(Reuters) -Dollar General Corp cut its full-year same-store sales and profit forecasts on Thursday as inflation-hit Americans, discouraged by higher prices for everything from home goods to consumables, tightened spending.
The company’s shares slid about 9% in premarket trading after it also posted weaker-than-expected first-quarter results.
American shoppers, economically strained by sticky food inflation, have turned cautious with purchases of discretionary goods and are buying fewer items on every store visit.
Last week, Dollar Tree, another big discount store, trimmed its annual profit forecast, hurt by slowing demand for discretionary items and elevated cost pressures.
The pullback in discretionary spending has led to a decline in traffic at Dollar General’s stores.
Dollar General’s 1.6% rise in first-quarter same-store sales was below analysts’ average estimate of a 4.07% rise, according to Refinitiv data. Its selling, general and administrative costs rose 94 basis points in the period.
Its sales were also hurt by higher inventory shrink and damages and CEO Jeff Owen warned that the “near-term pressure” that weighed in the quarter would impact the company’s full-year sales and profit.
The discount store chain expects fiscal 2023 same-store sales to rise between 1% and 2%, compared with its prior outlook of an increase of 3% to 3.5%.
It expects earnings per share to range from being flat to declining 8% year over year, down from a prior forecast of an about 4% to 6% rise.
Its net sales are now expected to grow in the range of about 3.5% to 5.0%, compared to its previous expectation of a 5.5% to 6% rise.
(Reporting by Savyata Mishra in Bengaluru; Editing by Pooja Desai and Dhanya Ann Thoppil)