{"id":55940,"date":"2023-09-01T21:18:18","date_gmt":"2023-09-02T01:18:18","guid":{"rendered":"https:\/\/ifintechworld.com\/uncategorized\/dollar-general-shares-sink-on-second-annual-forecast-cut-disappointing-investors\/"},"modified":"2023-09-01T21:18:21","modified_gmt":"2023-09-02T01:18:21","slug":"dollar-general-shares-sink-on-second-annual-forecast-cut-disappointing-investors","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=55940","title":{"rendered":"Dollar General shares sink on second annual forecast cut, disappointing investors"},"content":{"rendered":"
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\u00a9 Reuters. FILE PHOTO: Dollar General shopping carts are seen outside a store in Mount Rainier, Maryland, U.S., June 1, 2021. REUTERS\/Erin Scott<\/span>
\n<\/i>\n<\/div>\n

By Savyata Mishra<\/p>\n

(Reuters) – Dollar General (NYSE:)’s shares closed about 12% lower on Thursday, after it forecast a steep drop in annual profit and missed market expectations for second-quarter results due to weak customer traffic and a shift to lower-margin goods.<\/p>\n

The Goodlettsville, Tennessee-based retailer has fallen short of average analyst forecasts for four straight quarters, cutting its full-year profit and sales targets on Thursday for the second time this year.<\/p>\n

Its stock tracked a nearly three-and-a-half-year low, slumping as much as 18.5% to hit $128.48 – making it one of the worst performers on the so far this year – as it battles bloated inventories and a shift in consumer spending patterns. <\/p>\n

“We thought there was a risk that DG (the company) would need to invest more in stores than management initially expected, and reduce guidance as a result, but this is a much bigger cut than we (and the market) were expecting,” Citi analyst Paul Lejuez said.<\/p>\n

“Our revised guide is really a function of the slower transactions that we’re seeing, and higher expected shrink,” CFO Kelly Dilts said on a call with analysts.<\/p>\n

The discount retailer plans to clear excess non-consumables inventory and ramp up labor investments ahead of the crucial holiday season.<\/p>\n

“Dollar General’s aggressive guidance cut should help establish a floor on the stock, but a deeper look suggests its strategic pivot may not be enough,” said Wells Fargo analyst Edward Kelly.<\/p>\n

The company said its low-to-middle-income customer was seeking cheaper options as it remained “financially constrained”. <\/p>\n

“We do not expect positive store traffic until the fourth quarter,” Dilts said.<\/p>\n

Evercore ISI analyst Michael Montani noted the company was wrestling for market share with Walmart (NYSE:) and rival Dollar Tree (NASDAQ:).<\/p>\n

Dollar General’s 2023 same-store sales forecast of a 1% decline to 1% growth was slower than analysts’ expectations of a 1.45% rise, according to Refinitiv data.<\/p>\n

Excluding items, profit-per-share is expected to decline between 22% and 34%, steeper than a flat-to-8% drop it forecast earlier.<\/p>\n

Its gross profit as a percentage of net sales fell 126 basis points in the quarter as retail shrink – inventory lost to theft and damage – worsened. It flagged $100 million in additional shrink headwinds since its last analyst address in June.<\/p>\n

Same-store sales for the quarter ended Aug. 4 fell while analysts had expected a 1.08% rise. It earned an adjusted $2.13 per share, missing analysts’ estimates of $2.46. <\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a9 Reuters. FILE PHOTO: Dollar General shopping carts are seen outside a store in Mount Rainier, Maryland, U.S., June 1, 2021. REUTERS\/Erin Scott By Savyata Mishra (Reuters) – Dollar General (NYSE:)’s shares closed about 12% lower on Thursday, after it forecast a steep drop in annual profit and missed market expectations for second-quarter results due […]<\/p>\n","protected":false},"author":1,"featured_media":2828,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[1],"tags":[83],"class_list":["post-55940","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-uncategorized","tag-featured","post_format-post-format-video"],"yoast_head":"\nDollar General shares sink on second annual forecast cut, disappointing investors | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u00a9 Reuters. 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