Lackluster consumer confidence is negatively affecting discount retailers such as Dollar General and Big Lots. Dollar General’s shares dropped 32 percent on Aug. 29 after the company admitted in its earnings report that lower-income customers are still struggling, while Big Lots’s fortunes are in a tailspin.
Middle-scale retailer Abercrombie & Fitch, which made a significant comeback in 2024, saw its stock drop 15 percent this week, while drugstore chain Rite Aid has emptied up to 500 stores amid its bankruptcy filing.
National Retail Federation (NRF) chief economist Jack Kleinhenz wrote in its August monthly review that while the U.S. economy appears healthy, consumers are skeptical. “While the overall economy continued to display remarkable strength in the first half of 2024, consumer confidence remains weak,” he said.
That sentiment was bolstered by the latest University of Michigan’s monthly survey in July, which fell for the fourth month in a row. Dr. Joanne Hsu, who authored the report, wrote: “Sentiment has lifted 33 percent above the June 2022 historical low, but it remains guarded as high prices continue to drag down attitudes, particularly for those with lower incomes.”
In Dollar General’s case, the discount store reported it expects fiscal 2024 same-store sales to be up 1.0–1.6 percent, lower than its prior outlook for a 2.0–2.7 percent increase, with earnings per share for the year expected to be in the range of just $5.50–6.20. That prediction was below its original forecast of $6.80–7.55 per share. Dollar General’s core consumer base comprises households earning less than $35,000 annually, contributing to 60 percent of overall sales.
On the company’s post-earnings call, Dollar General CEO Todd Vasos said, “While middle and higher-income households are seeking value as well, they don’t claim to feel the same level of pressure as low-income households, as customers have felt more pressure on their spending.” He added that what he is seeing in the numbers “would indicate that this is a cash-strapped consumer, even more than we saw in the first quarter.”
Meanwhile, another discount retailer, Big Lots, is struggling in this economy. In its June filing with the U.S. Securities and Exchange Commission, Big Lots reported that 244 of its 1,392 stores are underperforming and planned to close 35 to 40 of them. Its net sales ended in May this year dropped 10 percent year over year ($415 million), to a little over $1 billion. The company also announced it owed another $72.2 million in debt, accounting for a total of $573.8 million.
Let’s Go Brandon.
Let’s Go Brandonette.
But Joey told all of us the economy is strong.
Sad..really sad.