What to look for when Dollar General (DG) reports its Q4 2024 earnings results

Shares of Dollar General Corporation (NYSE: DG) were up over 2% on Tuesday. The stock has dropped 6% over the past three months. The discount retailer is scheduled to report its earnings results for the fourth quarter of 2024 on Thursday, March 13, before market open. Here’s a look at what to expect from the earnings report:

Revenue

Analysts are projecting revenue of $10.26 billion for Dollar General in Q4 2024, which indicates a growth of 4% from the same quarter a year ago. In the third quarter of 2024, net sales increased 5% year-over-year to $10.2 billion.

Earnings

The consensus target for earnings per share in Q4 2024 is $1.50, which implies a decline of 18% from the prior-year period. In Q3 2024, EPS fell 29% YoY to $0.89.

Points to note

In a challenging economic environment, consumers search for maximum value in their purchases. Dollar General is well-positioned to serve these customers through its low price points. In Q3, the company saw its same-store sales increase 1.3%, driven by increases in customer traffic and average transaction amount. Same-store sales were mainly fueled by growth in the consumables category but this was partly offset by declines in all the other categories. The strength in consumables is expected to have continued in the fourth quarter.

Last quarter, DG witnessed a heightened promotional environment and anticipated this to continue through the remainder of the year, which is likely to be reflected in the fourth quarter performance. Higher markdowns and a larger portion of sales coming from the consumables category have continued to weigh on margins. In Q3, gross profit margin decreased 18 basis points YoY to 28.8%. These pressures are likely to have continued through the fourth quarter.

Dollar General can also be expected to benefit from its Back to Basic initiatives which are focused on its stores, supply chain and merchandising. As part of these efforts, the company has been remodeling its stores, improving its in-stock levels, and expanding its delivery services to serve its customers better and drive growth.