Dollar General Corp. (NYSE:DG) has reported an earnings miss and cut its full-year guidance as customers in its target market cut back on spending due to the effects of a tougher economy, sending its shares more than 20% lower on Thursday morning.
The discount retailer posted a 6.8% gain in net sales to $9.33 billion for the quarter ended May 5, 2023, with same-store sales rising 1.6%. The consensus estimate of analysts polled by Refinitiv was for revenue of $9.46 billion.
Operating profit decreased by 0.7% to $740.9 million, while diluted earnings per share (EPS) came in 2.9% lower at $2.34, below the $2.38 expected by the Street.
“While the macroeconomic environment has been more challenging than expected, particularly for our core customer, we are confident in Dollar General’s ability to deliver strong growth in the years ahead, despite the near-term pressure which impacted our first quarter sales results and is anticipated to impact our full-year sales and EPS,” CEO Jeff Owen said in a statement.
The retailer now expects full-year 2023 net sales to grow by 3.5% to 5%, down from its previous guidance for growth of 5.5% to 6%.
Diluted EPS for the year are expected to be flat to 8% lower, down from the 4% to 6% growth it previously forecast.
“Looking ahead, we feel good about our position, and are taking action to better serve our core customer, which is our most important calling at Dollar General,” Owen continued.
Meanwhile, CNBC reported that the company’s shareholders passed a resolution Wednesday to create an independent audit into worker safety as it faces mounting pressure to improve conditions.
The proposal asked Dollar General’s board to commission an independent, third-party audit that would examine the company’s policies and practices and how they affect the safety and well-being of workers.
Earlier this year, the US Department of Labor’s Occupational Safety and Health Administration (OSHA) reported in a release that Dollar General and subsidiary Dolgencorp LLC have been fined more than $15 million since 2017 for serious workplace safety violations related to unsafe conditions in more than 180 inspections nationwide.
The retailer’s shares were down 21% at $160.77 shortly after noon.
Contact the author at stephen.gunnion@proactiveinvestors.com