Dollar General closed the first quarter of fiscal 2026 with better-than-expected results, confirming the increasingly central role of discount retailers in the U.S. retail landscape. The chain posted net sales of $10,8 billion, up 3,4% from the same period last year, while comparable store sales grew 2%.
The main driver of this performance was increased in-store traffic, which rose 1,4%, accompanied by a 0,5% increase in the average receipt. All major product categories performed well, from consumer goods and seasonal items to clothing and home goods.
Operating profit increased 10,8% to $638,5 million, while net income rose 13,3% to $444,1 million. Diluted earnings per share were $2, up 12,4% from $1,78 a year earlier.
Behind these results is a phenomenon affecting the entire American market: the so-called "trading down," or consumer choice to switch to cheaper brands to keep daily expenses down. According to CEO Todd Vasos, the trend is accelerating and now affects all income brackets, including customers earning more than $100 a year.
Pressure on family budgets is primarily due to rising fuel prices. Vasos explained that many customers, especially in rural areas, are trying to reduce travel and concentrate their purchases in nearby, convenient stores. In this context, Dollar General's extensive network represents a significant competitive advantage.
Among the initiatives that are yielding the best results is the new frozen food section. During the quarter, the brand introduced a section with an entire refrigerated door dedicated to products priced under $1. According to management, the offering is receiving very positive feedback from consumers.
In terms of network development, Dollar General opened 190 new stores in the United States and five in Mexico. At the same time, it completed 659 Project Renovate upgrades and 711 Project Elevate upgrades, bringing its total store count to 21.055.
Capital expenditures in the quarter reached $352 million, primarily for store modernization, network expansion, logistics, and technology infrastructure.
Jefferies analysts emphasized that growth isn't driven by a single factor, but rather by a combination of commercial expansion, restructuring programs, supply chain investments, digital development, and strategies focused on affordability. However, some uncertainties remain related to intensifying competition and promotional activities in the sector.
The company also raised its full-year 2026 guidance, raising its earnings per share estimate to a range of $7,20 to $7,45. It confirmed its sales growth targets of 3,7% to 4,2% and its plan to open approximately 450 new stores in the United States and 10 in Mexico by the end of the fiscal year.
Among the changes in the coming months will be a change at the helm of the group: effective January 1, 2027, Todd Vasos will step down as CEO and will be replaced by JJ Fleeman, former CEO of Ahold Delhaize USA, who will lead the retailer's next phase of development.
