Shares of Dollar General (DG) fell 32% on Thursday after the company lowered its outlook, citing financial stress on customers. Dollar General’s decline on Thursday was its biggest on record.
Dollar General expects same-store sales growth in fiscal 2024 to be in the range of approximately 1.0% to 1.6%, compared to the previously expected range of 2.0% to 2.7%. He said there was.
“We feel very strongly that consumers in this lower price range continue to be in a very tough economic situation, especially as it relates to their ability to support and provide for their families,” CEO Todd Bathos said. told analysts during the earnings call. Called Thursday morning.
Mr. Vasos said the final week of each calendar month in the quarter was “the slowest on record,” with customers still leaning toward a mix of 2,000 items priced at $1 or less. During the quarter, shoppers chose more consumables and less seasonal, home goods, and apparel items.
“All of these points would indicate that this consumer is even more cash strapped than we saw in the first quarter,” he added.
Shares of rival Dollar Tree (DLTR), which is scheduled to report quarterly results next week, followed suit, falling 10%.
Dollar General is moving forward with a “back-to-basics” improvement plan led by Mr. Vasos, who returned to Dollar General last year.
But Wall Street is growing impatient with the dollar store model as retail giants like Walmart (WMT) expand their market share to consumers of various income groups.
On Thursday, CFRA Research senior equity analyst Arun Sundaram downgraded Dollar General from a “buy” rating to a “hold” rating. “As other retailers like Walmart expand their omnichannel offerings and have more tools to keep prices low, dollar store operators have lost some of the appeal of value and convenience,” Sundaram said. I wrote.
The analyst expects Dollar General will have to spend more on store renovations, price cuts, lower inventory prices and higher wages, which could weigh on profits.
Dollar General said quarterly gross profit as a percentage of net sales decreased to 30%, compared with 31.1% in the year-ago period. This is due in part to increased markdowns, increased inventory losses, increased percentage of sales in the consumables category, and increased sales. Shrink.
The company’s adjusted earnings per share were $1.70, compared to expectations of $1.79, and revenue was $10.21 billion, below Wall Street’s consensus estimate of $10.36 billion.
Dollar General’s stock price has fallen more than 40% this year.
A Dollar General truck is parked on the side of the highway on July 8, 2024. (Beata Zawrzel/NurPhoto via Getty Images) (NurPhoto via Getty Images)
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X @ines_ferre.
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