Buyers abandon the general dollar: "a very bad situation"
Analysts advise investors to sell their actions of the retailer.
During the last years, General dollar Rose to become the fastest growth retailer in the United States. The popular reduction chain has opened 1,000 new stores or more each year since 2020, transforming Dollar General into the largest company in the country in terms of physical imprint, with more 19,000 locations at national scale. But this explosive growth could slow down because the retailer started to have trouble bringing buyers in his stores, and investors are now warned to stay away. Read more to find out why experts say that Dollar General is in a "very bad situation".
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General actions in dollars have been demoted.
There are warning panels for general dollar. More specifically, JPMorgan has dropped his note For the retailer on September 20, Wallstreetzen reported. Directed by a veteran detail analyst Matthew Boss , The bank degraded the actions of General de General de Hold to Strong Sell.
In other words, the new rating "indicates a strong recommendation for investors to sell their assets in equities", because JPMorgan worried about the prospects of the company, according to the media. The bank has also reduced its price for the Dollar General by 12.1% from $ 132 to $ 116 per share.
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Buyers seem to turn away from the retailer.
Boss's decision to demarize Dollar General follows a worrying quarter for the retailer. In a August 31 Press release Société Générale Dollar has revealed that its sales in comparable stores for the second quarter of its 2023 fiscal year had decreased by 0.1% compared to the same quarter of last year. This drop was "fired by a drop in customer traffic", according to the company. AE0FCC31AE342FD3A1346EBB1F342FCB
On a August 31 profit call With analysts, Dollar General CEO Jeff Owen admitted that its main customers continues to feel "financially constrained" overall.
"Our client, what she tells us is that the prices of gas are certainly lower than the index of last year, but they accelerate throughout 2023, and it still feels the opposite of the Reduction of snapshots and also the lack of tax reimbursements. And her savings are so much. And therefore certainly, she still lives with inflationary pressure, "said Owen. "So, certainly, customers are challenged."
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Dollar General strives to improve its position with customers.
During the call for results, Owen admitted that Dollar General was currently "not satisfied" with his global financial results. But according to the CEO, the company worked to bring buyers back.
"We continue to improve execution in our distribution centers and stores, offering our customers even lower prices and improved shopping experience working on the right of our inventory levels," said Owen.
CFO General in dollars Kelly Dilts told analysts during the call according to which the company expects traffic trends to improve over time with its efforts, although it noted that they "do not expect from positive traffic to the fourth quarter "of the exercise 2023.
"Hopefully, while we look at the back half of this year and next year, the stability of the store will help us generate continuous traffic, and this is one of the measures on which we focus the most As you go, "Owen says.
But experts say that Dollar General is now in a "very bad situation".
Despite the hope of a general dollar for progress, his recent demotion of actions underlines how his financial situation is challenged by the decline of consumers. In a September 20 interview On CNBC Squawk in the street ,, Crazy money host Jim Cramer said that the boss's decision to move the actions of the selling retailer was "very unusual" and that suggested investors should indeed stay away.
The Dollar General Consumer Base "really, really bad", according to Cramer. And the company is now expecting reimbursement of restoring student housing and higher fuel prices will continue to financially tend its costumers.
"It's a very bad situation," said Cramer.
Better life Contacted Dollar General about the retrochasure of actions and the warning of Cramer, and we will update this story once we have heard.
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