Finance

Dollar General (DG) earnings Q2 2024

Published

4 months ago

August 29, 2024

Business Finance News

A sign hangs above a Dollar General store in Chicago on Aug. 31, 2023.

Scott Olson | Getty Images

Dollar General shares tumbled Thursday after the discount retailer slashed its sales and profit guidance for the full year, suggesting its lower-income customers are struggling in this economy.

Shares of the retailer, which caters to more rural areas, tumbled 25% after the earnings report.

The company now expects fiscal 2024 same-store sales to be up 1.0% to 1.6%, lower than its prior outlook for a 2% to 2.7% increase. Earnings per share for the year are expected to be in the range of just $5.50 to $6.20, versus the prior forecast of $6.80 to $7.55 per share.

“While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control,” said CEO Todd Vasos in a statement.

However, he also acknowledged that the company has more work to do. Dollar General has said that it needs to improve its stores and how it handles inventory to curb losses.

Here’s how Dollar General did in its second fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: $1.70 vs. $1.79 expected
Revenue: $10.21 billion vs. $10.37 billion expected

The company’s reported net income for the three-month period that ended Aug. 2 was $374 million, or $1.70 per share, compared with $469 million, or $2.13 per share, a year earlier.

Sales rose to $10.21 billion, up about 4.2% from $9.80 billion a year earlier.

Competitor Dollar Tree was falling in sympathy, off by more than 7% in early trading.

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Finance

Fed Governor Bowman says December interest rate cut should be the last

Published

3 hours ago

January 9, 2025

Business Finance News

Michelle Bowman, governor of the U.S. Federal Reserve, speaks during the Exchequer Club meeting in Washington, D.C., on Feb. 21, 2024.

Kent Nishimura | Bloomberg | Getty Images

Federal Reserve Governor Michelle Bowman said Thursday she supported the recent interest rate cuts but doesn’t see the need to go any further.

In a speech to bankers in California that was part monetary policy, part regulation, Bowman said concerns she has that inflation has held “uncomfortably above” the Fed’s 2% goal lead her to believe that the quarter percentage point reduction in December should be the last one for the current cycle.

“I supported the December policy action because, in my view, it represented the [Federal Open Market Committee’s] final step in the policy recalibration phase,” the central banker said in prepared remarks. Bowman added that the current policy rate is near what she thinks of as “neutral” that neither supports nor restrains growth.

Despite the progress that has been made, there are “upside risks to inflation,” Bowman added. The Fed’s preferred inflation gauge showed a rate of 2.4% in November but was at 2.8% when excluding food and energy, a core measure that officials see as a better long-run indicator.

“The rate of inflation declined significantly in 2023, but this progress appears to have stalled last year with core inflation still uncomfortably above the Committee’s 2 percent goal,” Bowman added.

The remarks come the day after the FOMC released minutes from the Dec. 17-18 meeting that showed other members also were concerned with how inflation is running, though most expressed confidence it will drift back towards the 2%, eventually getting there in 2027. The Fed sliced a full percentage point off its key borrowing rate from September through December.

In fact, other Fed speakers this week provided views contrary to that of Bowman, who is generally regarded as one of the committee’s more hawkish members, meaning she prefers a more aggressive approach to controlling inflation that includes higher interest rates.

In a speech delivered Wednesday in Paris, Governor Christopher Waller had a more optimistic take on inflation, saying that imputed, or estimated, prices that feed into inflation data are keeping rates high, while observed prices are showing moderation. He expects “further reductions will be appropriate” in the Fed’s main policy rate, which currently sits in a range between 4.25%-4.5%.

Earlier Thursday, regional presidents Susan Collins of Boston and Patrick Harker of Philadelphia both expressed confidence the Fed will be able to lower rates this year, if it a slower pace than previously thought. The FOMC at the December meeting priced in the equivalent of two quarter-point cuts this year, as opposed to the four expected at the the September meeting.

