Dollar General lifts FY guidance after Q1 profit beat

(Sharecast News) - Shares in Dollar General rose strongly on Tuesday after the US discount retailer raised its full-year profit outlook following stronger first-quarter earnings, lifted by higher sales and improved margins.

The company, which operates more than 20,000 stores across the US and has a small presence in Mexico, posted net sales of $10.79bn for the quarter ended 1 May, up 3.4% year-on-year, while diluted earnings per share increased 12.4% to $2.00.

Revenues came in slightly shy of the $10.82bn consensus forecast, but EPS comfortably topped the $1.89 market estimate.

Dollar General said the increase in sales was driven by positive same-store sales growth and contributions from new store openings. Comparable sales rose 2.0%, reflecting increases in both average transaction amount and customer traffic.

Profit growth came despite pressure from higher fuel costs, with the retailer pointing to stronger gross margins supported by tighter inventory management and lower shrink levels.

Chief executive Todd Vasos said the group delivered "strong execution" against its strategic priorities during the quarter, with growth across key merchandise categories helping offset external cost pressures and difficult operating conditions, including severe winter weather impacts in parts of the period.

"We believe the essential nature of our offering and our expansive footprint position us well to navigate the current macroeconomic environment," he said.

The Tennessee-based retailer also raised its full-year earnings guidance, now expecting fiscal 2026 diluted EPS of $7.20 to $7.45, up from the previous range of $7.10 to $7.35. The outlook for annual same-store sales growth of 2.2% to 2.7% was maintained.

Stock futures were up 4.9% at $115.34 with 20 minutes to go before the opening bell.