© Reuters. FILE PHOTO: A sign is seen outside a Dollar General Store in Chicago
By Uday Sampath Kumar
(Reuters) – Dollar General (NYSE 🙂 announced Thursday that the launch of the vaccine and reopening of the economy would result in an unexpectedly sharp slowdown in discounted food sales, while a new round of economic activity may be more difficult to capitalize on than before.
The company's shares fell over 6% as it was also forecasting a profit below estimates for the full year.
The promise of a return to relative normality later this year when more Americans are vaccinated against COVID-19 has made the inventory boom that made Dollar General one of the biggest retail beneficiaries of the health crisis unlikely to repeat it.
A new round of $ 1,400 stimulus payments towards mostly low- and middle-income households should boost spending in discounters at least in the coming weeks, but Dollar General said there was too much uncertainty about how much that The company could benefit from including it in its outlook.
"Compared to the previous economic rounds that helped us, the economy is now opening up more. We are competing with other industries outside of retail for that share of the wallet. So how much we are getting is uncertain," said CFO John Garratt Said on a call with analysts.
According to Refinitiv's IBES data, Dollar General expects full-year revenue to decline 4% to 6%, compared to estimates of a 1.2% decline. The company projected total revenue unchanged at 2%, compared to estimates of a 1.4% increase.
The company forecast annual earnings per share of $ 8.80 to $ 9.50, down from estimates of $ 10.08.
Revenue in the same store rose 12.7% in the fourth quarter, beating analysts' estimate of 10.7%, aided by the $ 600 stimulus checks that spurred spending.
Net income rose about 20% to $ 642.7 million, or $ 2.62 per share, but fell short of estimates of $ 2.72 per share.
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