Dollar General Shares Plummet On Lower Q1 2023 Profit, Sales Growth Outlook

Dollar General Corporation (NYSE: DG) reported its fiscal Q1 2023 financials, topbilled by a quarterly revenue of $9.34 billion, up from Q1 2022’s $8.75 billion. This failed to beat the consensus estimate of $9.47 billion.

A slightly higher interest expense led the firm to notch a lower net income of $514.4 million during the quarter, compared to $552.7 million in the comparable period last year. This translates to $2.34 earnings per diluted share, also missing the estimate of $2.38 earnings per share.

“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,” said CEO Jeff Owen.

Dollar General now forecasts full-year fiscal 2023 earnings per share to be flat to down 8% from last year. It had earlier predicted 4%-6% growth. It expects 1%-2% growth in same-store sales, down from its previous forecast of 3%-3.5%.

Net sales growth is also expected to dwindle down in the range of 3.5% to 5.0%, compared to the firm’s previous forecast of 5.5% to 6%.

All this despite the retailer ending the quarter with more stores than last year, counting 19,294 stores versus 18,356 locations a year ago.

The firm’s shares declined nearly 20% on the day following the news, plummeting to a three-year low. Year-to-date, the firm has seen its shares fall 34%.

According to the corporation, customers are continuing to shift their spending away from frivolous items and toward necessities such as food. Smaller-than-expected tax refunds and fewer food assistance benefits were limiting how much buyers could spend, the firm said during a conference call.

“[U]nfortunately, our customers are saying they’re having to rely more on food banks, savings, credit cards. As we all know, credit card rates are at an all-time high,” Owen said on the earnings call.

The firm also generated operating cash of $191.1 million compared to $449.5 million in the same period last year. This led the company to end with a cash balance of $313.1 million.

Shareholders demand workplace safety audit

Following employee, regulator, and activist demands for better working conditions, Dollar General shareholders opted to have the chain’s workplace safety audited independently.

Workers and campaigners protested outside Dollar General’s headquarters on Wednesday calling for safe employment conditions as shareholders convened in Goodlettsville, Tennessee for their annual meeting.

The retailer, which is the fastest-growing in the United States, has a lethal track record. According to the Gun Violence Archive, at least 48 people have been killed and 172 have been injured at Dollar General locations since 2014.

Workers, joined by community organization Step Up Louisiana, are today celebrating the audit resolution’s passing. Introduced by Domini Impact Investments, the proposal was approved by the shareholders despite its board’s opposition.

Dollar General has a history of violating US labor standards, which led to the company being placed in the “Severe Violator Enforcement Program” by the Occupational Safety and Health Administration (OSHA) in October. Companies on the watch list are those who commit “willful, repeated, or failure-to-abate violations” of workplace safety legislation.

The firm has paid $21 million in OSHA fines since 2017 after 111 workplace safety violations were discovered during over 270 store inspections across the United States. In May, OSHA imposed another $3.4 million in penalties after investigators discovered “aisles, emergency exits, fire extinguishers, and electrical panels blocked by stored merchandise,” among other concerns.

According to its website, Dollar General employs over 170,000 people and has over 19,000 locations in 47 states. Data from the Shift Project and the Economic Policy Institute said an estimated 92% of workers earn less than $15 per hour, which is less than a livable wage in the United States.

Information for this briefing was found via Insider, Quartz, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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