On Thursday, shares of Dollar General (DG) crashed by 32.15%. The discount retailer posted weak Q2 results and cut its guidance.
Dollar General posted revenue rising by 4.2% Y/Y to $10.2 billion, thanks mostly to new store openings. While same-store sales grew as customer traffic increased, consumers spent less per transaction. The CEO said that the core customer feels financially constrained, resulting in softer sales trends.
Consumers have weak spending power. Dollar General said that “the gross profit rate decrease was primarily attributable to increased markdowns, increased inventory damages, a greater proportion of sales coming from the consumables category, and increased shrink.”
DG stock is under profit pressure as it enhances its value and convenience offerings. For the full year, the company expects revenue of 4.7% to 5.3%. This is down from expectations of at least 6%.
The weak outlook hurt Dollar Tree (DLTR) stock, which lost 10.24%.
Pure Storage (PSTG) lost 15.8% yesterday. It issued revenue guidance of $3.1 billion. As customers spend more on hyperscalers for cloud AI, PSTG stock will rebound.
Birkenstock (BIRK) fell by 16% after posting Q3 results. Markets priced this IPO stock too perfectly. Still, margins improved while its B2B business profitability increased. Expect higher EBITDA margins compared to its D2C business to continue.
