Dollar General reported second-quarter fiscal 2026 results that exceeded Wall Street expectations, sending shares up 6.5% in premarket trading.
The discount retailer posted earnings per share of $2.48, a 33% increase from the prior year and $0.48 above the $2.00 consensus estimate. Net sales reached $11.3 billion, up 0.2% year-over-year and surpassing the $11.19 billion forecast by approximately $110 million. Same-store sales rose 3.5%, marking the fifth consecutive quarter of positive comparable sales growth.
Gross margin expanded by 127 basis points to 32.6%, including an estimated 81-basis-point benefit from tariff refunds. Operating profit climbed 29.2% to $769 million, with operating margin rising 126 basis points to 6.8%. The company’s return on equity over the last twelve months stood at 19%.
Executives highlighted balanced growth across key metrics. CEO Todd Vasos noted the quarter delivered "balanced top-line growth, healthy operating margin expansion, and strong double-digit EPS growth," while CFO Donny Lau emphasized the company’s satisfaction with margin performance even before tariff refund benefits.
Dollar General raised its full-year fiscal 2026 guidance, projecting net sales growth of 4.0% to 4.3% and same-store sales growth of 2.5% to 2.9%. Diluted EPS is now expected in the range of $7.80 to $8.00, including a $0.25 benefit from tariff refunds. The company plans to resume share repurchases in the third quarter, targeting up to $700 million in buybacks during the second half of the year.
Inventory levels remained essentially flat year-over-year at $6.6 billion, while cash flow from operations totaled $1.5 billion year-to-date through the second quarter. The board approved a quarterly cash dividend of $0.59 per share for the quarter.
Strategic initiatives for 2026 include 2,000 Project Renovate remodels, 2,250 Project Elevate remodels, and 450 new U.S. store openings. The company also plans about 10 store openings in Mexico. Its Value Valley program, featuring more than 600 rotating $1 items, saw comparable sales increase by over 16% in the quarter.
