How DG (Dollar General) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a discount retail leader like DG Income Statement Overview (DG) makes money is essential for investors and anyone interested in the business of value-focused retail. In this post, we break down DG's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick DG Overview

DG Income Statement Overview operates a nationwide chain of discount retail stores, offering a broad assortment of consumables, seasonal items, home products, and apparel. Revenue comes primarily from high-frequency consumables sales, supplemented by seasonal merchandise, household goods, and apparel. The business is organized into four main segments: Consumables, Seasonal, Home Products, and Apparel.

Revenue Breakdown

• Total Revenue (Q3 2025): $10.7B (+5.1% YoY)
  • Consumables Revenue: $8.82B (82.2% of total)
  • Seasonal Revenue: $1.11B (10.3% of total)
  • Home Products Revenue: $0.51B (4.8% of total)
  • Apparel Revenue: $0.29B (2.7% of total)
• Growth is powered by expansion of store footprint, increased basket size, and resilient demand for everyday essentials.

Gross Profit and Margins

• Gross Profit: $3.36B (31.3% gross margin)
  • Cost of Revenue: $7.37B (+3.0% YoY)
  • DG maintains robust margins due to its efficient supply chain, private label penetration, and scale-driven purchasing power.
• Most costs come from product sourcing, logistics, and store operations.

Operating Income and Expenses

• Operating Income: $0.60B (+8.3% YoY, 5.6% margin)
• Operating Expenses: $2.77B (+10.2% YoY)
  • SG&A: $2.77B (+10.2% YoY, 25.8% of revenue) — includes store labor, rent, utilities, and corporate overhead
  • DG continues to invest in store upgrades and technology while maintaining cost discipline and operational efficiency.

Net Income

• Pre-Tax Income: $0.54B (+11.6% YoY, 5.0% margin)
• Income Tax: $0.13B (23.5% effective tax rate)
• Net Income: $0.41B (+10.0% YoY, 3.8% net margin)
• DG converts a moderate portion of sales into profit due to tight cost controls and scale advantages.

What Drives DG's Money Machine?

• Consumables Sales: Over 82% of revenue comes from consumables, reflecting DG's focus on everyday essentials and high-frequency shopping.
• Store Expansion: DG added new locations and improved same-store sales, driving top-line growth.
• SG&A Efficiency: Despite rising expenses, DG leverages technology and process improvements to keep costs in check.
• Seasonal and Home Products: These segments offer higher margins and growth potential, though they remain a smaller share of revenue.

Visualizing DG's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant investments in store operations and expansion, 3.8% of revenue drops to the bottom line.

Key Takeaways

• DG's money comes overwhelmingly from consumables sales
• High gross and net margins illustrate the power of DG's scale-driven, value-focused retail model
• Heavy investment in store operations and technology, balanced by efficiency in operating costs
• Ongoing growth is driven by store expansion, resilient demand, and merchandising improvements

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FAQ About DG's Income Statement

1. What is the main source of DG's revenue in 2025?

DG generates over 82% of its revenue from consumables sales. Seasonal, home products, and apparel contribute smaller but growing shares.

2. How profitable is DG in Q3 2025?

DG reported net income of $411.4M in Q3 2025, with a net margin of approximately 3.8%, reflecting moderate profitability driven by scale and cost discipline.

3. What are the largest expense categories for DG?

The biggest expenses on DG's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A reached $2.77B in Q3 2025, as DG prioritizes store operations, labor, and technology investments.

4. Why does the Apparel segment operate at a loss?

Apparel, despite generating $289.9M in revenue, posted an operating loss in Q3 2025. This is because DG aggressively invests in expanding product assortment and marketing, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does DG's effective tax rate compare to previous years?

DG's effective tax rate in Q3 2025 was 23.5%, consistent with previous years. This moderate rate is primarily due to standard corporate tax treatment and limited international exposure.