Dollar General cut its annual sales and profit forecasts on Thursday, hurt by a decline in store traffic and the discount retailer's move to sell more low-margin essentials over discretionary products.
Shares of the Goodlettsville, Tennessee-based company, down about 36% this year, fell 14% premarket.
U.S. consumers, particularly in low-to-middle-income groups, have been feeling the pinch as reductions in government funding and lower tax refunds worsen inflationary pressures.
The company said gross profit as a percentage of net sales was down 126 basis points in the second quarter from last year, driven by lower inventory and increased shrink, as well as inventory damages.
The discount retailer now expects fiscal 2023 same-store sales in the range of a 1% decline to 1% growth, compared with its prior outlook of an increase of 1% to 2%. Analysts on average were expecting a growth of 1.45%, according to Refinitiv IBES data.
For the year, adjusted earnings per share are forecast in the range of $7.10 to $8.30, or a decline of 34% to 22%, from a flat-to-8% decline in the prior outlook.
(Reporting by Savyata Mishra in Bengaluru; Editing by Pooja Desai)
