Family Dollar Down

SUBHEAD: The government shutdown is wreaking havoc the poor and discount stores that service them.

By Kim Bhasin on 12 October 2013 for Huffington Post -

Image above: A Family Dollar clearance sale banner.  From original article.

The ongoing government shutdown is taking its toll on Americans at the margins, the chief executive of Family Dollar said this week.

"The threat of the shutdown, the uncertainty regarding some of the government assistance ... the uncertainty around job growth are very real to our customer every day," said Howard Levine, the CEO of the discount retail chain, in a Wednesday call with analysts and investors.

"Over half" of Family Dollar's customers are on some sort of government assistance, Levine said in the call.

Levine also said that the company expects high unemployment levels, higher taxes and "continued uncertainty" in Washington to continue to clamp down on consumers' income.

Family Dollar has been growing in recent years as more Americans struggle to afford basic necessities. The company, with its network of more than 7,000 stores, is one of three dollar store chains (along with Dollar General and Dollar Tree) aggressively expanding across the country. These stores thrive on low-income shoppers -- but not no-income shoppers.

Levine is bracing for shutdown pain, he said, as he doesn't expect his customers to recover any time soon. "We expect that many of the headwinds faced by our customers will persist," he said. "We have repositioned the company for the tough sales environment."

Low-income Americans have been caught up in Washington's funding impasse. Several states have scaled back or halted the Special Supplemental Nutrition Program for Woman, Infants and Children, which aids 9 million moms and babies across the country. Some states shuttered Head Start programs, affecting more than 7,000 children, until philanthropists stepped in with funding to cover the rest of the month. Arizona halted welfare checks for 3,200 families, until Gov. Jan Brewer (R) reversed the decision on Monday.

Around 800,000 government employees have been furloughed during the shutdown, and that number doesn't include private-sector employees affected by the congressional standoff. While some workers have been called back -- including most of the nearly 400,000 Pentagon workers -- there's still no guarantee of back pay for some employees.

But dollar store chains have also played a role in squeezing low-income consumers by forcing down wages, leading to some lengthy legal battles from employees who claimed mistreatment.

The National Retail Federation, the nation's largest retail trade group, sent a personalized letter to each member of the Senate and House of Representatives earlier this week, calling for an end to the shutdown and a measure to raise the debt ceiling.

"There are warning signs that an extended shutdown will have serious repercussions for the U.S. economy," wrote Matthew Shay, the president and CEO of the NRF. He cautioned that the shutdown comes at the "worst possible time" for retailers -- in the run-up to the important holiday season. Holiday spending accounts for 20 percent of the industry's annual sales, according to the NRF.

"Retailers already have more than 4 million cargo containers of merchandise on their way to store shelves for the holidays," wrote Shay. "Even if Customs and other agencies can get that merchandise off the docks without a hitch, shutdown-fueled consumer worries over the economy could leave that merchandise sitting on shelves well past Christmas."

See also:
Ea O Ka Aina: Peak Walmart 9/30/13

No comments :

Post a Comment