Dollar General (NYSE: DG) has revised its annual projections for sales and profits in the wake of challenges stemming from diminished store foot traffic and a strategic shift towards emphasizing low-margin essentials over discretionary items.
The stock of this Tennessee-based discount retailer, which has seen a roughly 36% decline in value this year, experienced a 14% premarket drop as a result.
Across the United States, especially among low-to-middle-income demographics, the financial strain has become palpable due to cuts in government funding and diminished tax refunds, exacerbating the effects of inflation.
During the second quarter, the company observed a decline of 126 basis points in gross profit as a proportion of net sales in comparison to the previous year. This was attributed to lower inventory, an increase in shrinkage, and inventory damages.
Dollar General’s revised forecast for fiscal 2023 anticipates same-store sales fluctuating within a range of a 1% decline to 1% growth. This is a departure from its previous projection of a 1% to 2% increase. According to Refinitiv IBES data, analysts had anticipated an average growth rate of 1.45%.
In terms of adjusted earnings per share for the year, the company now predicts figures ranging from $7.10 to $8.30, signifying a decline between 34% and 22%. This is a shift from the previous outlook of a flat-to-8% decline.