Discount retailer Dollar General (NYSE: DG) saw its shares jump 13.3% in premarket trading on Thursday after the company raised its full-year guidance, adding approximately $3.6 billion to its market capitalization. The stock was trading at $139.11 as of 07:30 EDT, up $16.33 from Wednesday's closing price of $122.78.
The surge came after Dollar General reported second-quarter results that exceeded analyst expectations and boosted its outlook for the full year. The company now expects net sales to grow 4.0% to 4.3% in fiscal 2026, up from its previous forecast of 3.7% to 4.2%. Comparable sales are projected to rise 2.5% to 2.9%, compared with the earlier range of 2.2% to 2.7%.
For the second quarter, Dollar General reported net sales of $11.29 billion, a 5.2% increase year-over-year and above the FactSet consensus of $11.2 billion. Comparable sales rose 3.5%, driven by a 2.0% increase in customer traffic and a 1.5% gain in average transaction value.
Diluted earnings per share came in at $2.48, up 33.3% from the prior year and well ahead of the Wall Street Journal consensus of $2.01. Net income climbed 33.8% to $550.3 million, while operating profit surged 29.2% to $769.2 million.
Gross margin expanded by 127 basis points to 32.6%, with tariff refunds contributing 81 basis points of that improvement. However, management noted that these refunds are not expected to repeat in the second half of the year. Operating margin rose to 6.81% from 5.55% a year earlier, with refunds accounting for 66 basis points of the increase.
The company raised its full-year EPS outlook to a range of $7.80 to $8.00, up from the previous $7.20 to $7.45 forecast, representing a 7.8% increase at the midpoint. This upward revision reflects stronger-than-expected second-quarter performance and a more optimistic view of the remainder of the year.
Dollar General also announced plans to repurchase up to $700 million in shares during the second half of the year, providing additional support for the stock. The board declared a quarterly dividend of $0.59 per share.
The retailer continues to expand its footprint, operating 21,148 stores as of July 31. The company maintains its forecast of approximately 450 store openings in the U.S., 10 in Mexico, and a total of 4,730 real-estate projects for the year.
Wall Street analysts were divided ahead of the report, with 45% of 18 analysts surveyed rating the stock as Buy or Strong Buy and 56% giving it a Hold. The consensus price target was $134.94, which the premarket price has now surpassed.
Investors should be aware of potential risks, including the non-recurrence of tariff refund benefits in the second half, rising fuel and freight costs, and ongoing pressure on lower-income consumers, which could impact traffic and margins.
