Dollar General (DG) is beginning to see investors allocate dollars back to its stock today after the discount chain announced it would close nearly 100 Dollar General locations and 45 pOpshelf sites while converting six pOpshelf stores to Dollar General stores. The review cost DG significantly in Q4 (Jan), clipping approximately $0.81 off EPS. However, in Q1 (ended Apr), DG posted EPS of $1.78, surpassing analysts’ $1.47 consensus, and net sales rose 5.0% yr/yr to $10.44 bn, with same-store sales up 2.4%—nearly double the 1.22% projection‍. Meanwhile, by excluding the prior portfolio-review charge, DG outperformed its previously lowered FY 25 outlook.

The retailer has been revamping thousands of stores, aiming to make them cleaner and more convenient. Alongside plans to fully remodel around 2,000 additional stores this year, CEO Todd Vasos announced last quarter that around 2,250 additional locations would undergo a lighter remodeling—adding produce and updating assortments. The move has not been without its costs; DG plans to maintain spending at a similar rate over the next five years as it did in FY 25 at roughly 3% of net sales.

• Refreshes driving growth. Mr. Vasos noted that Q1 same-store sales of +2.4% were driven by a lift in basket size and continued traffic resilience, underscoring early benefits of the “DG Fresh” and Project Elevate initiatives.
• Operating leverage emerging. Net income climbed to $391.9 mm (+7.9% yr/yr), even as DG absorbed incremental costs from remodels and the lingering effects of the Q4 charge.
• Consumer wallet pressure persists. Management reiterated that many shoppers remain “only able to afford essentials,” and Vasos said he does not expect material relief this year, as inflation-driven trade-down trends continue.
o Tariff risk managed. DG affirmed it can mitigate much of the “highly dynamic” tariff pressure—citing its 2018–19 playbook—but flagged ongoing uncertainty around potential changes to SNAP and other entitlement programs.
• Raised FY 25 outlook. Following Q1, DG now guides to EPS $5.20–5.80, net-sales growth +3.7–4.7%, and same-store sales +1.5–2.5% (previously +3.4–4.4% and +1.2–2.2%). Longer-term, DG reiterated its five-year targets of sales CAGR +3.5–4.0%, SSS +2–3%, EPS CAGR +6–7%, and ~2% annual new-unit growth.

A barrage of stubborn economic headwinds has kept DG down over the past several months but not entirely out. The company’s store refresh plans may keep a lid on medium-term profitability, especially if tariffs present outsized challenges. However, DG remains a turnaround candidate: its deep rural/underserved footprint, combined with cleaner, more convenient stores, positions it to reaccelerate once economic conditions stabilize.