Dollar General Stock Plunges on Weaker-Than-Expected Earnings Outlook
Dollar General (DG) shares tumbled Thursday morning after the discount retailer reported weaker-than-expected earnings for the second quarter and lowered its projections for full-year revenue.
Disappointing Second Quarter Results
Dollar General reported $10.21 billion in revenue for the second quarter, which was a 4% increase from the same time last year. However, this fell below analysts’ estimates. Same-store sales also rose just 0.5%, further disappointing investors. Additionally, the company’s net income was down 20% year-over-year at $374.19 million.
Financial Constraints on Core Customers
CEO Todd Vasos acknowledged that Dollar General is facing softer sales trends, which he believes can be attributed to a core customer base that feels financially constrained. In response, the company is taking decisive action to improve value and convenience for its customers.
Lowered Outlook for Full Fiscal Year
In light of the disappointing second quarter results, Dollar General has lowered its outlook for the full fiscal year. The company now projects revenue growth of between 4.7% to 5.3%, down from the previous range of 6% to 6.7%. Similarly, same-store sales are expected to grow 1% to 1.6%, down from 2% to 2.7% previously.
Furthermore, Dollar General anticipates full-year earnings per share (EPS) of $5.50 to $6.20, which is a decrease from the previous range of $6.80 to $7.55. These revised projections are below analyst estimates and the $7.55 per share reported for fiscal 2023.
Market Reaction
Following the news of Dollar General’s weaker-than-expected earnings and lowered outlook, the company’s shares plunged by 28% to $89.01 in Thursday morning trading. This significant drop in stock value adds to the overall decline of over one-third since the beginning of the year.
Conclusion
Dollar General’s second quarter earnings report and revised projections for the full fiscal year have disappointed investors and resulted in a significant drop in stock value. The company’s CEO attributes the softer sales trends to a core customer base that feels financially constrained. In response, Dollar General is taking action to improve value and convenience for its customers. However, it remains to be seen whether these measures will be enough to turn the company’s financial performance around.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial advice. Investing in stocks involves risks, and investors should do their own research and consult with a financial advisor before making any investment decisions.
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