A sign inside a Dollar General store in Chicago.
Jim Young | 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 seen 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.
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