🟢 At a Glance:
Dollar General just reported its Q1 FY25 earnings, and it’s a mix of:
- ✅ Improved profit
- ❌ Shrinking same-store sales
- 🚨 A very cautious outlook
Welcome to the retail rodeo, where inflation is cooling, but margins are still on thin ice — and Dollar General’s cart is swerving between “value” and “volume.”
💸 Key Financials (Q1 FY25)
| Metric | Q1 FY25 | YoY Change |
|---|---|---|
| 🛍️ Net Sales | $9.91 billion | ▲ 6.1% |
| 💰 Net Income | $513.4 million | ▲ 26.5% |
| 📈 Diluted EPS | $2.31 | ▲ 27.6% |
| 🏪 Same-Store Sales | ▼ 1.3% | ↓ |
| 📦 Gross Margin | 32.2% | ▲ 89 bps |
🧠 TL;DR: Dollar General sold more overall, earned way more, but sold less per store. It’s like throwing a huge party… but fewer guests showed up to each room.
💥 What Went Right?
- Net sales jumped despite weak same-store sales — thanks to new store openings
- Gross margin improved due to better inventory management and reduced shrink (aka theft shrinkage + clearance damage)
- SG&A expenses were tightly controlled, despite store growth
- Net income shot up 26.5% — biggest win of the quarter
CFO be like: “Finally, profits are profiting again.”
🧻 What’s Still Crumpled?
- Same-store sales down 1.3% Customers might be trading down to even cheaper or simply buying less.
- Consumables performed well (snacks, essentials), but non-consumables (home, apparel) remained weak.
- Traffic & basket size? Not thrilling.
🏗️ Store Count
- Dollar General opened 197 new stores in Q1.
- Plan: 800+ net new stores in FY25.
Imagine a DG on every rural highway exit and behind every Walmart. That’s the vibe.
🔮 Updated FY25 Guidance
| Metric | Previous | Updated |
|---|---|---|
| 📈 Net Sales Growth | ~6.0–6.5% | ~6.5–7.0% |
| 💰 EPS (Diluted) | $7.80–$8.60 | $8.00–$8.75 (raised) |
| 💸 CapEx | ~$1.4 billion | Unchanged |
Management is quietly flexing. Not a full mic drop, but definitely a confident throat clear.
📦 Balance Sheet Check
- 📦 Inventory: $6.9B (up slightly YoY, but leaner than last year’s overstocked chaos)
- 🏦 Cash: $560M
- 💳 Total Debt: $6.5B
- 🎯 Dividend: Declared and steady at $0.59/share
No wild surprises. Just textbook retail hygiene.
🔍 EduInvesting Take
“Dollar General just showed how to turn meh traffic into massive profits — by selling more diapers, fewer T-shirts, and stopping shrink like it’s Ocean’s Eleven.”
It’s not exciting. It’s not sexy. But it works. And in retail, boring consistency beats flashy collapses.
They’re not trying to reinvent the wheel — just make sure that every wheel comes with a 20¢ profit margin and sells in a store that costs $12/sqft to run.
🧮 Fair Value Estimate (2025–26)
Let’s run a conservative valuation with the following:
- FY25 expected EPS: $8.00–$8.75
- Historic P/E range: 15–18x
- No major leverage risk
🔢 FV Range: $120–$157
At this valuation, Dollar General may look “cheap” during corrections — and “boring” during bull runs. Exactly what a hedge fund grandma would love.
🚧 Risks & Red Flags
- Shrinking same-store sales = a red blinking light
- Non-consumables continue to underperform
- Wage pressures, labor unions, and theft could rear up again
- Rural expansion eventually plateaus — can’t open infinite stores
📢 Final Verdict
| Metric | Grade | Notes |
|---|---|---|
| Revenue Growth | B | Topline strong due to expansion |
| Profitability | A | Margin game on point |
| Store Efficiency (SSS) | C- | Weakest link |
| Inventory Discipline | A- | Big recovery post-2023 mess |
| Outlook & Confidence | B+ | Quietly optimistic |
| Memes & Marketability | D | Still not as viral as Costco samples |
Dollar General’s not where dreams are made — it’s where margins are.
And right now, they’re not just surviving inflation — they’re quietly filtering money from every dollar bin and aisle endcap.
Tags: Dollar General Q1 FY25, DG Earnings May 2025, Retail Stocks 2025, Value Retail Chains, EPS Growth, Dollar General Fair Value, US Retail Outlook
Author: Prashant Marathe
Date: June 4, 2025
