Dollar General CEO says 'financially constrained' consumers partially to blame for softer demand
Dollar General lowered its 2024 sales and profit forecast
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Dollar General stock plunged 27% on Thursday after the company released second-quarter financial results that showed softening consumer demand and prompted a cut to its annual sales and profit forecast.
The company's operating profit decreased by 20.6% to $550 million, while its diluted earnings per share fell 20.2% to $1.70. Its net sales for the quarter were $10.21 billion, shy of analysts' average estimate of $10.37 billion, according to LSEG data.
The discount store operator and rival Dollar Tree have been losing budget-conscious shoppers to Walmart, Target and China-based e-commerce platform Temu, which offer low-priced home goods, apparel and seasonal items. Walmart and Target each raised their full-year profit forecasts earlier this month.
"While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control," Dollar General CEO Todd Vasos said.
Dollar General Corp.
Dollar General is facing stiff competition from retailers like Walmart and Target. (Beata Zawrzel/NurPhoto via Getty Images / Getty Images)
"With the evolving retail and consumer landscape in mind, we are taking decisive action to further enhance our value and convenience offering, as well as the in-store experience for our associates and customers," Vasos said.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DG | DOLLAR GENERAL CORP. | 77.79 | +0.52 | +0.67% |
DOLLAR GENERAL INVESTS $100M IN STAFFING, STORE ENHANCEMENT
Dollar General lowered its sales and profit outlook for its 2024 fiscal year. (Angus Mordant/Bloomberg via Getty Images / Getty Images)
The company's revised fiscal 2024 forecast now projects same-store sales rising 1% to 1.6%, down from the prior forecast of 2% to 2.7%, while earnings per share are projected to be $5.50 to $6.20 compared to the previous forecast of $6.80 to $7.55.
Dollar General's margins have been under pressure by high labor costs, as well as increased markdowns, inventory damages and retail shrink, which includes losses from theft or damage.
"Dollar General has a long history of serving customers in a variety of macroeconomic environments, and we believe the actions we are taking will allow us to further strengthen our position and build on our Back to Basics progress, as we seek to deliver sustainable growth and long-term shareholder value," Vasos said.
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Reuters contributed to this report.