DOLLAR STORES Report DIMSAL NUMBERS As Foot Traffic Dries Up

DOLLAR STORES Report DIMSAL NUMBERS As Foot Traffic Dries Up

Dollar General Corp. reported weaker-than-expected sales growth in its latest quarter, hurt by declining traffic, signaling that discount retailers are also vulnerable to the trend of dwindling consumer spending in brick-and-mortar stores.

Same-store sales increased 0.7%, compared with the 2.6% growth analysts were expecting, according to the consensus estimate from Consensus Metrix. Dollar General said an increase in average transaction amount was offset by declining traffic. Shares skidded 7.4% to $85 in premarket trading.

Dollar General’s chief executive, Todd Vasos, said food deflation, a reduction in food stamp participation rates and benefit levels and a mild spring hurt the business. Mr. Vasos also said competition also intensified in some regions.

Like rival Dollar Tree Inc., Dollar General has benefited over the past year from rising wages among core customers, who in the second quarter saw their wages increase at the best clip since the recession. Sales and traffic had been up in the sector, in contrast to trends across the larger retail space, and both stocks had benefited.

Also Thursday morning, Dollar Tree’s sales results came in below its expectations. Same-store sales increased 1.2%, compared with a 2.7% increase a year ago. Analysts, on average, expected 2.6% growth in the latest quarter. Dollar Tree shares fell 6% to $89.16 premarket.

Dollar General has been working to grow its footprint after last year losing out on a merger between rivals. The company bid to buy Family Dollar, which ultimately merged with Dollar Tree in a deal worth about $9 billion. Since then, Dollar General has said it would boost its store base by about 50%, targeting 20,000 shops by 2020…CONTINUE READING

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