The Dollar General share $DG (+1.92%) has suffered a considerable loss in value in recent years. Since its peak in 2022, the share price has fallen by around 70% and the company's profits have halved in the same period.
Main reasons for the share price decline:
1.Financial strain on the core customer base: A large proportion of Dollar General's customers come from households with an annual income of less than USD 35,000. This group is particularly affected by economic uncertainties and has reduced its spending on non-essential goods.
2.Strong competition: Retail giants like Walmart and Target have expanded their omnichannel offerings and are able to keep prices low, costing dollar stores market share.
3.Internal challenges: Issues such as staffing shortages and shoplifting have increased operating costs and hurt profit margins.
Current developments:
Despite these challenges, Dollar General plans to expand aggressively and is looking to open over 1,300 new stores to increase sales and regain market share.
The company has also introduced a "back to basics" plan led by CEO Todd Vasos, which includes store remodels, expansions and measures to reduce shoplifting.
Analysts are forecasting moderate profit growth and see potential for a recovery in the share price if the planned measures are successfully implemented.
The share currently offers a dividend yield of 3.3%, which is solidly covered by profits.
It remains to be seen whether Dollar General can overcome the challenges and regain the trust of investors.
