Topline
Dollar General on Tuesday reported quarterly earnings that surpassed Wall Street’s expectations, as the discount retailer was a far cry from the nearly $1 billion in inventory shrink—a mix of theft, damage and other losses—that once weighed on its profits.
Profits for the discount retailer jumped after it reported a further decline in losses from shoplifting and damages.
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Key Facts
Dollar General announced a 3.4% annual increase in revenue to $10.7 billion, just under consensus analyst estimates of $10.8 billion, as earnings of $2 per share beat projections of $1.89 per share, according to FactSet.
Dollar General increased its profit outlook for the year, with estimates of annual earnings reaching $7.45, up 10 cents from earlier projections.
The retailer reported $153 million in inventory shrink through the quarter, down 13% from the $176 million recorded a year ago, after Dollar General said inventory shrink has “significantly improved from elevated levels in recent years” and that progress was made in reducing damages over the last five consecutive quarters.
Dollar General said last year its inventory shrink was “significant” and could disrupt its finances, with merchandise losses peaking at $928 million in 2024, before an annual inventory shrink of $928 million in 2024, when the retailer said merchandise losses were “significant” and could disrupt its finances.
Shares of Dollar General dropped by 1.8% shortly after trading opened on Tuesday.
Surprising Fact
Dollar General’s inventory shrink of $928 million was roughly 84% of its $1.1 billion net income in 2024, underscoring merchandise losses as a headwind on profits.
Key Background
Dollar General has taken steps in recent years to reduce inventory losses from theft and damages, announcing in 2024 that it would start removing self-checkout stands from hundreds of stores. The retailer said in 2022 that self-checkout could “enhance” convenience for shoppers while allowing staff to “dedicate even more time to serving customers,” as Dollar General tested stores with only self-checkout kiosks. CEO Todd Vasos, who returned from retirement in 2022 before returning less than a year later to lead the retailer’s turnaround, said a decision to cut self-checkout would likely have a “material and positive impact” on shrink. Improvements on shrink improved Dollar General’s profits through 2025: In Q1, the company reported a 31% increase in gross margin, or the percentage of sales a company keeps after paying for the product it sells, citing a reduction in shrink.