Dollar stores feel the squeezes their customers do

Here's the latest bad economic news: Dollar stores, which have expanded recently in rural areas and became more popular during the Great Recession, are failing to meet quarterly profit forecasts, reports Ann Zimmerman of The Wall Street Journal.

"In the past several weeks, Dollar General Corp., Family Dollar Stores Inc. and Dollar Tree Inc., the country's three largest chains that sell sharply discounted food, household staples and other items in modest-size stores, all have missed their quarterly earnings targets," Zimmerman reports, calling it "a sign that even fairly cheap toys and other small indulgences now are a stretch for some consumers." (Associated Press photo: Family Dollar aisle)

The companies blamed higher cost of fuel for hauling goods, but "also said their price-sensitive customers, pummeled by high unemployment, stagnant wages and soaring gasoline prices, are buying more food and other basics like cleaning products, which have relatively low profit margins, and fewer higher-margin discretionary products, such as apparel and home decorative items," Zimmerman writes. Also, the stories are squeezed by higher food prices, which "they have been reluctant to pass on to their struggling core customers, who typically have family income of less than $40,000." (Read more)