to increase sales through a variety of initiatives centered around new brand partnerships and enhanced in-store experience, new and expanded categories, and a new loyalty and digital experience. As an example of these efforts, we recently implemented a new store layout with a heightened focus on toys, party, candy, and beauty categories.”
Key Metrics
In the final three months of fiscal 2024, net sales increased 4.5% year-over-year to $10.3 billion, with same-store sales growing 1.2%. Net income decreased around 52% annually to $191.2 million or $0.87 per share in the January quarter. Sales almost matched Wall Street’s expectations while the bottom line beat estimates, after missing in the trailing two quarters.
For fiscal 2025, the Dollar General leadership expects net sales to grow between 3.4% and 4.4% and same-store sales to increase by 1.2-2.2%. It is looking for full-year earnings per share in the range of $5.10 to $5.80. Recently, the company revealed plans to close 96 stores, which is less than 1% of its overall store base, following a real estate portfolio optimization review.
Market Trend
The retail industry is struggling to cope with the inflation-induced strain on sales and cutback in consumer discretionary spending. While the company maintained stable sales performance in recent quarters, supported by competitive pricing, profitability suffered due to higher costs and markdowns.
This month, shares of Dollar General traded mostly above their 52-week average price of $92.66. On Tuesday, DG opened lower and traded down 1% in the early hours.
