Dollar General Corp. shares plummeted in the New York premarket trading following a weaker-than-expected second-quarter earnings report. The discount retailer faces its first annual decline and has lowered its profit forecast for the second quarter in a row amid “softer sales trends.” Troubles at Dollar General mirrors challenges faced by other retail businesses, pointing to the potential cracking of low/mid-tier consumers.

The discount retailer posted earnings of $2.13 a share on revenue of $9.8 billion. Analysts surveyed by FactSet forecasted $2.47 a share on sales of $9.9 billion. Same-store sales declined .1%, while analysts were expecting a .9% rise, driven by a slowdown in consumer traffic.

Dollar General’s second-quarter highlights:

  • Comparable sales -0.1% vs. +4.6% y/y, estimate +0.92%
  • EPS $2.13 vs. $2.98 y/y
  • 2-year same-store sales stack +4.5% vs. -0.32% y/y, estimate +5.37%
  • Net sales $9.80 billion, +3.9% y/y, estimate $9.91 billion
  • Gross margin 31.1% vs. 32.3% y/y, estimate 31.7%
  • SG&A as a percentage of revenue 24% vs. 22.6% y/y, estimate 23.5%
  • Operating profit $692.3 million, -24% y/y, estimate $785.1 million