No. of Recommendations: 3
The Morningstar bunch on DG, a full recovery of profit margin expected:
More positively, we don't view current pressure as an appropriate bellwether for Dollar General's longterm prospects. The firm's core customers, who live in rural areas and make less than $40,000 per year,
are feeling a disproportionate share of current macroeconomic pressure and some pullback in demand
should have been expected. With labor and rental costs set at least in part by the broader market, it's no
surprise to see sharp operating deleverage in hindsight, and we expect a full recovery to high-singledigit margins as macro pressure abates.
