Tag: Economics (Page 2 of 10)

Dollar General now says consumers are running out of money, particularly those in lower-income households, per a new report.

Lower-income American households are running out of money each month, according to Dollar General, which reported disappointing financial results that caused its shares to plummet over 30%—the largest single-day drop in the company’s history.

As the largest dollar store chain in the U.S., with over 20,000 locations across 48 states, Dollar General highlighted the financial struggles faced by many of its customers due to ongoing inflation and the depletion of savings accumulated during the pandemic.

The company also noted an increase in “shrink,” a term that refers to inventory losses from theft and other factors.

Based in Tennessee, Dollar General operates small-format stores that sell affordable food and household items, many priced at $1.

Their locations are primarily situated in rural areas and economically disadvantaged urban neighborhoods.

According to company filings, their core customers are often the first to feel the impact of negative economic conditions and the last to experience any recovery.

CEO Todd Vasos reported that around 60% of Dollar General’s sales come from customers earning less than $35,000 annually, who are currently feeling “financially constrained.”

He noted that many of these customers feel worse off financially than six months ago due to rising prices, softer job markets, and increased borrowing costs.

For the quarter ending on August 2, Dollar General’s same-store sales—an important industry metric—grew by just 0.5%, falling short of both the company’s expectations and Wall Street forecasts, per Financial Times.

This growth was driven entirely by consumables like food, rather than discretionary items such as clothing and home goods.

Executives indicated that sales were weakest in the final week of each month.

CFO Kelly Dilts remarked that their typical customer often runs out of money by month’s end.

This outlook contrasts with comments from other retailers.

For instance, discount apparel chain Burlington Stores noted that while low-income shoppers remain “very fragile,” their circumstances have improved somewhat as inflation decreases.

Similarly, Walmart and Target reported solid sales growth, with Walmart indicating it has gained market share from competitors.

Vasos acknowledged that despite the challenging conditions, customer traffic at Dollar General increased by 1% in the second quarter, although the average spending per shopper dropped by 0.5% due to falling retail prices.

The company’s net sales rose by 4.2% year-over-year to $10.2 billion, but operating profit fell by 20.6% to $550 million, partly due to markdowns and increases in inventory losses attributed to ‘shrink’.

Rival Dollar Tree, which operates under its own name and the Family Dollar brand, is set to report its earnings next week, with its shares currently down more than 10% in the past week.

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Also Read: A Struggling Gas Station Chain Now Files An Unexpected Bankruptcy

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California is now hitting farmers up to $10k fines per day after lawmakers approved an order to increase violation fees.

California lawmakers approved significant increases in fines for water violations late Friday after ranchers defied state orders by pumping water from the drought-stricken Shasta River for eight days.

Previously, state officials imposed the maximum fine of $4,000, which amounted to about $50 per rancher, causing frustration among tribes and conservationists, per Cal Matters.

The Shasta River is crucial for salmon habitat, especially during California’s driest three-year period on record.

The new legislation, awaiting Governor Gavin Newsom’s signature, would double daily fines for minor violations and impose fines of up to $10,000 per day for those violating curtailment orders, along with an additional $2,500 for every acre-foot of water taken.

If this law had been in effect, the Siskiyou County ranchers could have faced total fines exceeding $1.2 million.

Analise Rivero from California Trout, a conservation group that supported the bill, expressed hope that increased penalties would deter future violations.

The legislation passed with little controversy, reflecting the state’s complex water rights system, which often pits agricultural interests against environmental concerns.

Assembly Bill 460 was introduced in response to a standoff with Siskiyou County ranchers.

It passed the Senate with a vote of 38 to 2 and the Assembly with 65 to 5, aiming to ensure compliance with water use regulations and prevent a “tragedy of the commons.”

California’s major agricultural organizations did not oppose the bill after amendments were made to remove provisions that would have allowed for quicker intervention by state officials to prevent environmental harm.

This change alleviated concerns from various stakeholders, including growers and urban water agencies.

The final version of the bill, according to California Farm Bureau’s senior policy advocate, Alexandra Biering, serves as a strong deterrent against illegal water use.

State officials have long criticized their limited ability to enforce water rights and monitor illegal diversions.

The bill addresses enforcement gaps highlighted during the Shasta Valley incident, where a rural water association ignored state curtailment orders to benefit their cattle, leading to a dramatic drop in river flows and jeopardizing salmon populations.

Previously, the water board had limited options for imposing fines, which were seen as insufficient by tribes and conservationists who emphasized the cultural significance of salmon to local communities.

The new legislation is seen as a necessary step toward better enforcement of water regulations.

While the legislation is celebrated, some farmers and ranchers express that the underlying curtailment rules are more pressing than the fines, arguing that they need river water for irrigation during critical growing periods.

The bill is part of a series of legislative efforts aimed at reforming California’s water priority system, with ongoing discussions about the need for enhanced enforcement of water rights.

Water advocates hope that the collaboration between various stakeholders can lead to further improvements in managing California’s water resources.

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Also Read: Thousands of Unexpected Layoffs Now Hit Ohio

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