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(Sharecast News) - Dollar General reported stronger-than-expected first-quarter earnings and raised its full-year guidance on Tuesday, sending shares soaring in premarket trading.
The suburban and rural-focussed general goods retailer posted net income of $391.9m for the 13 weeks to 2 May, up 7.9% year-on-year, with diluted earnings per share rising to $1.78 - beating analyst forecasts of around $1.49.
Revenue grew 5.3% to $10.44bn, exceeding expectations and driven by new store openings and a 2.4% rise in same-store sales.
Same-store growth was supported by a 2.7% increase in average transaction size, which more than offset a modest decline in customer traffic.
The company reported margin expansion, with gross profit improving to 31.0% of sales amid lower shrink and better inventory markups, though selling and administrative costs rose due to higher labor, incentive pay, and maintenance expenses.
In response to the strong performance, Dollar General lifted its full-year sales and earnings outlook.
It said it now expected 2025 financial year net sales growth of 3.7% to 4.7%, up from a prior range of 3.4% to 4.4%, and same-store sales growth of 1.5% to 2.5%, compared to an earlier forecast of 1.2% to 2.2%.
The company raised the lower end of its earnings guidance, projecting diluted earnings per share of $5.20 to $5.80.
While the outlook assumed current US tariffs remained unchanged through mid-August, Dollar General warned that renewed tariff hikes on Chinese imports could pressure consumer demand.
However, it said mitigation plans were in place to manage most of the expected cost impacts.
During the quarter, the retailer opened 156 new stores and completed over 1,200 remodels or relocations under its Project Elevate and Project Renovate programmes.
Capital expenditure totaled $291m.
The company's board also declared a quarterly dividend of 59cents per share.
"We are pleased with our start to the year, including strong same-store sales and earnings per share results," said chief executive officer Todd Vasos.
"Our efforts to improve execution and enhance the associate and customer experience are yielding positive outcomes in both our operational performance and our financial results.
"Looking ahead, we are uniquely well-positioned to serve our customers in a variety of economic environments."
At 0808 EDT (1308 BST), shares in Dollar General Corporation were up 9.98% in premarket trading in New York, at $106.79.
Reporting by Josh White for Sharecast.com.