Executive Summary

Q3 performance: Net sales rose 5.0% to $10.18B, same‑store sales +1.3%, but operating profit fell 25.3% to $323.8M and diluted EPS declined 29.4% to $0.89, driven by SG&A pressures including $32.7M hurricane-related costs .
Guidance: FY2024 guidance narrowed; EPS range trimmed to $5.50–$5.90; FY2025 store growth accelerated with ~4,885 real estate projects planned (Project Elevate introduced for mature stores) .
Strategic initiatives: Back to Basics execution, shrink improvement (+29 bps tailwind to gross margin), and a same‑day delivery pilot (75 stores) position DG for operational improvement into 2025 .
Trend context: Q1–Q2 FY2025 showed margin recovery and EPS growth (Q1 EPS $1.78; Q2 EPS $1.86) before Q3 SG&A/weather headwinds; FY2025 guidance was raised after Q1 and raised again after Q2 .
Estimates: Wall Street consensus via S&P Global was unavailable at time of writing; therefore beat/miss vs estimates cannot be determined and should be revisited once available.

What Went Well and What Went Wrong

What Went Well

Market share and SSS: “We continue to grow market share in both dollars and units in highly consumable product sales … same‑store sales increased 1.3%” (Todd Vasos) .
Shrink improvement: “Shrink was a year‑over‑year tailwind of 29 basis points in Q3,” better than expectations (CFO) .
Digital/convenience push: Launched same‑day home delivery pilot in ~75 stores; leverages DG app and third‑party delivery to enhance convenience and support DG Media Network monetization (CEO) .

What Went Wrong

Profitability pressure: SG&A rose to 25.7% of sales (+111 bps YoY), with $32.7M hurricane costs; operating margin compressed to 3.18% and EPS fell to $0.89 .
Mix headwind: Gross margin fell 18 bps to 28.8% given higher markdowns, damages, and mix shift toward consumables; discretionary categories (home, seasonal, apparel) declined .
Promotional environment: Heightened promotions persisted in Q3 and are expected through year‑end, pressuring gross margin (CEO/CFO) .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Billions)	$10.44	$10.73	$10.18
Diluted EPS ($)	$1.78	$1.86	$0.89
Gross Margin (%)	30.96%	31.34%	28.83%
SG&A as % of Sales	25.44%	25.79%	25.65%
Operating Margin (%)	5.52%	5.55%	3.18%
Net Income ($USD Millions)	$391.9	$411.4	$196.5
Same-Store Sales (%)	+2.4%	+2.8%	+1.3%
Traffic Change (%)	−0.3%	+1.5%	+0.3%

Notes:

Q3 YOY: Revenue +5.0%; EPS −29.4%; Operating profit −25.3% .
Effective tax rate: Q3 23.2% .

Segment/category breakdown (Net Sales):

Category ($USD Billions)	Q1 2025	Q2 2025	Q3 2025
Consumables	$8.64	$8.82	$8.45
Seasonal	$1.02	$1.11	$0.94
Home Products	$0.51	$0.51	$0.52
Apparel	$0.27	$0.29	$0.28
Total	$10.44	$10.73	$10.18

Key KPIs and costs:

KPI	Q1 2025	Q2 2025	Q3 2025
Avg Transaction Change (%)	+2.7%	+1.2%	+1.1%
Inventory ($USD Billions, end of period)	$6.59	$6.61	$7.12
Shrink impact (bps)	—	—	+29 bps tailwind
Hurricane-related SG&A ($USD Millions)	—	—	$32.7
Quarterly Dividend ($/share)	$0.59 declared	$0.59 declared	$0.59 declared

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales Growth	FY2024	~4.7%–5.3%	~4.8%–5.1%	Narrowed
Same-Store Sales Growth	FY2024	~1.0%–1.6%	~1.1%–1.4%	Narrowed
Diluted EPS	FY2024	~$5.50–$6.20	~$5.50–$5.90 (assumes ~23% tax)	Lowered high end
CapEx	FY2024	$1.3–$1.4B	$1.3–$1.4B	Maintained
Real Estate Projects	FY2024	2,435 (730 new, 1,620 remodels, 85 relocations)	2,435 (same)	Maintained
Net Sales Growth	FY2025	~3.4%–4.4% (Mar)	~3.7%–4.7% (Jun) ; ~4.3%–4.8% (Aug)	Raised twice
Same-Store Sales Growth	FY2025	~1.2%–2.2% (Mar)	~1.5%–2.5% (Jun) ; ~2.1%–2.6% (Aug)	Raised twice
Diluted EPS	FY2025	~$5.10–$5.80 (Mar, ~23.5% tax)	~$5.20–$5.80 (Jun) ; ~$5.80–$6.30 (Aug)	Raised twice
Real Estate Projects	FY2025	~4,885 (575 new US, up to 15 Mexico, 2,000 full remodels, 2,250 Project Elevate, 45 relocations)	Reiterated	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 FY2025)	Current Period (Q3 FY2025)	Trend
Shrink & damages	Gross margin benefited from lower shrink in Q1 and Q2	Shrink tailwind +29 bps; damages still elevated; aiming for pre‑pandemic shrink levels (CFO)	Improving tailwind, ongoing work
Promotional intensity	Elevated promotions; margin headwinds discussed in Q1	Heightened promotions persisted; expected through year‑end (CEO/CFO)	Persistent headwind
Back to Basics execution	Progress cited, margin recovery in Q1/Q2	Customer satisfaction +900 bps vs Q1; in‑stock +180 bps since 2020; floor stand reductions ~50% YoY (CEO)	Execution improving
Supply chain/OTIF	Ongoing optimization (press releases)	OTIF improved: on‑time +470 bps, in‑full +900 bps YoY; automation in DCs; exiting temp warehouses	Structural improvement
Digital & delivery	DoorDash partnership; framework in place	Same‑day delivery pilot via DG app (~75 stores); complements DG Media Network monetization	New growth lever
Real estate strategy	FY2025 projects communicated (Mar/Jun)	Project Elevate for mature stores; 4,885 projects in FY2025; remodel IRRs > new stores (CEO/CFO)	Accelerating remodels
Tariffs/macro	Tariff uncertainty flagged in Q1 guidance update	Consumer still constrained; end‑of‑month spending weak; planning under macro neutrality to softening ranges (CEO/CFO)	Watchful stance

