Shoppers Are Abandoning Dollar General, Data Shows—Here's Why
The discount retailer is struggling to get customers into its stores.
The retail apocalypse may be showing signs of improvement, but that doesn't mean retailers aren't struggling. Recent financial reports from major companies like Target, Macy's, and Home Depot have all shown a clear decline in sales across the board. Now, Dollar General's latest financial earnings reveal that the discount retailer is also losing customers. Read on to discover why shoppers are abandoning Dollar General.
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Dollar General is "not satisfied" with its latest earnings.
As with other retailers, Dollar General's latest financial results are concerning.
In an Aug. 31 press release, the Dollar General Corporation released data for the second quarter of its 2023 fiscal year, which ended on Aug. 4. According to the release, the retailer's same-store sales decreased by 0.1 percent compared to the same quarter last year.
While that might not sound like much, the company's sales have fallen short of its forecast for four straight quarters, Reuters reported. As a result, its stock shares fell by as much as 18 percent.
In an accompanying statement, Dollar General CEO Jeff Owen admitted that the retailer is "not satisfied" with these financial results overall.
Best Life reached out to Dollar General for more on its latest financial results, and we will update this story with the response.
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Shoppers are not visiting the retailer as much.
Dollar General's net sales did increase by 3.9 percent for the second quarter of 2023. But this increase was "primarily driven by positive sales contributions from new stores," according to the company's release. Meanwhile, that growth was "partially offset by a slight decline in same-store sales," the retailer added.
But what caused Dollar General's same-store sales to fall? The company said that this drop was "driven by a decline in customer traffic." And that drop would have been even larger if shoppers weren't spending, on average, a bit more in their transactions.
"Same-store sales in the second quarter of 2023 included declines in each of the home, seasonal, and apparel categories, partially offset by growth in the consumables category," Dollar General stated.
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Sales are not expected to improve over the next half of the year.
Dollar General shoppers are shifting their spending toward food and essentials, and pulling back on other purchases, The Wall Street Journal reported.
"Our core customers continue to tell us they feel financially constrained," Owen told the newspaper, adding that the retailer has been working to avoid passing along higher prices to its customers—even going so far as to reduce prices in certain areas.
Neil Saunders, retail analyst and managing director at GlobalData, told CNN that Dollar General's core customers are feeling a constraint because of the "cost-of-living-crisis," and that the situation is not likely to improve in 2023.
"This has been exacerbated by cuts in SNAP payments as temporary pandemic benefits came to an end. As a result, lower-income shoppers are cutting back on non-consumable and indulgent purchases from the chain in a bid to save money," Saunders said. "Unfortunately, this dynamic will not change any time soon as, if anything, finances will tighten over the second half of the year."
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Dollar General also said theft is hurting its profits.
During its second quarter, Dollar General's operating profit also fell 24.2 percent to $692.3 million. But that was not just the result of the retailer's drop in same-store sales and lower consumer traffic. The company said that theft, or "increased shrink," is also hurting its profits.
Dollar General CFO Kelly Dilts told analysts on Aug. 31 that the retailer is now expecting to see an additional $100 million loss from retail theft, Fox Business reported.
"The shrink environment has continued to worsen," Dilts said during an earnings call. Meanwhile, the company is "working to reduce these levels through multiple targeted actions," she added.
