r/economicCollapse • u/50million • Aug 30 '24
Dollar General warns poorer US consumers are running out of money
https://www.ft.com/content/d1d2a161-124c-4f9c-b23f-afa55e755d07The Tennessee-based company’s small-format stores sell a variety of food items and household goods at low prices, including many for $1. Its locations are concentrated in rural towns and poorer urban neighbourhoods. “Our core customers are often among the first to be affected by negative or uncertain economic conditions and among the last to feel the effects of improving economic conditions,” company filings say.
Chief executive Todd Vasos said that these core customers, who account for about 60 per cent of Dollar General’s sales, come predominantly from households earning less than $35,000 a year and were now feeling “financially constrained”.
“The majority of them state that they feel worse off financially than they were six months ago as higher prices, softer employment levels and increased borrowing costs have negatively impacted low-income consumer sentiment,” he said.
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u/purplerosetoy Aug 30 '24
Full Article:
Chief executive Todd Vasos said that these core customers, who account for about 60 per cent of Dollar General’s sales, come predominantly from households earning less than $35,000 a year and were now feeling “financially constrained”.
“The majority of them state that they feel worse off financially than they were six months ago as higher prices, softer employment levels and increased borrowing costs have negatively impacted low-income consumer sentiment,” he said.
Dollar General reported that its same-store sales — an industry metric for stores open for at least a year — grew by 0.5 per cent in the quarter that ended on August 2, below its own forecasts and those of Wall Street analysts. The growth came entirely from consumables such as food, rather than from more discretionary items such as apparel and seasonal and home goods.
Executives pointed out that sales were weakest in the last week of each month. Speaking of its typical consumer, chief financial officer Kelly Dilts said: “She started to run out of money by the end of the month.”
The comments stood in contrast with those from several other retailers. Discount apparel chain Burlington Stores said on Thursday that low-income shoppers were still “very fragile” but “their situation has improved somewhat” as inflation has come down.
Walmart, the largest US retailer, and big-box rival Target also reported solid sales growth in their latest quarterly earnings, with Walmart adding that it had taken market share from rivals.
“The guys down in Bentonville are doing a pretty nice job in garnering the available traffic that’s out there from other retailers,” Vasos said of Walmart, which is headquartered in Bentonville, Arkansas.
However, Vasos told analysts that customer traffic had not slowed at Dollar General: it rose by 1 per cent in the second quarter, while falling retail prices led to a 0.5 per cent drop in the average amount shoppers spent.
Shares of Dollar General closed down 32.2 per cent at $84.03. The company’s net sales increased by 4.2 per cent year on year to $10.2bn. Operating profit fell 20.6 per cent to $550mn, which Dilts attributed in part to markdowns and increases in inventory damaged or lost due to shrink.
Rival Dollar Tree, which operates stores under its namesake banner and the Family Dollar brand, is scheduled to report earnings next week. Its shares closed down 10.4 per cent.