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Cramer dubs ‘pain’ justified as Dollar General stock tanks on weak guidance

on Jun 1, 2023
  • Dollar General reports a disappointing Q1 and trims future guidance.
  • Jim Cramer discussed its earnings print on CNBC's "Squawk on the Street".
  • Dollar General stock is now down 35% versus the start of the year 2023.

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Dollar General Corp (NYSE: DG) tanked 20% on Thursday after reporting disappointing results for its first financial quarter.

Cramer reacts to Dollar General results

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The chain of variety stores is taking a hit also because the management trimmed guidance for the future.

Dollar General now forecasts its EPS to remain flat this year at best. In comparison, consensus was a 4.9% annualised growth. On CNBC’s “Squawk on the Street”, Jim Cramer said today:

It’s supposed to do well in a slowdown but the numbers, the comparable gain, outlook, is just terrible. The trade down didn’t happen, they’re not a major winner.

The Mad Money host sees the “pain” today in Dollar General stock as justified considering the weak guidance.

What else was a negative for Dollar General stock

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For fiscal 2023, Dollar General expects a 5.0% year-on-year increase in sales at the top end of its range, as per the earnings press release – below 5.7% that experts had forecast.

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Also a negative was disclosure from the discount retailer that it did not repurchase stock in its recently concluded quarter. In March, it had announced plans of repurchasing about $500 million worth of its shares this year.

The Tennessee-based company noted a 1.6% annualised increased in its Q1 same-store sales – well below the Street estimates. Dollar General stock is now down 35% for the year.

Dollar General Q1 financial highlights

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  • Earned $514.4 million versus the year-ago $552.7 million
  • Per-share earnings also declined from $2.41 to $2.34
  • Net sales climbed 6.8% year-on-year to $9.34 billion
  • Consensus was $2.38 a share on $9.47 billion in revenue
  • Declared 59 cents a share of quarterly cash dividend

The retail chain agreed that customer traffic was down and attributed sales growth primarily to bigger transactions on average. Wall Street had consensus “overweight” rating on Dollar General stock heading into the earnings print.


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