Dollar General Corporation (DG) shares surged Thursday after the discount retailer delivered third-quarter results that blew past Wall Street's expectations and raised its outlook for the full year.

The company posted net sales of $10.65 billion for the third quarter of fiscal 2025, essentially matching the consensus estimate of $10.64 billion. That represented a solid 4.6% increase driven by contributions from new store openings and same-store sales growth, though partially offset by store closures.

But the real story was on the bottom line. Dollar General earned $1.28 per share, significantly ahead of analyst estimates calling for 95 cents. That's the kind of beat that gets investors' attention.

Traffic and Margins Tell the Story

Same-store sales increased 2.5% compared to the same quarter last year, driven entirely by a 2.5% jump in customer traffic. Average transaction amounts were flat, meaning more people are walking through the doors rather than spending more per visit. The company saw growth across all major categories: consumables, seasonal items, home products, and apparel.

Gross profit margin expanded to 29.9%, up a hefty 107 basis points. The improvement came primarily from higher inventory markups and lower shrink (retail speak for theft and inventory losses), though an increased LIFO provision took some of the shine off. Operating profit jumped 31.5% to $425.9 million compared to $323.8 million in the prior-year quarter.

Guidance Gets an Upgrade

Dollar General raised its financial expectations for fiscal 2025 on Thursday, primarily reflecting the third-quarter beat and an improved outlook for the rest of the year. The company did acknowledge potential uncertainty around consumer behavior going forward.

The retailer boosted its full-year earnings guidance from a range of $5.80-$6.30 to $6.30-$6.50, well above the consensus estimate of $6.17. Sales guidance also got a lift, moving from $42.36 billion-$42.56 billion to $42.52 billion-$42.60 billion, matching the consensus of $42.52 billion.

That translates to net sales growth of approximately 4.7% to 4.9%, up from the previous expectation of 4.3% to 4.8%. Same-store sales growth is now expected to land around 2.5% to 2.7%, compared to the earlier forecast of 2.1% to 2.6%.

Capital expenditures, including investments in strategic initiatives, are now expected toward the lower end of the $1.3 billion to $1.4 billion range.

Aggressive Expansion Plans

Dollar General is sticking with its plan to execute approximately 4,885 real estate projects in fiscal 2025. That includes opening roughly 575 new stores in the United States and up to 15 new stores in Mexico, remodeling about 4,250 stores, and relocating around 45 stores.

Looking ahead to fiscal 2026, the company outlined plans for approximately 4,730 real estate projects. That includes opening about 450 new stores in the U.S. plus roughly 10 in Mexico, fully remodeling approximately 4,250 stores, and relocating about 20 stores.

Shares of Dollar General jumped 8.90% to $119.67 on Thursday, hitting a new 52-week high as investors digested the strong results and improved outlook.