What risks could derail DG's 2026 EPS forecast?

Dollar General's (DG) 2026 EPS forecast could be derailed by several risks, including:

1. **Macroeconomic Pressures**: Dollar General's lower-income consumer base is sensitive to economic fluctuations. Persistent inflation, reduced SNAP benefits, and potential impacts of government entitlement program changes could strain customer budgets, affecting sales and EPS.
2. **Increased Competition**: The retail sector is highly competitive, with Dollar General facing challenges from larger rivals like Walmart and Costco, as well as other discount and deep-discount retailers. Intense competition could pressure margins and profitability.
3. **Operational Risks**: The company is exposed to operational risks such as inventory shrinkage and damages, which have impacted results. Failure to mitigate these risks could negatively affect EPS.
4. **Tariff and Supply Chain Risks**: Dollar General has indicated the potential impact of tariffs, although it has successfully mitigated some effects in the past. However, ongoing trade tensions and supply chain disruptions could pose risks to the company's profitability.
5. **Store Closure and Remodeling Costs**: The strategic decision to close underperforming stores and remodel existing ones is a key part of DG's growth plan. However, these actions can be costly and may impact short-term EPS as the company incurs charges and invests in new store formats.
6. **Workforce and Labor Costs**: The company has faced increased workforce and labor costs, which can pressure margins and impact EPS. Ongoing labor hour investments and potential increases in wage rates could affect profitability.
7. **Distribution and Logistics Challenges**: Inflation-driven increases in gasoline, diesel fuel, and energy prices could raise distribution costs, potentially impacting the company's margins and EPS.

In summary, while Dollar General has demonstrated resilience in the face of challenges, several risks could still derail its 2026 EPS forecast. These risks are largely related to macroeconomic pressures, competitive dynamics, and operational and logistical challenges.