Dollar General (ticker: GD) stock took a hit on Thursday as the discount retailer revised its outlook, citing softer sales trends and plans to ramp up inventory reduction efforts. In the fiscal second quarter, the company reported earnings of $2.13 per share on revenue of $9.8 billion, missing analysts' expectations of $2.47 per share on sales of $9.9 billion.

The retailer also experienced a decline in same-store sales, which decreased by 0.1% compared to the first quarter of 2022. The decrease was primarily driven by a decline in customer traffic.

Despite these results, Chief Executive Jeff Owen expressed confidence in the company's progress, stating, "While we are not satisfied with our overall financial results, we made significant progress in the second quarter improving execution in our supply chain and our stores, as well as reducing our inventory growth rate and further strengthening our price position."

To accelerate inventory reduction efforts and invest in areas such as retail labor, Dollar General has slashed its fiscal 2023 outlook. The company now anticipates net sales growth to be between 1.3% and 3.3%, compared to the previous guidance of 3.3% to 5%. Additionally, management expects earnings to decline by a range of 34% to 22% in the year, compared to the previous guidance of an 8% drop to flat growth.

As a result of the news, shares of Dollar General plunged 15% to $134.79 in premarket trading on Thursday. The stock has already experienced a 36% decrease in value since the beginning of 2023.

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