Dollar General Corp. recently reported weaker-than-expected 2023 results. In addition, leverage as measured by S&P Global Ratings-adjusted debt to EBITDA exceeded 3.5x. We now expect weaker financial results to persist into 2024, including lower margins driven by a mix shift away from higher margin nonconsumable items. This could result in leverage sustained higher than 3.5x. As a result, we revised our outlook on Dollar General to negative from stable. We also affirmed all our ratings, including our 'BBB' long-term issuer credit rating. The negative outlook reflects the risk that Dollar General's decreased demand from low-income consumers, mix shift away from nonconsumable products, and elevated shrink will persist, resulting in weaker-than-expected operating performance and leverage remaining elevated over the coming year
