Whatâs Going On Here?US discount retailer Dollar General reported worse-than-expected earnings on Thursday, and shoppers donât look like theyâre about to start filling their carts again anytime soon. What Does This Mean?Americans stockpiled Dollar Generalâs low-priced groceries in their droves during the pandemic, but those glory days might be a thing of the past. The retailer said sales were down by 16% in the first two weeks of March compared to the same period last year, and itâs expecting its full-year revenue to drop off by as much as 6% compared to 2020. Thatâs more of a slowdown than analysts were expecting, so itâs probably no wonder the companyâs shares initially tumbled 6%. Why Should I Care?The bigger picture: People want luxuries, not staples.
It isnât just groceries Americans have been hoarding, but cash too â thereâs not been a lot to spend it on, after all. In fact, Wells Fargo reckons consumer spending in the next two quarters is likely to be the strongest in at least 70 years, driven primarily by nice-to-haves (tweet this). That might explain why Signet Jewelersâ earnings struck a more positive note than Dollar Generalâs on Thursday: the worldâs biggest diamond jewelry retailer saw its sales outlook top estimates, and its stock initially shot up 6%.
Zooming out: Beware, beware post-IPO bumps.
Petco reported its own strong earnings on Thursday, in the pet retailerâs first update since its initial public offering in January. That means its shares have risen 30% since then â a gain of 21% more than Poshmark, the online thrift store that listed on the same day and posted a disappointing sales outlook earlier this month. Still, letâs meet back here in half a decade and see how theyâre both getting on then: 60% of IPOs end up trading below their initial prices five years after they list anyway. | 