The rise and fall of Dollar General as a defensive play as its revenues slow, income declines and interest expenses rise in a tough macroeconomic, competitive and geopolitical environment
Analysis is on spot. Kudos. Personally speaking I lost money on this stock thinking it provide shelter but I now know DG mis-stepped on their inventory plans and wounded themselves in the foot. I do think if they start to refocus back onto their $40k consumer as you point out, it should be a good stock again. Thats months away.
You are 100% right with DG’s miscalculation on the inventory side of things, which is of course hurting them hard now, with inventory piling up and inventory to sales ratio spiking. I believe last year the CEO mentioned, that they were getting market share from the higher income earners, as inflation was soaring, which was boosting earnings last year. I believe that the high income earner traffic was now dried up, and to your point, they should just focus on the $40k group, while tightening their discipline with the balance sheet.
I live out in the rural country between Porterville and Terra Bella (about 12 minutes from both). Dollar General is the only inexpensive store in the tiny town of Terra Bella. For a quick shopping trip I often choose to go there for my shopping rather then into larger Porterville. Dolllar General is the lifeline for most of the poor people who live there. It’s closure will significantly change their lives.
Thanks for sharing, yes Dollar General is undoubtedly the lifeline of people living in rural parts of the US. While the business is struggling financially, I believe that given its strong historical performance, it should be able to regain its financial strength if the management stays focused. Plus, the economic times are undeniably hard today.
Thank you so much for pointing it out. Yes, you are absolutely right, I have edited. The pitfalls of staying up late to write, sometimes logical thought process starts to reverse.
Analysis is on spot. Kudos. Personally speaking I lost money on this stock thinking it provide shelter but I now know DG mis-stepped on their inventory plans and wounded themselves in the foot. I do think if they start to refocus back onto their $40k consumer as you point out, it should be a good stock again. Thats months away.
You are 100% right with DG’s miscalculation on the inventory side of things, which is of course hurting them hard now, with inventory piling up and inventory to sales ratio spiking. I believe last year the CEO mentioned, that they were getting market share from the higher income earners, as inflation was soaring, which was boosting earnings last year. I believe that the high income earner traffic was now dried up, and to your point, they should just focus on the $40k group, while tightening their discipline with the balance sheet.
Their previous CEO has just returned back to the fold so they should be able to refocus back!
I live out in the rural country between Porterville and Terra Bella (about 12 minutes from both). Dollar General is the only inexpensive store in the tiny town of Terra Bella. For a quick shopping trip I often choose to go there for my shopping rather then into larger Porterville. Dolllar General is the lifeline for most of the poor people who live there. It’s closure will significantly change their lives.
Thanks for sharing, yes Dollar General is undoubtedly the lifeline of people living in rural parts of the US. While the business is struggling financially, I believe that given its strong historical performance, it should be able to regain its financial strength if the management stays focused. Plus, the economic times are undeniably hard today.
I’m currently learning to read financial statements and this is so helpful. Thanks for sharing!
Glad you found this helpful!!
I think you meant to say ... "Today the east-west gap is getting WIDER, as trade relations are weaker and transportation fuel costs are higher"..???
Thank you so much for pointing it out. Yes, you are absolutely right, I have edited. The pitfalls of staying up late to write, sometimes logical thought process starts to reverse.