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(AOF) – Dollar General shares (-25.78% at $91.91) posted the biggest drop in the S&P500 on Thursday, having lost more than a quarter of their value since the opening, after the publication of their second-quarter results. The low-cost retail chain lowered its annual outlook, now targeting diluted earnings per share of between $5.50 and $6.20, compared to $6.80 and $7.55 initially. Net sales growth is expected to reach 4.7% to 5.3%, compared to 6.0% to 6.7% expected.
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Two major challenges for the sector
The turnover of retail brands increased by 6.6% in the third quarter of 2022 according to the IRI panelist. Such a performance had not been recorded since the lockdowns of 2020. However, since the end of September, volumes have been declining following the increase in prices. The results of French players, which have been relatively unaffected until now, should therefore suffer. Moreover, in the United States, Walmart and Target have issued warnings on their results.
Another challenge: logistical disorganization. According to NielsenIQ data, the stockout rate has increased further on the shelves to reach 5.8% at the end of October. This represents a loss of 3.5 billion euros since the beginning of the year. According to Système U, these disorders have never been observed for more than fifty years. The reasons are multiple: climatic, geopolitical, logistical, inflationary, and also linked to the behavior of consumers, who stockpile certain items. On the other hand, the strike in the refineries seems to have had little impact because the brands have managed to organize themselves.
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