Wednesday, 30 Oct 2024

Dollar General's cash-strapped customers are turning to food banks, CEO says


Dollar General's cash-strapped customers are turning to food banks, CEO says
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Dollar General's stock just had one of its worst days ever on Wall Street. And that spells trouble for Main Street.

The discount retailer's shares fell 20% Thursday after the company slashed its earnings forecast for the year. Dollar General now expects sales to rise between 1% and 2% (down from an earlier forecast of about 3%) and expects earnings to fall 8% year over year.

That news is a giant red flag for the broader US economy.

Put simply: We already knew that American consumers were hurting because other retailers' results - including Macy's, Costco and Target - showed consumers pulling back on discretionary items. But Dollar General's worse-than-expected results point to a more-troubling reality for the nation's consumer-dependent economy. When high- and middle-income shoppers feel strained, they tend to shift their spending - buying chicken instead of beef, say, or getting their home goods from Walmart instead of West Elm.

When Dollar General's core customers feel strained, they pull back completely.

"Unfortunately, our customers are saying they're having to rely more on food banks, savings, credit cards," CEO Jeff Owen said on a call with analysts Thursday.

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