Management Commentary

“Net sales increased 5% to $10.2 billion in Q3… same‑store sales increased 1.3%… we continue to grow market share in both dollars and units in highly consumable product sales” (CEO) .
“Shrink was a year‑over‑year tailwind of 29 basis points in Q3… better than our expectations” (CFO) .
“We began a test of same‑day home delivery… partnering with a third party to offer delivery through our DG app from approximately 75 stores… delivery can also enhance our DG Media Network monetization” (CEO) .
“We plan to execute approximately 4,885 projects in FY2025… 2,000 full remodels and an additional 2,250 Project Elevate remodels” (CEO) .
“We are focused on double‑digit EPS growth over time… with long‑term margin drivers including shrink reduction, sales mix stabilization, DG Media Network, private brands, global sourcing, and supply chain efficiencies” (CFO) .

Q&A Highlights

Comp algorithm & remodel contribution: Management expects real estate programs (including Project Elevate) to contribute to comps; cost structure focus (shrink, damages, depreciation, retail salaries) to support a return to double‑digit EPS over time .
Double‑digit EPS pathway: Back to Basics progress underpinning the foundation; more work ahead; long‑term aim to restore double‑digit EPS growth (CEO/CFO) .
Gross margin recovery: Shrink tailwind expected in Q4 and into 2025; journey to pre‑pandemic shrink levels will take time (CFO) .
Consumer behavior: Core customer constrained; ticket up with selective discretionary purchases; end‑of‑month weakness persists; traffic focus remains priority (CEO) .
Delivery economics: Low‑cost approach with third party; aims to boost top line and margins via media network; scaling to thousands of stores over time (CEO) .

Estimates Context

S&P Global consensus EPS and revenue for Q3 FY2025 were unavailable at time of writing due to data access limitations; accordingly, beat/miss assessment vs Street cannot be provided and should be revisited when data become available.
Company‑reported results: Q3 EPS $0.89 and net sales $10.18B; FY2025 guidance raised in June and August following Q1/Q2 outperformance, suggesting Street models may need to reflect stronger second‑half trends despite promotional intensity .

Key Takeaways for Investors

Near-term: Q3 profitability was pressured by SG&A (hurricanes) and promotions; watch Q4 margin trajectory with shrink tailwind and holiday mix; trading setups may hinge on sequential margin recovery and holiday sales cadence .
Medium-term: Back to Basics and supply chain OTIF improvements are tangible; Project Elevate accelerates touchpoints across mature stores with attractive IRRs; expect remodel-driven comp lift (3–5% Elevate; 6–8% full) and mix stabilization over time .
Digital optionality: Same‑day delivery pilot plus DG Media Network can deepen customer engagement and provide incremental margin levers beyond product margins .
Guidance credibility: FY2025 guidance has been raised twice after Q1 and Q2; monitor execution vs elevated targets amid macro and tariff uncertainties .
Risk watch: Promotional environment and damages remain headwinds; wage rate pressure and depreciation likely persist into 2025; hurricane repairs add ~$10M in Q4 SG&A (already flagged) .
Capital allocation: Dividend maintained ($0.59/share); no buybacks assumed in FY2024–FY2025; focus on high‑return remodels and store optimization (Q4 portfolio review charges already absorbed) .
Re-rate drivers: Evidence of sustained gross margin expansion (shrink benefits, reduced damages), successful scaling of delivery, and remodel‑driven comp lifts could catalyze sentiment and valuation normalization over the next 12–18 months .

Citations:
All quantitative and qualitative information above is sourced from Dollar General’s Q3 FY2025 Form 8‑K and press release , Q3 FY2025 earnings call transcript –, and prior quarter releases for trend context – –.

DOLLAR GENERAL CORP (DG)·Q3 2025 Earnings Summary