In a surprising turn of events, Dollar General (DG) witnessed a sharp decline in pre-market trading on Thursday following the release of its disappointing Q2 financial results. The widely recognized discount store retailer reported earnings of $1.70 per share, marking a significant decrease of 20.2% compared to the same period last year. This fell short of analysts' expectations of $1.79 per share, further dampening investor sentiment.

Although Dollar General achieved a 4.2% year-over-year increase in net sales, generating $10.2 billion in revenue, it failed to meet Street estimates of $10.4 billion. Additionally, the company's same-store sales inched up by a mere 0.5% during the second quarter, adding to the disappointment among investors.

Addressing the lackluster results, Todd Vasos, CEO of Dollar General, acknowledged the financial strain experienced by the company's core customers. He commented, "While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control."

Despite the challenging quarter, Dollar General's Board of Directors approved a quarterly cash dividend of $0.59 per share on its common stock. The dividend is scheduled to be paid on or before October 22 to shareholders of record as of October 8, 2024. However, the company did not engage in any share buybacks during the second quarter. As of the end of the quarter, Dollar General had approximately $1.4 billion remaining for future stock repurchases.

Looking ahead, Dollar General has revised its FY24 outlook. The company now projects net sales growth in the range of 4.7% to 5.3%, down from its previous forecast of 6% to 6.7%. Similarly, same-store sales are anticipated to increase by approximately 1% to 1.6%, compared to the initial expectation of a rise of 2% to 2.7%. The company has also adjusted its earnings forecast to a range of $5.50 to $6.20 per share, below the previous estimate of $6.80 to $7.50 per share.

Analysts maintain a cautiously optimistic stance on DG stock, with a Moderate Buy consensus rating based on eight Buy recommendations, ten Holds, and one Sell. Over the past year, Dollar General's stock has experienced a decline of over 15%. However, the average price target of $146.24 suggests an upside potential of 18.1% from the current levels.

As updated analyst ratings are anticipated following Dollar General's Q2 results, the stock's future outlook remains to be seen. Investors will be closely monitoring any potential shifts in sentiment regarding the company's performance.