Shoppers Fleeing Inflation Head to Dollar Tree and Dollar General

As a result of four decades of high inflation, more and more people have been shopping at discount chain stores like Dollar Tree and Dollar General for everything from light bulbs to food, and these stores have reported growing sales in the second quarter.

Items in dollar stores are typically sold singly rather than in bulk, making it easier for customers on tight budgets to make purchases. However, discount retailers are feeling the effects of price increases throughout their supply chains as well.

The Chesapeake, Virginia-based Dollar Tree posted a quarterly profit that blew away estimates even as sales fell short of forecasts. It reduced its annual profit forecast as well as its sales forecast.

Even though it was acquired in 2015, Dollar Tree is currently working to integrate the Family Dollar brand.

The second quarter of 2018 was profitable for Dollar Tree Inc., with a profit of $359.9 million, or $1.60 per share, as reported for the three months ending July 30. During the same period a year year, they earned $282.4 million, or $1.23 per share.

Zacks Investment Research reports that Wall Street analysts expected earnings per share of $1.58.

Better than last year, sales of $6.77 billion fell just shy of Wall Street forecasts.

Revenue is expected to be between $6.75 billion and $6.87 billion for the current quarter ending in November, as reported by Dollar Tree. Zacks polled industry experts, and they predicted a total of $6.77 billion in sales.

Dollar Tree saw a 7.5% increase in net sales from last year at comparable stores. The growth in sales at existing Family Dollar stores was a modest 2.

New full-year profits estimates put the company's profit per share at $7.10 to $7.40 on revenue between $27.85 billion and $28.1 billion. The previous full-year EPS forecast ranged from $7.80 to $8.20. Annual consolidated net sales were predicted to be within the range of $27.76 billion and $28.14 billion.

The Dollar Tree is a story of two companies, according to Neil Saunders, managing director at GlobalData Retail.

Family Dollar is the terrible firm; it has been underperforming for a long time, he remarked. Even if consumers are trying to cut costs and make sacrifices, we think Family Dollar should be doing much better financially.

His criticism of Family Dollar was that the stores offer a fairly confused variety of merchandise and that the chain has done nothing to improve their appearance. His comments on the dingy and dreary environment in many stores were as follows: the environment is neither favorable to attracting or maintaining customers, nor is it useful for raising average basket size.

Net income for the three months ending July 29 at Dollar General Corp., headquartered in Goodlettsville, Tennessee, was reported at $678 million, or $2.98 per share, for the company's fiscal second quarter. During the same period last year, the company earned $637 million, or $2.69 per share.

Analysts' predictions for earnings per share were $2.93, therefore the actual results were better.

The revenue of $9.43 billion was higher than the $8.65 billion recorded in the previous year and also exceeded Wall Street's expectations.

The company has increased its previous projection for same-store sales growth from 3% to 3.5% to 4% to 4.5%.

The preceding is a summary of an article that originally appeared on Headline Wealth.

Written by Staff Reports

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