|
Freight, labor and other supply chain-related costs have jumped
for U.S. retailers, while excess inventory levels have also
forced them to offer deep discounts to spur demand.
While margins have been pressured across the retail industry,
Tennessee-based Dollar General said it was also seeing
inefficiencies within its own supply chain.
Unexpected delays in acquiring additional warehouse space to
store inventory resulted in higher-than-expected distribution
and transportation costs, according to the company.
Dollar General, which in July named insider Jeff Owen its new
chief executive, saw its gross margin fall by 27 basis points to
30.5% in the third quarter.
"It's unusual for this well-run company to stumble on execution
issues. The fact that it's occurring during the CEO transition
and seemed to come out of left field isn't a great look," Wells
Fargo analyst Edward Kelly said.
Rival Dollar Tree Inc last month cut its full-year profit
forecast for the second time, citing planned price cuts and weak
demand for discretionary goods, while discount store peer Big
Lots Inc also posted downbeat quarterly results earlier on
Thursday.
Dollar General now expects fiscal 2022 earnings per share to
increase about 7% to 8%, compared with its prior outlook of a
rise of about 12% to 14%.
The company reported a profit of $2.33 per share for the third
quarter ended Oct. 28, missing analysts' estimates of $2.54,
according to Refinitiv IBES data.
The retailer, however, said its annual same-store sales would be
toward the upper end of its previously expected range of 4.0% to
4.5%, after topping same-store sales estimates for the reported
quarter.
(Reporting by Granth Vanaik and Deborah Sophia in Bengaluru;
Editing by Sriraj Kalluvila and Shounak Dasgupta)
[© 2022 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
