Dollar General warns of dropping sales as pandemic boom peters out

Dollar General warns of dropping sales as pandemic boom peters out

News: Dollar General warns of dropping sales as pandemic boom peters out.

(Reuters) – Dollar General Corp on Thursday forecast annual sales and earnings below estimates, suggesting vaccine rollouts and a reopening of the economy would result in an unexpectedly sharp slowdown if the pandemic resulted in a discount on discounted groceries leads.

The company’s shares, which rose nearly 22% last year, fell 4.5% before the bell.

The promise of a return to relative normality later this year when more Americans are vaccinated against COVID-19 has made the inventory boom that made Dollar General one of the biggest retail beneficiaries of the health crisis unlikely to repeat it.

Analysts expect discount store sales to decline in the later half of the year after the new stimulus money dried up on its way to mostly low- and middle-income households.

According to Refinitiv’s IBES data, Dollar General expects full-year revenue to decline 4% to 6%, compared to analysts’ estimate of a 1.2% decline. Total sales are expected to remain unchanged, up to 2% lower, compared to estimates of an increase of 1.4%.

“There remains significant uncertainty about the severity and duration of the COVID-19 pandemic, including its impact on the US economy, consumer behavior and the company’s business,” Dollar General said in a statement.

The company forecast annual earnings per share of $ 8.80 to $ 9.50, down from estimates of $ 10.08.

Revenue in the same store rose 12.7% for the fourth quarter ended Jan. 29, beating analysts’ estimate of 10.7%, aided by the $ 600 stimulus checks that boosted spending in January.

Net income rose about 20% to $ 642.7 million, or $ 2.62 per share, but fell short of estimates of $ 2.72 per share.

Reporting from Uday Sampath in Bengaluru; Arrangement by Krishna Chandra Eluri

Original Source © Reuters

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