Dollar General delivered its fiscal second-quarter results for the 13-week period ending July 31, 2026, with net sales reaching $11.3 billion, a 5.2% increase from $10.7 billion in the prior-year quarter. The growth was driven by comparable store sales gains and contributions from new store openings, partially offset by the impact of store closures.

Comparable store sales rose 3.5% during the quarter, supported by a 2.0% increase in customer traffic and a 1.5% uptick in average ticket size. The average transaction value benefited from higher retail prices, though the number of items per transaction declined slightly.

Operating profit climbed 29.2% year over year to $769.2 million, while net income advanced 33.8% to $550.3 million. Diluted earnings per share reached $2.48, up from $1.86 in the same period last year, with tariff refunds estimated to have contributed approximately $0.25 per share after accounting for reinvestment.

The board declared a quarterly cash dividend of $0.59 per share on August 26, payable on October 20 to shareholders of record as of October 6. Management raised all three full-year guidance metrics — earnings per share, net sales growth, and comparable store sales — citing better-than-expected first-half performance and improved confidence in the second half. The company noted that tariff refunds, net of reinvestment, will not materially impact results in the latter part of the fiscal year.

Where the growth is coming from

Dollar General, headquartered in Goodlettsville, Tennessee, operates small-format discount stores offering everyday essentials, seasonal merchandise, home goods, and apparel, primarily in rural communities and suburban fringe locations, with a focus on low prices and convenience. As of July 31, the company operated 21,148 stores spanning approximately 161.5 million square feet of selling space, a net addition of 255 stores since the start of the year. The comparable store base included 20,476 locations generating $11 billion in sales.

The company competes with Walmart and Dollar Tree for price-sensitive shoppers, with consumables accounting for roughly 80% of revenue. Gross margin expanded by 127 basis points to 32.6%, up from 31.3% in the prior-year period, with all four product categories posting positive comparable sales. The margin improvement was primarily attributed to tariff refunds, lower last-in, first-out inventory reserves, and reduced distribution costs, partially offset by increased promotional activity and higher transportation expenses. Tariff refunds, net of reinvestment, contributed an estimated 81 basis points to gross margin and approximately 66 basis points to operating margin.

Selling, general, and administrative expenses remained flat at 25.8% of net sales, with higher depreciation and amortization offset by lower rent expense. Net interest expense declined 25.7% to $42.9 million. The effective tax rate came in at 24.2%, compared with 23.5% a year earlier, as the expiration of federal tax credits was partially offset by lower state taxes.

Inventory and cash flow metrics

Merchandise inventories stood at $6.6 billion as of July 31, down 2.7% on a per-store basis compared with August 1 of the prior year. Operating cash flow for the first 26 weeks reached $1.5 billion, with capital expenditures of $758 million.

All four merchandise categories delivered positive comparable store sales for the sixth consecutive quarter, while customer traffic increased for the fifth straight quarter. Consumables sales reached $9.263 billion, up 5.0% year over year; seasonal products generated $1.188 billion, up 7.4%; home products contributed $537 million, up 4.8%; and apparel sales totaled $303 million, up 4.5%.

During the quarter, the company opened 125 new stores in the United States and one in Mexico, completed 665 remodels under its Project Renovate initiative, executed 711 Project Elevate remodels, and relocated five stores.

Leadership perspective

Chief Executive Officer Todd Vasos noted that the quarter delivered balanced sales performance, operating margin expansion, and double-digit earnings per share growth, exceeding company expectations even before accounting for the tariff refund contribution net of reinvestment. He highlighted sustained positive customer traffic and comparable sales across all four categories for multiple consecutive quarters and expressed confidence in the company's second-half strategy and long-term financial framework.

All three full-year guidance metrics were raised simultaneously, with the company excluding further tariff refund contributions from second-half expectations. For fiscal 2026, net sales growth guidance was revised from approximately 3.7%–4.2% to approximately 4.0%–4.3%. Comparable store sales guidance was lifted from approximately 2.2%–2.7% to approximately 2.5%–2.9%. Diluted earnings per share guidance was raised from $7.20–$7.45 to approximately $7.80–$8.00, assuming a 24.5% tax rate and incorporating the $0.25 per share benefit from second-quarter tariff refunds net of reinvestment.

Capital expenditures remain targeted at $1.4 billion to $1.5 billion, with share repurchases capped at $700 million. The company continues to plan approximately 4,730 real estate projects for the full year, including roughly 450 new U.S. stores, about 10 new stores in Mexico, approximately 2,000 Project Renovate remodels, approximately 2,250 Project Elevate remodels, and around 20 store relocations.

Following the announcement, shares rose approximately 9% in pre-market trading. The top end of the new annual earnings per share range is $0.55 higher than the previous ceiling, with $0.25 attributable to the realized second-quarter tariff refund; the remainder reflects improved sales and margin expectations. Without a comparable tariff refund in the second half, profit growth is expected to moderate in line with underlying sales and expense trends.