(Reuters) -Discount retailer Dollar General forecast annual sales above Wall Street estimates on Thursday, banking on more inflation-affected customers buying its cheaper groceries and essentials, sending its shares 6.6% higher premarket.
Like rival Dollar Tree, however, Dollar General also projected annual profit below estimates, underscoring margin pressures from higher costs and a shift in customer spending towards lower-margin consumables.
With consumers preferring to cook more meals at home amid higher prices and borrowing costs, Dollar General has been seeing more shoppers visiting its outlets to browse for lower-margin, needs-based goods over pricier general merchandise.
That helped the discount retailer forecast 2024 sales to grow between 6.0% and 6.7%, above analysts’ estimate for growth of 4.4% to $40.33 billion, according to LSEG data.
However, Dollar General expects 2024 profit between $6.80 and $7.55 per share, compared with estimates of $7.55, as the company continues to struggle with high supply-chain, labor, and raw material costs.
(Reporting by Granth Vanaik and Anuja Bharat Mistry in Bengaluru; Editing by Pooja Desai and Devika Syamnath)
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