Dollar General Corporation ( DG ) shares traded higher Thursday after the discount retailer reported stronger-than-expected second-quarter fiscal 2025 results and raised its full-year guidance.

The stock reversed its earlier gains and is now trading almost 4% lower.

The company posted net sales of $10.72 billion, up 5.1% year-over-year, slightly ahead of the consensus estimate of $10.69 billion.

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The increase was driven by contributions from new stores and a 2.8% rise in same-store sales, which reflected a 1.5% gain in customer traffic and a 1.2% increase in average transaction size.

Growth was seen across consumables, seasonal goods, home products, and apparel.

Gross margin expanded to 31.3% from 30% last year, benefiting from lower shrinkage, higher inventory markups, and reduced damages.

These gains were partially offset by increased LIFO provisions, markdowns, and distribution costs. Operating profit climbed 8.3% to $595.4 million, compared with $550.0 million a year earlier.

Earnings came in at $1.86 per share, topping the Street’s estimate of $1.57.

Outlook

CEO Todd Vasos said, “Looking ahead, we believe we have ample opportunity to drive growth and further improve our operating and financial performance.”

During the earnings call, he also reportedly acknowledged that tariffs have already resulted in some price increases.

On Thursday, Dollar General ( DG ) said it is raising its financial expectations for 2025, primarily to reflect its outperformance in the second quarter and its improved outlook for the second half of the year, while also considering the potential for uncertainty related to consumer behavior.

The company increased fiscal 2025 earnings guidance from $5.20-$5.80 per share to $5.80-$6.30, compared to the consensus of $5.75.

The company raised the sales guidance from $42.12 billion-$42.52 billion to $42.36 billion-$42.65 billion compared to the consensus of $42.43 billion.

The company forecast same-store sales growth to be approximately 2.1% to 2.6%, compared to its previous expectation of approximately 1.5% to 2.5%.

The company reiterated capital expenditures of $1.3 billion to $1.4 billion.

The company also reiterated its plans to execute approximately 4,885 real estate projects in fiscal year 2025, including opening approximately 575 new stores in the U.S. and up to 15 new stores in Mexico, remodeling approximately 2,000 stores through Project Renovate, remodeling approximately 2,250 stores through Project Elevate, and relocating approximately 45 stores.

Price Action: DG stock is trading lower by 3.79% to $106.98 at last check Thursday.

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