So here’s a fun Thursday story: while the rest of the stock market was basically having an existential crisis, Dollar General decided to be the main character and jumped 5%. Because apparently, someone didn’t get the memo about having a terrible day.
Here’s what happened: Dollar General dropped their Q4 earnings, and it was… well, let’s call it “complicated.” Like that friend who says they’re “fine” but clearly has some stuff going on.
The Good News (Revenue Was Actually Decent)
Revenue hit $10.3 billion, up 4.5% from last year and slightly better than what the Wall Street crystal ball gazers predicted. Same-store sales grew 1.2%, which in retail speak means “people are still showing up to buy stuff.” For the whole year, they pulled in $40.6 billion. Not too shabby for a company that sells everything for under $20.
The Plot Twist (Earnings Were… Yikes)
Now here’s where it gets spicy. Earnings per share came in at 87 cents, which sounds fine until you realize analysts expected $1.50. That’s like ordering a large pizza and getting a personal pan. But wait – there’s a perfectly reasonable explanation that doesn’t involve corporate incompetence.
Dollar General has been playing Marie Kondo with their stores, asking “does this location spark joy?” Apparently, 96 Dollar General stores and 45 Popshelf stores did not spark joy, so they got the boot. This “Store Portfolio Optimization Review” (fancy corporate speak for “we’re closing stuff”) cost them $232 million in charges, or about 81 cents per share.
Do the math: without those one-time charges, they would’ve actually beaten expectations. It’s like failing a test because you spent all your time organizing your desk – technically a loss, but probably smart long-term.
Why Investors Are Actually Excited
Here’s the thing about Dollar General: they’re basically the economic mood ring of retail. When times are tough, people flock there like it’s Black Friday every day. And according to CEO Todd Vasos, their customers are telling them things are still pretty rough out there.
“Our customers continue to report that their financial situation has worsened,” Vasos said, which sounds depressing but is actually Dollar General’s sweet spot. When people need to stretch their dollars, guess where they go?
The Future Looks Surprisingly Bright
For 2025, they’re projecting steady growth with same-store sales up 1.2% to 2.2%. But here’s the kicker: they’re planning to add 575 new stores this year and remodel over 4,000 existing ones. They’re targeting 10% earnings growth in 2026, which in today’s market is like finding a unicorn that also does your taxes.
The stock is trading at just 12 times earnings with a consensus price target suggesting 8% upside. In a world where everything feels expensive, Dollar General is serving up value – both in their stores and their stock price.
Sometimes the best investment strategy is betting on the company that thrives when everyone else is struggling. Dollar General just proved that point while the rest of the market was having a meltdown.