The discount store Dollar General is struggling, with the retailer announcing on Thursday, August 29, that it has missed its second-quarter earnings and is cutting its outlook for 2024. At the time of writing, the Dollar General stock price has taken a tumble of about 30%, falling roughly 36 points to $88 per share. The American chain’s CEO Todd Vasos gave several reasons for why the company’s stock took a substantial hit, but there are other explanations for why its profits are down.
Why is Dollar General stock price down?
The Dollar General stock price is trending down due to the company lowering sales expectations in 2024, but the general cause is how inflation is hitting consumers.
In a statement, Vasos stated that its “softer sales trends are partially attributable to a core consumer who feels financially constrained.” He says that Dollar General needs to improve how its stores handle inventory to avoid losses. But overall, the company is “not satisfied” with its financial results. This is despite the chain planning to open 800 additional stores this year, according to Retail Dive.
For some additional insight, Barron’s says that consumers are still feeling the effects of inflation, which is causing them to be “more mindful of their spending.” This means that customers are focusing on essential goods, like groceries, which has much lower margins. Groceries also have higher competition from other discount retailers like Walmart, which has a wider selection than Dollar General’s.
Dollar stores in general have been hit hard in 2024. The California-based 99 Cents Only closed all of its 371 locations in April, as reported by KTLA. The retailer also blamed inflation, shifting consumer demand, and rising levels of shrink or “shrinkflation,” which is when a product reduces its amount or volume but is still offered at the same price. Dollar Tree will also be closing down nearly 1,000 stores this year.
In July, Dollar General agreed to pay $12 million in penalties after the Labor Department claimed that the discount retailer put its employees in danger. A video by More Perfect Union in March that has about 4 million views on YouTube delves into several class-action lawsuits against Dollar General accusing it of deceptive pricing.
