Americans are ditching dollar stores

The Street

TheStreet’s Conway Gittens brings you the biggest news of the day, including what investors are watching and why stores like Dollar Tree and Dollar General are in trouble.

Transcript

00:00I'm Conway Gittins reporting from the New York Stock Exchange.

00:03Here's what we're watching on the street today.

00:06Cooler heads prevailed on Wall Street on Wednesday,

00:09even though there are still concerns about an economic slowdown.

00:13Job openings hit their lowest since January 2021.

00:17Meanwhile, the Federal Reserve's Summary of Economic Conditions,

00:20known as the Beige Book, reported more signs of sluggishness across the country.

00:25It also said weakness in consumer spending was spreading.

00:29The Fed will use that information to determine how much to cut interest rates at its September meeting.

00:35Here's something else for the Fed to consider.

00:37Dollar stores are struggling as inflation takes a bigger bite out of their customer base.

00:43Dollar Tree, which also operates Family Dollar, on the super low end,

00:48saw quarterly profits cut by a third.

00:51The problem? Dollar Tree says it is, quote,

00:54navigating through one of the most challenging macro environments ever.

00:59Discretionary spending at Dollar Tree is particularly weak,

01:03describing consumer behavior as, quote,

01:05buying for need, not buying for want.

01:08Even its mid- to higher-income consumers are pulling back because of inflation.

01:13With value being the name of the game,

01:15households earning $125,000 or more a year are switching to Walmart and Target,

01:22where they can buy everything in one place.

01:25Dollar Tree took in $7.37 billion in revenue during the second quarter,

01:30which was weaker than expected.

01:32The average sale per customer was down from a year ago.

01:36That problem is not Dollar Tree's alone.

01:39Its rival, Dollar General, said its customers are, quote,

01:42financially constrained.

01:45Both companies slashed financial projections for the rest of this year

01:48with little hope of relief for their key consumer.

01:52That'll do it for your daily briefing from the New York Stock Exchange.

01:55I'm Conway Gittins with The Street.

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