GOODLETTSVILLE (AP) — Dollar General put up weak earnings numbers for the third quarter in an environment that has largely favored bargain stores, with so many people still looking to cut costs where they can.
The Goodlettsville, Tennessee, retailer cited lower food prices and a cut in food-stamp benefits in several states that forced low-income customers to trim spending.
Almost two dozen states have altered the Supplemental Nutrition Assistance Program, giving a smaller of pool of people access to assistance. Dollar General has a strong presence in many of the states involved in the cutbacks.
The company on Thursday lowered its profit expectations, and shares slumped 6 percent at the opening bell. Shares had surged to a three-month high last week after rival Dollar Tree posted better-than-expected profits.
"The challenging retail environment that we experienced in the 2016 second quarter continued into the third quarter, contributing to weakness in our same-store sales and our financial performance," said CEO Todd Vasos.
Profits fell 7 percent and comparable-store sales, a closely watched barometer in the retail industry, fell as foot traffic in Dollar General stores faded.
Industry analysts had expected a slight increase in same-store sales, but they slipped 0.1 percent during the quarter.
Net income fell to $235.3 million, or 84 cents per share, from $253.3 million, or 86 cents per share, in the same quarter a year ago.
Per-share earnings, adjusted for non-recurring costs, were 89 cents per share, 4 cents short of Wall Street expectations, according to analysts surveyed by Zacks Investment Research.
Revenue rose 5 percent to $5.32 billion, though that was also short of the $5.36 billion that Wall Street was looking for.
Dollar General said Thursday that it now expects earnings growth for the year to be at the low-end of its ealier forecast between 10 percent and 15 percent.
Shares of Dollar General Corp. fell $4.85 to $72.47 Thursday, but they're still up 1.7 percent for the year. Shares of Dollar Tree are up 14 percent in 2016.