When Dollar General reports its third-quarter profits Dec. 5, investors and analysts will be looking out for just how the company's core customer is doing. The company's top-line number will go a long way to clarifying some of the confusion created last week by Family Dollar, which said a "very cautious consumer" limited same-store sales growth to 3.1 percent. Canaccord Genuity analyst Laura Champine duly lowered her target on Dollar Tree to $48 from $52 and cut her Q4 same-store forecast to 2 percent, “which would be the weakest Q4 performance in six years.”
Separately, Family Dollar CFO Mary Winston told Bloomberg Radio listeners late last week that she's "not so sure very much has changed" in recent years for customers in lower-income bands. Yes, the economy has steadily improved and lifted some shoppers' fortunes but Winston said macroeconomic and political events and trends are creating nervousness that continues to affect spending habits.
Analysts and investors appear to be sanguine about Dollar General's performance. Both the stock (Ticker: DG) and EPS estimates haven't budged much at all lately (see image below). Now it's up to Chairman and CEO Rick Dreiling to deliver both numbers and clarity.