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

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Understanding how a discount retail giant like DG Income Statement Overview (formerly Dollar General) makes money is essential for investors and anyone interested in the business of value 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 operates one of the largest chains of small-box discount retail stores in the United States, offering everyday low prices on a broad assortment of consumables, seasonal items, home products, and apparel. Revenue comes primarily from high-frequency consumables sales, with additional contributions from seasonal, home, and apparel categories. The company’s business model focuses on rural and suburban communities, leveraging a high-turnover, low-cost structure to drive consistent traffic and sales.

Revenue Breakdown

• Total Revenue (Q3 2025): $10.7B (+5.1% YoY)
  • Consumables Revenue: $8.82B (82.2% of total, +5.0% YoY)
  • Seasonal Revenue: $1.11B (10.3% of total, +4.9% YoY)
  • Home Products Revenue: $0.51B (4.8% of total, +6.6% YoY)
  • Apparel Revenue: $0.29B (2.7% of total, +4.2% YoY)
  • Growth is powered by store expansion, increased customer visits, and resilient demand for essential goods.

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, strong private label penetration, and disciplined pricing strategies.
• Most costs come from merchandise procurement, logistics, and distribution center operations.

Operating Income and Expenses

• Operating Income: $595.4M (+8.3% YoY, 5.6% margin)
• Operating Expenses: $2.77B (+10.2% YoY)
  • R&D: Not separately disclosed (typical for retail sector)
  • SG&A: $2.77B (+10.2% YoY, 25.8% of revenue) — Includes store labor, occupancy costs, advertising, and corporate overhead
  • DG continues to invest in store growth, technology upgrades, and supply chain enhancements while maintaining operational efficiency.

Net Income

• Pre-Tax Income: $537.7M (+11.6% YoY, 5.0% margin)
• Income Tax: $126.3M (23.5% effective tax rate)
• Net Income: $411.4M (+10.0% YoY, 3.8% net margin)
• DG converts a moderate portion of sales into profit due to its scale, cost discipline, and focus on high-turnover categories.

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What Drives DG's Money Machine?

• Consumables: Over 82% of revenue comes from consumables, reflecting the company’s focus on everyday essentials and high-frequency purchases.
• Store Network Expansion: DG’s growth is fueled by opening new stores in underserved markets, driving both top-line and bottom-line gains.
• Supply Chain Investment: Strategic investments in distribution and logistics enhance inventory turnover and reduce costs.
• Digital and Private Label Growth: Future growth areas include digital initiatives and expanding private label offerings, though these are not yet major profit contributors.

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 costs, 3.8% of revenue drops to the bottom line.

Key Takeaways

• DG’s money comes overwhelmingly from consumables sales in its vast store network.
• High gross and stable net margins illustrate the power of DG’s scale-driven, low-cost retail model.
• Heavy investment in store expansion and supply chain, balanced by efficiency in operating costs.
• Ongoing growth is driven by new store openings, resilient demand for essentials, and operational 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, including food, cleaning supplies, and household essentials. Seasonal, home, and apparel categories contribute the remainder.

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, cost control, and strong demand for essentials.

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 (25.8% of revenue), as DG prioritizes store operations, labor, and logistics.

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

Apparel, despite generating $289.9M in revenue, faces margin pressure and may post operating losses due to aggressive discounting and inventory management, as DG invests in driving traffic and clearing seasonal stock.

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 U.S. corporate tax structures and limited international exposure.