Dollar General Stock Plummets 32%... Largest One-Day Drop
The stock price of Dollar General, famous as a '1-dollar shop' in the United States, plummeted 32% in a single day, marking the worst one-day drop since its listing. This is interpreted as a confirmation of the worsening financial conditions of low-income consumers in the U.S.
On the 28th (local time), Dollar General announced that its Q2 sales and earnings per share (EPS) were $10.21 billion and $1.70, respectively. These figures fell short of the market research firm LSEG's estimates of $10.37 billion and $1.79.
Dollar General is considered the largest 1-dollar shop with over 20,000 stores across 48 states in the U.S. mainland. The term '1-dollar shop' is a nickname for retailers that sell food, daily necessities, and more for one dollar. Low-income households are the main customers, with 60% of Dollar General's sales coming from households with an annual income below $35,000.
Dollar General diagnosed that although the economic situation seems to be improving, the living conditions of low-income groups have not improved, which dealt a direct blow to its performance. It also added that widespread theft among financially strained low-income customers caused inventory losses, negatively impacting margins.
Todd Vasos, CEO of Dollar General, said, "Most (low-income) customers feel financially worse off than six months ago," adding, "This is because inflation, lower employment levels, and increased interest costs make low-income groups more vulnerable."
Due to the poor performance, Dollar General's stock closed at $84.03, down 32.15% from the previous session. This is the largest one-day drop since its listing in 2009.
The stock of Dollar Tree, the parent company of 'Family Dollar' in the same industry, also fell 10.24% due to the Dollar General shock. Dollar Tree is scheduled to announce its earnings next week.
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