Dollar General Corporation Q2 FY2025 earnings call

• Todd Vasos thanked the team for strong Q2 results, consumer resonance, and mentioned growth in net sales, same-store sales, and market share in consumable and non-consumable products. - Kelly Dilts discussed financials: gross profit as % of sales was 31.3% (up 137bps) due to lower shrink, higher inventory markups, and lower damages; SG&A as % of sales was 25.8% (up 121bps) due to incentive comp, repairs, and benefits; operating profit increased 8.3% to $595 million; EPS increased 9.4% to $1.86. - Operational highlights: Real estate work with new store openings, remodels; digital initiative with delivery partnerships and DG Media Network; non-consumables growth with brand partnerships and PopShelf banner learnings.

Net sales increased 5.1% to $10.7 billion in Q2 2025, compared to $10.2 billion in Q2 2024. This growth was driven by new stores and the mature store base. Same-store sales grew 2.8% with 1.5% customer traffic growth and 1.2% average basket growth. Non-consumable sales grew, and the $1 Value Valley merchandising set had same-store sales growth more than twice the company rate. Revenue contribution: Net sales growth from various segments including new stores and mature store base, with same-store sales growth from balanced customer traffic and basket growth.

• 2025 net sales growth expected to be 4.3% to 4.8%, same-store sales 2.1% to 2.6%, EPS $5.08 to $6.30. - Shrink to be a tailwind but less in Q4. - SG&A incentive comp expected to be a headwind of ~$200 million. - Capital spending expected in range of $1.3 billion to $1.4 billion, with 4,885 real estate projects including 575 new US stores, 15 in Mexico, etc. - Plan to redeem $600 million of senior notes in Q3 earlier than maturity.

• Tariffs could impact cost of goods and lead to price increases. - Consumer spending pressure in the back half of 2025. - SG&A expenses including incentive comp and repairs/maintenance pressures. - Potential impacts of SNAP changes on core customer.

Q: I was wondering if you had an early view on how the one big, beautiful bill will have an impact on your core customer. And then maybe digging into that a little bit, looks like Snap Dollar's will get cut starting in October. Maybe by about high single-digit percent. Is that something that's factored into the outlook? Do you think that will have any impact?

A: Todd Vasos said everything known to date is factored into the outlook, and they believe the bill will be a tailwind for the core customer initially, with some headwinds to watch later.

Q: Can you just talk about what Dollar General is doing on the fresh initiatives you guys are doing with DG Market and maybe how you see competing with Walmart and I guess, maybe even Amazon at some point trying to get more fresh food delivery into the rural markets?

A: Todd Vasos said they are proud of fresh initiatives, have a fresh distribution network, produce in stores, and delivery partnerships, seeing it as a competitive advantage in rural markets.