Cash-conscious consumers don’t shop where you’d expect

Transcription:

Conway Gittens: I’m Conway Gittens, reporting from the New York Stock Exchange. Here’s what we’re watching today on TheStreet.

Cooler heads prevailed on Wall Street on Wednesday, although there were still concerns about an economic slowdown. The number of job openings hit the lowest level since January 2021. Meanwhile, the Federal Reserve’s summary of economic conditions, known as the Beige Book, reported more signs of a slowdown across the country. It also said the weakness in consumer spending is spreading. The Fed will use this information to determine how much it will cut interest rates at its meeting in September.

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Here’s something else the Fed needs to consider… Dollar stores are struggling as inflation takes a bigger bite out of their customer base. Dollar Tree, which also operates Family Dollar at the super low end, saw quarterly profits fall by a third.

The problem: Dollar Tree says it’s “navigating through one of the most challenging macro environments” ever. Discretionary spending at Dollar Tree is particularly weak, describing consumer behavior as “need shopping,” not “need shopping.” Even its middle to higher income consumers are pulling back due to inflation. With value being the name of the game, households making $125,000 or more a year are turning to Walmart and Target for one-stop shopping.

Dollar Tree had revenue of $7.37 billion in the second quarter, which was weaker than expected. The average sale per customer is down from a year ago.

This problem isn’t just Dollar Tree’s. Its rival Dollar General said its customers were “financially constrained.” Both companies have cut financial forecasts for the rest of this year, with little hope of relief for their key consumer.

That will do for your daily briefing. From the New York Stock Exchange, this is Conway Gittens with TheStreet.

Related: Dollar General Makes Key Change to Fight Retail Theft