Transcript:
Conway Gittens: I’m Conway Gittens reporting from the New York Stock Exchange. Here’s what we’re watching on TheStreet today.
Cooler heads prevailed on Wall Street on Wednesday even though there are still concerns about an economic slowdown. Job openings hit their lowest since January 2021. Meanwhile, the Federal Reserve’s summary of economic conditions, known as the Beige Book, reported more signs of sluggishness across the country. It also said weakness in consumer spending was spreading. The Fed will use that information to determine how much to cut interest rates at its September meeting.
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Here’s something else for the Fed to consider…..Dollar stores are struggling as inflation takes a bigger bite out of their customer base. Dollar Tree, which also operates Family Dollar on the super low end, saw quarterly profits cut by a third.
The problem: Dollar Tree says it is “navigating through one of the most challenging macro environments” ever. Discretionary spending at Dollar Tree is particularly weak, describing consumer behavior as “buying for need” not “buying for want.” Even its mid-to-higher income consumers are pulling back because of inflation. With value being the name of the game, households earning $125,000 or more a year are switching to Walmart and Target where they can buy everything in one place.
Dollar Tree took in $7.37 billion in revenue during the second quarter, which was weaker than expected. The average sale-per-customer was down from a year ago.
That problem isn’t Dollar Tree’s alone. Its rival Dollar General said its customers are “financially constrained.” Both companies slashed financial projections for the rest of this year with little hope of relief for their key consumer.
That’ll do it for your Daily Briefing. From the New York Stock Exchange, I’m Conway Gittens with TheStreet.
Related: Dollar General makes a key change to fight retail theft
