Dollar General Delivers Strong Q1—And Shows Why It’s Built for Recession Resilienc

Dollar General (NYSE:) stock has outperformed the market by a wide margin this year, and it continued charging higher Tuesday after releasing its first quarter earnings.

The deep discount retail store chain easily beat earnings and revenue estimates, as its stock price jumped by about 13% in early trading. Dollar General stock is now up about 44% YTD, compared to an S&P 500 that is basically flat.

The company generated $10.4 billion in revenue in the quarter, up 5.3% year-over-year. It also topped analysts’ estimates of $10.3 billion. The company saw same-store sales rise 2.4% in the quarter, and operating profit increase by 5.5% to $576 million.

Net income rose about 8% year over year to $391.9 million, or $1.78 per share. That crushed estimates of $1.48 per share. Earnings were aided by an 11% decrease in interest expenses, due to lower interest rates, and improved cost of goods sold, which accounted for 69% of sales, down from roughly 70% of sales in the same quarter a year ago.

“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,” Todd Vasos, Dollar General’s CEO, said. “These efforts contributed to market share gains in sales of both consumables and non-consumables and drove growth with both our core customer and trade-in customers during the quarter.”

Tariffs Have Little Impact

One of the reasons Dollar General has outperformed has to do with the economic environment. The stock typically outperforms during challenging and recessionary conditions, because consumers are cutting back on spending and looking for lower priced goods.

While Dollar General struggled during the bull market years of 2023 and 2024, it was one of the top performers in 2022, up 5% in a year where the S&P 500 was down 19% and the Nasdaq was off 33%. In 2018, when the S&P 500 was down 6%, Dollar General was up 18%. And in 2015, when the large cap benchmark dropped 1%, Dollar General gained 3%.

Then this year, with the S&P 500 basically flat, Dollar General has returned 44%.

The other reason that Dollar General is beating the market, and the competition, is its limited exposure to tariffs. Dollar General imported just 4% of its merchandise in 2024, which is far less than its larger competitors, like Walmart (NYSE:), and smaller ones, like Dollar Tree (NASDAQ:).

“Tariff rates on both direct imports and domestic purchases did not materially impact our financial results for the first quarter of 2025. Currently announced tariff rates, as well as any increases or expansions of tariff coverage affecting the products that we sell, including those that have been announced but delayed, could have a more significant impact on our business and on our customers’ budgets. However, the tariff environment remains highly dynamic, and the specific tariffs applicable to goods imported by us and our suppliers into the U.S., continue to evolve,” management stated in the 10-Q.

Dollar General “uniquely well-positioned”

While acknowledging that uncertainty exists for the remainder of the fiscal year due to tariffs and their potential impacts, Vasos said the company is “uniquely well-positioned to serve our customers in a variety of economic environments.”

Even with tariff uncertainty, Dollar General is raising its guidance for the fiscal year, based in part on outperformance in Q1.

The updated guidance assumes that the current tariff rates remain in place through mid-August and factors in the firm’s plans to address the potential reversion to the tariff rates previously announced on goods from China on April 2.

That said, Dollar General is expecting net sales growth of approximately 3.7% to 4.7%, compared to the previous guidance of 3.4% to 4.4%. Same-store sales growth is targeted at 1.5% to 2.5%, compared to its previous expectation of 1.2% to 2.2%. And earnings are now estimated to be $5.20 to $5.80 per share, up from the previous outlook of $5.10 to $5.80 per share.

In addition, the guidance targets capital investments in the range of $1.3 billion to $1.4 billion. In addition, it reaffirms plans to open 575 new stores in the U.S. and up to 15 new stores in Mexico. Further, it plans to remodel 4,250 stores and relocate 45 stores.

Even with its 13% surge on Tuesday, Dollar General is uniquely positioned to keep growing, as Vasos said. The stock is still fairly cheap with a P/E ratio of 19 and it got a slew of price target upgrades. It looks like a solid option in uncertain times.

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