Subject: Re: OT: Mungofitch - Any observations on DG results_QM
As others note, another board is probably better. There's a thread at Falling Knives with some useful thoughts.

But briefly: ouch.

I doubt many expected the "shrink" to keep getting worse. The word is in quotation marks because I think it was used by a lot of retail management teams as a fashionable excuse for other problems. For example, industry wide shrink as a percentage of retail sales definitely got worse in the last couple of years, sure, but that was from a relatively recent low point...it was running not far from levels that were considered entirely normal a decade ago. 2022 was bad, but the same as 2019, and both were only a hair higher than 2010.

Of course, the issue is much more diffuse than merely shrink. Gross profit down 1.1% of sales due to four cited factors, and SG&A up 0.6% of sales for another four.

Is it a buy at $87.60 right now?
It comes down to whether you expect normalization back to how things used to work, or whether you think the basic business model is dead. If things normalize, then it doesn't particularly matter very much how long it takes, one will probably do well from here. If a material amount of the damage to the business model is permanent, then it's not a buy. e.g., perhaps it will becomes a societal norm in the places DG operates to put on a hoodie and steal whatever you like with (understandably) no pushback from the staff.

I'm sitting on my hands patiently. Not buying, not selling. There's one usually sensible first course of action when you find yourself underwater: Hold your breath.

Jim