“Is it safe to shop at Dollar General?”
If you work or shop at Target, you might not question your safety, but Dollar General shoppers and employees might.
In July, the U.S. Department of Labor announced a settlement with Dollar General, requiring the retailer to pay $12 million in penalties and implement workplace safety improvements.
The improvements include hiring additional safety managers, reducing inventory and increasing stocking efficiency to prevent blocked exits and unsafe material storage, and providing safety and health training.
The bargain retailer has already received over $21 million in fines from the federal Occupational Safety and Health Administration since 2017 due to blocked fire exits, dangerous levels of clutter and other safety claims, according to a CNBC report.
Gun violence has also been a problem at Dollar General stores, with at least 49 fatalities and 172 injuries, according to CNBC, citing data from the Gun Violence Archive. Remember the 2023 Jacksonville shooting. Three people were killed in a racially motivated attack at a Dollar General store in Jacksonville, Florida.
Dollar General replaced its CEO in October 2023, two months after the shooting happened. The company reinstated Todd Vasos as Chief Executive, replacing Jeff Owen.
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Vasos had previously held the position for seven years before retiring in 2022. Dollar General doubled its market capitalization during his tenure and saw annual sales grow by over 80%.
Oppenheimer analyst Rupesh Parikh, according to CNN, said the change of CEO “could help to re-instill confidence” in Dollar General stock. The company said it faced challenges from US shoppers reining in spending in 2023 as inflation elevated.
Dollar General might benefit from shoppers’ tight budgets.
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Can Q1’s strong sales continue?
Dollar General Corporation (DG) is a Tennessee-based retail chain of discount stores. Founded in 1939 as a family-owned business, it now operates nearly 20,000 stores in the United States and Mexico.
The company reported solid earnings for the first quarter of 2024, with net sales of $9.91 billion, up 6.1% year over year, topping the estimate of $9.86 billion. The earnings of $1.65 per share also beat the $1.57 forecast but declined 29.5% from a year ago.
Dollar General saw softness in sales in the discretionary category during Q1, “a reflection of the continued pressure our core customers feel on their spending,” Vasos warned in the Q1 earnings call.
But unlike its higher-end retail rivals, such as Target, which are cutting prices to boost sales, Dollar General might benefit from shoppers’ tight budgets.
Related: Analysts revise Target stock price goal before earnings
“We see accelerated share growth in private brand sales as well as increased engagement with items at or below the $1 price point,” Vasos said, “We continue to do well with our core customers while growing with middle- and higher-income trade-in customers from adjacent cohorts. We continue to feel very good about our pricing position.”
Dollar General will post its second-quarter earnings result for fiscal 2024 on August 29.
Analysts revise Dollar General’s stock price target
On August 13, Cleveland Research downgraded Dollar General stock to neutral from buy. Loop Capital lowered Dollar General’s price target to $130 from $140 and kept a hold rating.
Loop’s analyst is “increasingly pessimistic” about Dollar General’s near-term prospects given growing macroeconomic pressure on the company’s core low-income customers, according to a research note.
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On the contrary, Goldman Sachs added Dollar General stock to US Conviction List on August 1. The firm has a buy rating with a $169 price target.
The analyst believes the worries about low-income consumers, discretionary spending, and competition are overstated.
Dollar General stock traded around $116 on August 13.
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