Dollar General Stock Just Popped, but Is the Worst Really Behind It?

Dollar general (DG -0.33%, Has struggled in recent years, as inflation pressure has hurt its low-oriented consumer base. However, Stock staged a strong rally following its fiscal first quarter income report. As this writing, it is 50% in 2025.

Let’s take a look at its most recent earning reports and comments whether this rally is sustainable or if the worst is not really behind it yet.

Is the dollar twisting the general corner?

On the surface, the tariff would seem to be a very negative for a company like the dollar general. After all, the retailer’s chief customer base was already feeling pressure from high prices due to inflation, and it seemed that it was losing share for the Big-Box price leader Wal-mart (WMT -0.52%,However, the company has started looking at its store continuously in search of more high-ion consumers in search of value.

The retailer said that it plans to minimize the impact of tariffs on its gross margin without an increase in prices, although it can increase prices as the last measure. It is planning to work with sellers to work with sellers, cut costs, transfer some manufacturing in other countries and to change your product lineup by changing some items or exchange of some items. Noted that the percentage of a middle-high-high-respective-respectives of its overall procurement is directly imported from China, but almost double percent comes from the country indirectly.

Inroads with high-oriented consumers contributed to an increase of 2.4% in equal-store sales in the quarter. While traffic declined by 0.3%, its average checkout ticket increased by 2.7%. Development has come from profit in food, seasonal and home and costume categories.

Same store sales are a very important metric for the dollar general, as it is said in the past that it needs to increase its comparable-store sales by about 3% to take advantage of its expenses and increase its earnings. However, the composition matters, and development from high-marginal regions, such as seasonal items, helped to make its earnings more. This seems to be largely a reflection of high-or-ore consumers shopping at its places, as well as improving customer experience and their efforts to offer better merchandising in categories such as seasonal decorations and household items.

Image Source: Getty Image.

The company also stated that its new popshalph store concept – which is to provide a fun and inexpensive shopping experience with focusing on home goods, seasonal decorations and party supply – performed well, performed well, more than expectations.

Overall, the dollar general’s revenue increased by 5% to $ 10.4 billion year after year, while its earnings increased by 8% to $ 1.78. This was well ahead with an analyzer’s consent of $ 10.3 billion in revenue and was adjusted to EPS of $ 1.48.

The gross margin 78 base points increased to 31%, helped by low shrinking and high inventory markup. Shrink is the amount of goods that are lost, damaged, deteriorates, stolen, or simply cannot be sold, and the company is working hard to improve this metric.

Looking forward, the Dollar General increased its full-year guidance. It is now expected that the revenue will increase between 3.7% and 4.7%, the same-store sales are increasing between 1.5% and 2.5%. It ranks above the pre-approach of revenue growth from 3.4% to 4.4% on comparable-store growth of 1.2% to 2.2%. Meanwhile, it extended the lower end of its full-year EPS guidance to the range of $ 5.10 to $ 5.80 from the previous forecast between $ 5.10 and $ 5.80. It said that guidance believes that current tariff rates remain.

Source: Dollar General.

The company is looking at the inauguration of 575 new stores in the US this year and up to 15 to Mexico.

Can the dollar continue to continue the pace of general?

Dollar Generals benefit from trade-down effects this year. This is something that Walmart has been experiencing for some time, but some dollar stores such as dollar general were already missing. It was only last year that these companies were talking about that the present environment was one of the most difficult periods in their history. And for the main customer bases of the dollar store, things can actually deteriorate, which can now be spoiled with tariffs compared to last year.

For example, can the dollar continue to turn on the general corner, it largely depends on whether it can keep high -income customers who have started visiting its store and continue to attract new ones. Right now, the company is looking at these new customers more often and spends more money per trip. With its mobile app and its remodeling efforts with its own delivery service and partnership for the same day’s delivery service and partnership DoordashPossibly more rich consumers are helping to attract.

From an assessment perspective, the retailer now trades the price-to-size (P/E) ratio of further 2025 for FY 2025 (ends in January 2026). That evaluation shows that the stock is no longer in the bargain bin. While the dollar general has made a lot of progress – is still very stressed with its main consumer – I do not want to go to my current assessment.