Is DG's Q4 2025 EPS a sign of stable profitability?

**Dollar General's (DG) Q4 2025 EPS does not indicate stable profitability**, and several factors suggest ongoing challenges and fluctuations in profitability:

1. **Q4 2025 EPS Performance**:
- DG's Q4 diluted EPS for fiscal 2025 was $0.87, which missed analyst expectations.
- This EPS figure represents a decrease from the previous year, with EPS falling from $7.57 in FY 2024 to $5.12 in FY 2025.
2. **Profitability Challenges**:
- Net income for Q4 declined by 52.4%, amounting to $191.2 million, compared to the previous year.
- Operating profit for Q4 dropped by 49.2%, with operating income falling to $294.2 million from $579.7 million in the previous year.
- The EPS of $0.87 in Q4 2025 represents a significant decrease from the previous year's EPS of $7.57.
3. **Cost and Expense Impact**:
- Higher expenses, including those related to store closures and portfolio optimization, have negatively affected profitability.
- The cost of sales amounted to 70% of total revenue, underscoring the impact on earnings.
4. **Strategic Initiatives and Outlook**:
- DG plans to close 96 Dollar General stores and 45 Popshelf stores, which could indicate strategic shifts impacting short-term profitability.
- The company anticipates a negative impact on EPS due to higher incentive compensation expense.
5. **Market and Economic Factors**:
- The decrease in profit margin was driven by higher expenses, which may be influenced by macroeconomic factors and competitive pressures.
- Same-store sales growth has been modest, with a 1.4% increase for the year, which could indicate stable but not necessarily improving profitability trends.

In conclusion, while DG's Q4 2025 EPS reflects a challenging period for the company, with significant declines in profitability and missed expectations, it is important to consider the broader strategic context and external factors influencing profitability. The company's plans for store closures and strategic initiatives may pave the way for improved profitability in the future, but these changes will likely take time to materialize.