A customer enters a Dollar General Corp. store in Colona, Illinois, U.S., on Wednesday, Sept. 10, 2014.
Daniel Acker | Bloomberg | Getty Images
Dollar General Corp on Thursday forecast full-year profit well below expectations after cutting its earnings estimate for the all-important holiday quarter on heavy discounts, higher costs and inventory damage due to winter storm Elliott.
Shares of the dollar store fell 6% in premarket trade.
The company forecast fiscal year 2023 profit to rise between 4% and 6%. Analysts on average were expecting a 10.6% increase, according to Refinitiv IBES data.
With U.S. consumer prices, rental housing and food costs still rising, retailers are increasingly becoming more cautious about their outlooks for the year.
Walmart Inc and Home Depot Inc earlier this week projected annual earnings below estimates.
Dollar General said same-store sales increased 5.7% in the fourth quarter ended Feb. 3, compared with its prior forecast of a 6% to 7% growth.
The company expects earnings per share to be between $2.91 and $2.96, compared with earlier expectation of $3.15 to $3.30.
U.S. companies are battling higher freight, labor and other supply chain-related costs while also offering deep markdowns to clear excess inventory.
Dollar General’s grocery and food business also faces stiff competition as major players like Walmart, which makes 56% of its sales from groceries, and Kroger Co gain more market share.
The company also blamed the cut to lower sales and higher inventory damages due to winter storm Elliott.
The winter storm pounded the heart of the United States in December bringing heavy snow and freezing rain to the Northern Plains and destructive tornadoes across parts of Louisiana, Oklahoma and Texas.
Dollar General is expected to post its results on March 16 for the three months ended Feb. 3.
