American Dollar General (DG.US) Q3 performance mixed, low-income consumers still struggling.

Dollar General Corporation (DG.US) announced its third-quarter financial performance. As of early November, the company's same-store sales increased by 1.3%, higher than Wall Street analysts' expectations. Q3 revenue increased by 5.1% year-on-year to $10.18 billion, slightly higher than market expectations. However, adjusted earnings per share were $0.89, lower than market expectations. The company currently expects full-year same-store sales to be between 1.1% and 1.4%, with the midpoint slightly lower than the previous growth expectations of 1% to 1.6%. The company now expects annual net sales to increase by 4.8% to 5.1%, while analysts' expectations were 4.77%. Dollar General also lowered the upper limit of its annual profit guidance and stated that the third quarter included $32.7 million in hurricane-related expenses the company expects annual earnings per share to be between $5.50 and $5.90, compared to the previous range of $5.50 to $6.20. In recent years, rising prices in the overall economy have squeezed Dollar General's core customers low-income consumers. At the same time, industry competition has become more intense, with dollar stores' market share being eroded by larger retailers such as Walmart Inc. (WMT.US), while companies like Aldi Inc. are also aggressively entering the discount market. Additionally, customers have complained about messy shelves and excessive inventory. This highlights the challenges this discount store faces in attracting consumers looking for bargains due to the decrease in purchasing power caused by price increases. Dollar General's stock price has fallen by about 42% this year, while the S&P 500 index has risen by 28% during the same period. This result underscores the difficulties Dollar General currently faces. Last year, the company rehired former CEO Todd Vasos and focused on streamlining operations. It is removing products, slowing down the pace of opening new stores, and investing in labor to improve the supply chain. Vasos stated that the company's core customers are still financially constrained, and the retailer is focused on providing essential products to customers and improving their store experience. Dollar General's main competitor, another "dollar store" giant Dollar Tree, Inc. (DLTR.US), also faces similar challenges. This is an unusual moment for dollar stores, which typically perform well when consumers are looking to expand their budget. To address the challenges, Dollar General launched a 24-day promotion during the holiday season with daily 50% off discounts on products ranging from Bluetooth speakers to thick-cut bacon to attract more shoppers. As a result, Dollar General stated that shoppers are spending more each time they visit, foot traffic is increasing, and there is a rising demand for food and other frequently purchased items. Meanwhile, by expanding product categories and ramping up promotions, Dollar Tree, Inc. also reported better-than-expected sales on Wednesday, stating that higher customer traffic helped boost the company's third-quarter sales. Dollar Tree, Inc. is currently looking for a new CEO and CFO, expanding its product categories, and evaluating strategic options for its struggling Family Dollar chain. The company stated on Thursday that it plans to significantly increase real estate investment projects next year, including renovating old stores. The company also outlined a plan to renovate old stores next year and open at least 500 new stores. The dollar store chain operator announced plans to open approximately 575 new stores in the United States by the end of the fiscal year in January 2026 and renovate about 2,000 stores.