(Reuters) - Dollar General indicated on Thursday the vaccine rollout and a reopening economy would lead to a bigger-than-expected slowdown in sales for discounted groceries, while a new round of stimulus may be tougher to take advantage of than before.
The company’s shares fell over 6% as it also forecast full-year profit below estimates.
The promise of a return to relative normalcy later this year as more Americans get inoculated against COVID-19 has made the boom in pantry stocking, which made Dollar General one of the bigger retail beneficiaries of the health crisis, unlikely to be repeated.
A new round of $1,400 stimulus payments, on the way to mostly lower- and middle-income households, was expected to boost spending at discount stores, at least in the coming weeks, but Dollar General said there was too much uncertainty about how much the company could benefit to include it in its outlook.
“Compared to the previous stimulus rounds, which helped us, the economy is now opening up more. We are competing with other segments of the economy outside of retail for that share of wallet, so how much we get is uncertain,” finance chief John Garratt said on a call with analysts.
Dollar General said it expects full-year same-store sales to fall 4% to 6%, compared with estimates of a 1.2% decline, according to IBES data from Refinitiv. The company forecast overall net sales to be flat to 2% lower, compared with estimates of a 1.4% increase.
The company forecast annual earnings per share of $8.80 to $9.50, below estimates of $10.08.
Same-store sales in the fourth quarter rose 12.7%, beating analysts’ estimate of a 10.7% increase, helped by the $600 stimulus checks that boosted spending.
Net income rose about 20% to $642.7 million, or $2.62 per share, but missed estimates of $2.72 per share.
Reporting by Uday Sampath in Bengaluru; Editing by Krishna Chandra Eluri
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March 18, 2021 at 06:00PM
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Dollar General warns of dropping sales, uncertain of stimulus impact - Reuters
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