Dollar General's Profit Falls: Company Lowers Outlook

[hatrack]

Dollar General Corp. said Wednesday that its third-quarter profits dropped nearly 9 percent amid high gas prices and reduced spending by its core, low-income customers. The discount retailer also lowered its forecast for the rest of the year.

For the three months ending Oct. 29, Dollar General earned $71.1 million, or 22 cents per share, down from $77.9 million, or 23 cents a share, a year earlier.

EDIT

The discount retailer said that low-income customers continue to be hurt by the economy - a problem that could persist through the holiday shopping season, hampering its ability to meet earnings expectations.

The company said it was selling more highly consumable products, such as milk and other foods, which usually offer a smaller gross profit."

EDIT

http://www.stltoday.com/stltoday/business/stories.nsf/story/D1858CA7F3B932E986256F5E000B3799?OpenDocument&Headline=Dollar+General's+profit+falls%3B+company+lowers+outlook

[Ms_Mary]

1. I know my sales fell

and I'm definitely hurting for it as a small business. I can attest to the news reports that wholesale costs have gone up substantially over the last quarter (more than in the last 14-15 years). We're going into our 3rd year and this is one of the worst months we've ever had. It started declining a couple of weeks before the election.

[susu369]

2. Very telling (and unsettling)

From my experience, the only products Dollar General sells that are NOT made in China would be the "highly consumable products, such as milk and other foods."

[AllegroRondo]

3. They discussed this on NPR Marketplace yesterday

along with the big drop in Wal-Mart profit lately.

The analysts the talked to called it 'the canary in the coal mine'. Its an indication that those in the lowest income levels are getting squeezed on all sides by higher gas prices, higher insurance, higher medical, and lower wages.

Another favorite phrase from the interview: "Hourglass Economy", referring to the increase in lower and upper class, and removal of middle class.

[TahitiNut]

7. "Hourglass Economy"

In our case, the sand (money) is flowing to the top since the hourglass is upside-down. Our economic system is in an accelerating decline because it's decimating the base.

Using another analogy, we're throwing the bailers overboard as our economic boat continues to take on water. The captains of our industrial boat don't want to suffer the discomforts of dampness. When it sinks, only the ones with expensive life jackets (and the very good swimmers) will survive.

The Gini Index continues to rise. The U.S.A. is a Banana Republic and well on its way to labor camps and poorhouses.

[TahitiNut]

4. It's important to realize that businesses are class-stratified.

In retail, for example, businesses target an economic class - with Wal*Mart, K-Mart, etc. targeting the lower tier of family income. What's particularly disturbing (due to the hysteresis effect) is that they're also the major employers of those same people.

As the poor get poorer, these businesses lose sales. As they lose sales, they try to drive down costs - particularly labor costs (except executive compensation, of course). When they drive down labor costs, they decimate their customer base. When the wholesalers raise prices, it exacerbates the problem. When the retailers look for more off-shore wholesalers/suppliers, the lower economic classes are further decimated.

This is part of the structural corruption in our economic system that's causing the Gini Index to climb ever-higher. We're a Banana Republic, folks.

[Ms_Mary]

5. Very, very true. nt

[Chipper Chat]

10. No, it CANT be true.....

Because Bush says $%^&**&**(((((( our leader Bush says(*#(*)(*&^%$%$%*&the chimperor says ))()(**&%$%$$^%$ Fox News says @*@(*@$&^$(*$(*#@(*$(*$$ Sean Hannity says "(*&(*+++)_(*&*#(#)(_carl rove says (*(*(*@(*&@(*&@(*&(*&@(* ann coulter says "ooooooooooo0000000000oooooooooo4398589(*&@(*@*;.
Surely - they all cant be lying?????

[Ms_Mary]

11. LOL, I'm so glad that was sarcasm.

I had a WTF moment when I read the title.

[Barkley]

9. TahitiNut: Your analysis is right on the money!

I read the the upper tier retailers: Saks 5th Ave are not doing
as bad as the lower levels: K-Mart/ Wal*Mart

Your comments are always great

Keep it up!

[TahitiNut]

12. (blush) Thanks! It doesn't, of course, stop at retail.

Residential construction, automotive, travel and entertainment, and other sectors are stratified/tiered as well, often not as obviously in terms of those employed but still with similar hysteresis effects. Medical care is becoming more stratified. (I'll bet cosmetic surgery isn't suffering!) Legal services are becoming more stratified. (Corporate firms are having banner years but personal injury forms are swimming upstream.) Economic class warfare is creating a "no man's land" in the middle class - with enormous casualty rates among the least well-armed.

The "big lie" of much of the data is a failure to acknowledge the increasing gulf between the tiers - a few CEO salaries go way up and many clerical salaries go down, but the 'average' doesn't move. Trying to find an 'average' salaried person is getting like trying to find an 'average' gendered person: 51% female? (Riight.)

Moral of the statistical story: there is no 'average' person.

[Sara Beverley]

6. Only the wealthy are able to spend.

So let them. The gap between the haves and have-nots is growing daily in this country. The biggest crime of all that keeps most just above poverty was the changing of the banking and credit laws so that now 25% finance charges can be slapped on working Americans without so much as a blink. Our next big fight should be against the disgusting credit card companies and their usury measures. It's all part of the agenda which includes controlling the media, the banking, and government.

[Wright Patman]

8. My brethren

in this poor East Texas county voted 70.5 percent for the Chimperor. So I can only assume they enjoy getting poorer as a way of getting closer to God or something.

There really hasn't been much of a middle class here since the early 1980s, but there's now quite a bit of near destitution. All it seems to make these fundies do is argue more vociferously about their pet peeves such as abortion, stem cell research, no school prayer and homosexual anything.

I am trying to understand the primitive thought process at work here. I think these increasingly penurious folk believe that God is somehow chastising them for the fact that they have not risen up as a mob to outlaw all the aforementioned social ills. So they are now rising up, having given up temporarily on the economic version of the American dream.