Scott Shellady warns dollar stores getting crushed in markets is bad sign for economy: 'Just can't ignore'
Scott Shellady on dollar stores' poor market performance, what it signals for the economy going forward and Google facing a massive antitrust fine.
Dollar stores struggling signals bad news for the U.S. economy, RFD-TV's Scott Shellady warned on Tuesday.
"It's one of those things you just can't ignore as much as a lot of people would like to," Shellady told Gxstocks' Stuart Varney as he floated the possibility of an upcoming recession.
"When you think about it, their target market is $30,000 to $45,000 earnings per year. Those people have basically stopped going or at least not spending what they used to spend. Even the CFO of Darden Restaurants, which is the Olive Garden, they've said that they've seen a decent amount of revenues, but it's from people that make over $200,000; their target market [is] between $70,000 and $80,000 a year. As far as what their customers are, they've dropped off the face of the earth."
DOLLAR TREE SLASHES ANNUAL FORECASTS AMID WEAKER DEMAND, STRONGER COMPETITION
A sign is posted in front of a Dollar Tree and Family Dollar store on March 13, 2024 in Rio Vista, California. (Getty Images / Getty Images)
Stores like Dollar General, Family Dollar and Dollar Tree have taken hits lately, with the latter of the three struggling to meet expectations despite selling most discounted items at $1.25 apiece.
Dollar Tree's shares tumbled last week after the company revised its annual outlook, with the change being attributed to pressure on its lower and middle income customers.
Dollar General Chief executive Todd Vasos commented on the company's financial troubles by highlighting lower-income customers, the core target, who "feel financially constrained."
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Dollar General truck is seen parked by a highway in the United States of America, on July 8th, 2024. Lower-income consumers are struggling in today's economy, with inflation driving them away from stores. (Photo by Beata Zawrzel/NurPhoto via Getty Images / Getty Images)
Shellady similarly warned that the consumer is "tapped out."
"They have no more money stored and that could lead to something bigger down the road," he said.
"I'm not trying to be a Debbie Downer or Chicken Little, [saying] 'The sky is falling; because there's going to be some opportunity for the markets when and if that does happen… but you can't ignore the fact that Mom and Pop on Main Street are really hurting. I think a lot of people do ignore that fact."
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