Still, as a governor Bowman is a permanent voter on the FOMC and will get a say this year on policy. She is also considered one of the favorites to be named the vice chair of supervision for the banking industry after President-elect Donald Trump takes office later this month.

Speaking of the incoming administration, Bowman advised her colleagues to refrain from “prejudging” what Trump might do on issues such as tariffs and immigration. The December minutes indicated concerns from officials over what the initiatives could mean for the economy.

At the same time, Bowman expressed concern about loosening policy too much. She cited strong stock market gains and rising Treasury yields as indications that interest rates were restraining economic activity and tamping down inflation.

“In light of these considerations, I continue to prefer a cautious and gradual approach to adjusting policy,” she said.

Finance

Slower pace ahead for rate cuts

Published

1 day ago

January 8, 2025

Business Finance News

Federal Reserve officials at their December meeting expressed concern about inflation and the impact that President-elect Donald Trump‘s policies could have, indicating that they would be moving more slowly on interest rate cuts because of the uncertainty, minutes released Wednesday showed.

Without calling out Trump by name, the meeting summary featured at least four mentions about the impact that changes in immigration and trade policy could have on the U.S. economy.

Since Trump’s November election victory, he has signaled plans for aggressive, punitive tariffs on China, Mexico and Canada as well as the other U.S. trading partners. In addition, he intends to pursue more deregulation and mass deportations.

However, the extent of what Trump’s actions will be and specifically how they will be directed creates a band of ambiguity about what is ahead, which Federal Open Market Committee members said would require caution.

“Almost all participants judged that upside risks to the inflation outlook had increased,” the minutes said. “As reasons for this judgment, participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy.”

FOMC members voted to lower the central bank’s benchmark borrowing rate to a target range of 4.25%-4.5%.

However, they also reduced their outlook for expected cuts in 2025 to two from four in the previous estimate at September’s meeting, assuming quarter-point increments. The Fed cut a full point off the funds rate since September, and current market pricing is indicating just one or two more moves lower this year.

Minutes indicated that the pace of cuts ahead indeed is likely to be slower.

“In discussing the outlook for monetary policy, participants indicated that the Committee was at or near the point at which it would be appropriate to slow the pace of policy easing,” the document said.

Moreover, members agreed that “the policy rate was now significantly closer to its neutral value than when the Committee commenced policy easing in September. In addition, many participants suggested that a variety of factors underlined the need for a careful approach to monetary policy decisions over coming quarters.”

Those conditions include inflation readings that remain above the Fed’s 2% annual target, a solid pace of consumer spending, a stable labor market and otherwise strong economic activity in which gross domestic product had been growing at an above-trend clip through 2024.

“A substantial majority of participants observed that, at the current juncture, with its policy stance still meaningfully restrictive, the Committee was well positioned to take time to assess the evolving outlook for economic activity and inflation, including the economy’s responses to the Committee’s earlier policy actions,” the minutes said.

Officials stressed that future policy moves will be dependent on how the data unfolds and are not on a set schedule. The Fed’s preferred gauge showed core inflation running at 2.4% rate in November, and 2.8% when including food and energy prices, compared with the prior year. The Fed target’s inflation at 2%.

In documents handed out at the meeting, most officials indicated that while they see inflation gravitating down to 2%, they don’t forecast that happening until 2027 and expect that near-term risks are to the upside.

At his news conference following the Dec. 18 rate decision, Chair Jerome Powell likened the situation to “driving on a foggy night or walking into a dark room full of furniture. You just slow down.”

That statement reflected that mindset of meeting participants, many of whom “observed that the current high degree of uncertainty made it appropriate for the Committee to take a gradual approach as it moved toward a neutral policy stance,” the minutes said.

The “dot plot” of individual members’ expectations showed that they expect two more rate cuts in 2026 and possibly another one or two after, ultimately taking the long-run fed funds rate down to 3%.