Robbins Arroyo LLP: Dollar General Corporation (DG) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Dollar General Corporation (NYSE: DG) in the U.S. District Court for the Middle District of Tennessee, Nashville Division. The complaint is brought on behalf of all purchasers of Dollar General securities between March 10, 2016 and November 30, 2016, for alleged violations of the Securities Exchange Act of 1934 by Dollar General’s officers and directors. Dollar General, a discount retailer, provides various merchandise products in the southern, southwestern, midwestern, and eastern United States.
Dollar General Accused of Lying About Its Declining Financial Condition
According to the complaint, Dollar General’s core customers are from low and fixed income households, a significant percentage of which qualify for the Supplemental Nutrition Assistance Program (“SNAP”), a federal food stamp benefits program. Notably, at least 20 states were planning to re-implement a limitation on SNAP benefits to become effective in April 2016. Dollar General officials nonetheless projected earnings per share growth of 10-15% for fiscal 2016, and annual same-store sales improvement of 2-4%. In addition, during a conference call with investors, Dollar General’s Chief Executive Officer downplayed the significance of SNAP payments to the company and any impact the SNAP reductions would have on the company’s sales. The complaint alleges that in so doing, Dollar General officials did not disclose that the SNAP limitations would have a negative effect on the company’s financial performance because 56% of Dollar General stores are located in states that re-implemented the SNAP limitations.
The truth regarding the impact that SNAP reductions were having on Dollar General’s business began to surface on August 25, 2016, when the company announced disappointing second quarter 2016 results. Dollar General attributed the decline in part to “a reduction in both SNAP participation rates and benefit levels.” Then, on December 1, 2016, the company announced that its third quarter 2016 results fell far short of market expectations, and included a reduction in same-store sales, despite the company’s earlier prediction of annual same-store sales growth at 2-4%. The company finally acknowledged the true extent to which SNAP reductions were having on its sales, stating that the benefit reductions “affect about 56% of our store base… And those states that have had the reduction or elimination, they are approximately 100-basis-point worse in comp.” On this news, Dollar General’s stock declined nearly 5%, to close at $73.48 per share on December 1, 2016.
Dollar General Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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