Dollar General’s brand is showing cracks ahead of earnings

[Pelican Press 0]

Dollar General’s brand is showing cracks ahead of earnings

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, when it is issued later this week. Keith, who has a neutral rating on the stock, expects Dollar General will earn $1.66 per share in the fourth quarter, which is below the FactSet consensus of $1.73 per share. For 2024, he is “a bit cautious” and projects the retailer will earn $7.04 per share, far below the average estimate of $7.42 per share, according to FactSet. “All in, we are encouraged with the stabilization in fundamentals and (what looks to be) improving comp trends,” Keith said, referring to sales in stores open at least 12 months, a key retail metric. “However, we still view 2024 as a relatively flat EPS growth year.” In addition to Dollar General’s own challenges, all dollar stores are likely being hurt by weaker spending among low income consumers. There has been a slow start to tax refund payments this year as well as a drop off in SNAP, or “food stamp,” payments. Both are headwinds for discounters. But Morgan Stanley analyst Simeon Gutman expects the sector has been benefiting shoppers feeling very cautious about their spending. For Dollar General, specifically, Gutman expects fourth-quarter earnings to match estimates. He expects same-store sales to have fallen about 1% in the latest quarter. “We think expectations are for a 0%-2% comp guide (in-line with consensus), which seems reasonable assuming ~flat ticket and a slight improvement in units/traffic throughout the year,” he wrote in a research note in late February. He anticipates the company’s 2024 forecast will be “somewhat more ************* in the $6.80-$7.00 range.” UBS analyst Michael Lasser expects Dollar General’s fourth quarter “is likely to suggest there is still more work to be done but its actions are gaining traction.” He’s on the more upbeat end of estimates, with a prediction that the company will estimate fiscal 2024 earnings of $7.00 to $7.50 per share and 0% to 2% same-store ***** growth. His own estimate calls for 2024 profit of $7.30 per share and comparable sales growth of 1.4%. Lasser expects Dollar General will need to boost spending further to attract and retain workers. “For now, we think DG’s shares will be volatile. But, we think the stock has a compelling path for upside over a multi-year *******,” he said. JPMorgan analyst Matthew Boss also expects strong trends for Dollar General over a longer-term horizon. He upgraded the stock to neutral on Tuesday, saying management is looking at “every element” of the business to return to historic levels of profitablity. Boss expects same-store sales are improving and could rise at a low-single digit pace in the first quarter of fiscal 2024. —CNBC’s Michael Bloom contributed to this report.

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Earnings,Retail industry,Breaking News: Business,Discount store and superstore operators,Target Corp,Dollar General Corp,Investment strategy,Dollar Tree Inc,Five Below Inc,Big Lots Inc,Ollie's Bargain Outlet Holdings Inc,Forex markets,business news
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