Dollar General Shares Plummet After Disappointing Earnings Report and Reduced Forecast
Dollar General Corp. shares plunged by 23.5%, reaching their lowest levels since 2018, in premarket trading in New York. This followed a second-quarter earnings report that fell short of Wall Street's expectations. The largest discount retailer in the country also cut its full-year forecast, citing financial constraints felt by its core customers.
The discount retailer, with nearly 19,000 locations in 48 states and 8,000 cities, reported adjusted earnings per share of $1.70 for the second quarter. This was below the average estimate of analysts tracked by Bloomberg, which was $1.79. Revenue was $10.21 billion, falling short of the $10.37 billion estimate, but still marking a 4.2% year-over-year increase. Same-store sales saw a .5% increase, missing the 2.07% estimate.
Snapshot of Second-Quarter Earnings
Here's a summary of the second-quarter earnings (information courtesy of Bloomberg):
- EPS $1.70 vs. $2.13 y/y, estimate $1.79
- Net sales $10.21 billion, +4.2% y/y, estimate $10.37 billion
- Comparable sales +0.5% vs. -0.1% y/y, estimate +2.07%
- Gross margin 30% vs. 31.1% y/y, estimate 30.3%
- SG&A as percentage of revenue 24.6% vs. 24% y/y, estimate 24.4%
- Operating profit $550.0 million, -21% y/y, estimate $587.5 million
Dollar General has revised its full-year outlook for sales and profit. The company has cut its guidance ranges for EPS to $5.50 to $6.20 from $6.80 to $7.55 and for same-store sales growth to 1% to 1.6% from 2% to 2.7%. The Bloomberg consensus was around 2.47%.
Full-Year Outlook Details
More details on the full-year outlook (information courtesy of Bloomberg):
- Sees comparable sales +1% to +1.6%, saw +2% to +2.7%, estimate +2.47% (Bloomberg Consensus)
- Sees EPS $5.50 to $6.20, saw about $6.80 to $7.55, estimate $7.11
- Sees net sales +4.7% to +5.3%, saw +6% to +6.7%
- Sees effective tax rate 23%, saw 22.5% to 23.5%
- Still sees capital expenditure $1.3 billion to $1.4 billion, estimate $1.39 billion
CEO Todd Vasos acknowledged that consumers are feeling the pinch in the current environment of high inflation and interest rates. He stated that while the softer sales trends can be partially attributed to financially constrained core customers, the company is taking decisive action to enhance its value and convenience offering, as well as the in-store experience for its associates and customers.
Shares plummeted 23.5% in premarket trading to the midpoint of the $94 handle, marking the lowest level since early 2018.
Analysts at consumer desks consider Dollar General's nearly 19,000 stores across the US as valuable indicators of the financial health of low- to mid-tier consumers.
The disappointing report from Dollar General serves as a reminder that the consumer downturn theme is still relevant and is likely to worsen in the coming months. This could potentially trigger the Federal Reserve's interest rate-cutting cycle as early as September 18. The Federal Reserve rarely cuts during good times. The policies of the Biden-Harris team have been financially devastating for an entire generation of consumers.
Bottom Line
The significant drop in Dollar General shares following a disappointing earnings report and reduced outlook is a stark reminder of the financial constraints felt by many consumers. With the current environment of high inflation and interest rates, it's clear that the retail landscape is evolving. What are your thoughts on this development? Do you think the situation will improve or worsen in the coming months? Feel free to share this article with your friends and join the conversation. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.
Dollar General Shares Plummet After Disappointing Earnings Report and Reduced Forecast
Dollar General Corp. shares plunged by 23.5%, reaching their lowest levels since 2018, in premarket trading in New York. This followed a second-quarter earnings report that fell short of Wall Street's expectations. The largest discount retailer in the country also cut its full-year forecast, citing financial constraints felt by its core customers.
The discount retailer, with nearly 19,000 locations in 48 states and 8,000 cities, reported adjusted earnings per share of $1.70 for the second quarter. This was below the average estimate of analysts tracked by Bloomberg, which was $1.79. Revenue was $10.21 billion, falling short of the $10.37 billion estimate, but still marking a 4.2% year-over-year increase. Same-store sales saw a .5% increase, missing the 2.07% estimate.
Snapshot of Second-Quarter Earnings
Here's a summary of the second-quarter earnings (information courtesy of Bloomberg):
- EPS $1.70 vs. $2.13 y/y, estimate $1.79
- Net sales $10.21 billion, +4.2% y/y, estimate $10.37 billion
- Comparable sales +0.5% vs. -0.1% y/y, estimate +2.07%
- Gross margin 30% vs. 31.1% y/y, estimate 30.3%
- SG&A as percentage of revenue 24.6% vs. 24% y/y, estimate 24.4%
- Operating profit $550.0 million, -21% y/y, estimate $587.5 million
Dollar General has revised its full-year outlook for sales and profit. The company has cut its guidance ranges for EPS to $5.50 to $6.20 from $6.80 to $7.55 and for same-store sales growth to 1% to 1.6% from 2% to 2.7%. The Bloomberg consensus was around 2.47%.
Full-Year Outlook Details
More details on the full-year outlook (information courtesy of Bloomberg):
- Sees comparable sales +1% to +1.6%, saw +2% to +2.7%, estimate +2.47% (Bloomberg Consensus)
- Sees EPS $5.50 to $6.20, saw about $6.80 to $7.55, estimate $7.11
- Sees net sales +4.7% to +5.3%, saw +6% to +6.7%
- Sees effective tax rate 23%, saw 22.5% to 23.5%
- Still sees capital expenditure $1.3 billion to $1.4 billion, estimate $1.39 billion
CEO Todd Vasos acknowledged that consumers are feeling the pinch in the current environment of high inflation and interest rates. He stated that while the softer sales trends can be partially attributed to financially constrained core customers, the company is taking decisive action to enhance its value and convenience offering, as well as the in-store experience for its associates and customers.
Shares plummeted 23.5% in premarket trading to the midpoint of the $94 handle, marking the lowest level since early 2018.
Analysts at consumer desks consider Dollar General's nearly 19,000 stores across the US as valuable indicators of the financial health of low- to mid-tier consumers.
The disappointing report from Dollar General serves as a reminder that the consumer downturn theme is still relevant and is likely to worsen in the coming months. This could potentially trigger the Federal Reserve's interest rate-cutting cycle as early as September 18. The Federal Reserve rarely cuts during good times. The policies of the Biden-Harris team have been financially devastating for an entire generation of consumers.
Bottom Line
The significant drop in Dollar General shares following a disappointing earnings report and reduced outlook is a stark reminder of the financial constraints felt by many consumers. With the current environment of high inflation and interest rates, it's clear that the retail landscape is evolving. What are your thoughts on this development? Do you think the situation will improve or worsen in the coming months? Feel free to share this article with your friends and join the conversation. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.
