Dollar General reported a significant recovery in its third-quarter financial results, which ended on November 1, showcasing resilience amidst various challenges faced in the retail industry. With net sales climbing by 5% year-over-year to $10.2 billion and a 1.3% increase in same-store sales, the company is turning the corner after a lackluster second quarter.
The driving force behind this positive trajectory can be attributed to the successful establishment of new stores alongside growth in existing locations. While the retailer did face some setbacks due to store closures, the surge in same-store sales, particularly in the consumables category, highlighted a strategic pivot to meet consumer demand. However, Dollar General did experience declines in its home, seasonal, and apparel categories.
Todd Vasos, CEO of Dollar General, expressed pride in the company’s ability to navigate through adverse conditions, including multiple hurricanes that impacted operations. “We are pleased with our team’s execution in the third quarter. While we continue to operate in an environment where our core customer is financially constrained, we delivered same-store sales near the top end of our expectations for the quarter,” he stated.
Despite the positive sales growth, the operating profit for this quarter fell sharply by 25.3%, totaling $323.8 million compared to $433.5 million in the previous year’s third quarter. This decline was primarily linked to increased markdowns, higher inventory damages, and a shift in the sales mix towards the consumables category, which traditionally offers lower margins. However, this was partially offset by improved inventory markups, reduced shrink, and lower transportation costs.
During the third quarter, Dollar General invested significantly in its operations—spending approximately $451 million on improvements, upgrades, remodels, and relocations of existing stores. This included $288 million directed towards distribution and transportation-related projects, along with another $259 million related to store facilities. These investments signify the company’s commitment to enhancing its retail framework and customer experience.
The retailer has been proactive in addressing its growth strategies, including the opening of 207 new stores, remodeling 434 locations, and relocating 27 stores within the same period. Additionally, Dollar General unveiled its “Project Elevate,” an initiative aimed at incrementally upgrading its mature stores. As CFO Kelly Dilts explained, this program targets stores that are not yet eligible for a full remodel, incorporating customer-facing updates and optimizing store layouts to enhance the shopping experience.
Looking ahead to the fiscal year ending on January 30, 2026, Dollar General plans to execute nearly 5,000 real estate projects. This ambitious plan includes the opening of around 575 new stores, a full remodeling of approximately 2,000 stores, and an additional 2,250 remodels through the Project Elevate initiative.
To keep up with changing consumer behavior and economic conditions, Dollar General has slightly adjusted its net sales and same-store sales growth expectations. It now forecasts net sales will increase by approximately 4.8% to 5.1%, with same-store sales growth expected to range between 1.1% and 1.4%.
As of November 1, Dollar General operated an extensive network of 20,523 stores across various formats, including Dollar General, DG Market, DGX, and pOpshelf in the United States, as well as Mi Súper Dollar General stores in Mexico. The continued expansion and adaptation of its business model position Dollar General favorably among retailers, reflected in its standing as the 17th company on the Progressive Grocer’s 2024 list of the top food and consumables retailers in North America.
In conclusion, Dollar General’s Q3 results underscore its strategic efforts to enhance store performance, introduce new initiatives, and adapt to economic pressures while remaining focused on growth and customer service.
