Dollar General’s shares plummeted by 20% on Thursday after the company significantly reduced its sales and profit expectations for the full year, citing growing financial pressures on its core lower-income customer base. The retailer, known for serving rural areas, now anticipates same-store sales growth of only 1.0% to 1.6% for fiscal 2024, down from the previously expected range of 2% to 2.7%. Earnings per share projections were also slashed to a range of $5.50 to $6.20, a sharp decline from the earlier forecast of $6.80 to $7.55.
The earnings report for the latest quarter also fell short of Wall Street’s expectations, with Dollar General reporting earnings per share of $1.70, missing the consensus estimate of $1.79. Revenue came in at $10.21 billion, lower than the anticipated $10.37 billion.
CEO Todd Vasos attributed the disappointing performance to “financially constrained” core customers, while emphasizing the importance of controlling the aspects of the business within the company’s reach. The steep drop in Dollar General’s stock had a ripple effect on its competitor, Dollar Tree, which saw a 6% decline in early trading as investors reacted to the news.
The downturn highlights the continued challenges faced by discount retailers, as inflation and economic uncertainty weigh heavily on lower-income consumers, leading to weaker sales performance across the sector.