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As More Americans Lose Food Stamp Benefits, Dollar General Posts Drop in Sales

The sign outside the Dollar General store in Westminster, Colorado is pictured
REUTERS/Rick Wilking

Discount retailer Dollar General reported a surprise drop in third-quarter comparable sales, largely due to lower grocery prices and a reduction of food stamp coverage in several U.S. states.

Sales at Dollar General stores open at least 13 months fell 0.1 percent, compared with the 0.8 percent growth expected by analysts polled by research firm Consensus Metrix.

By the end of 2016, as many as 22 states will have changed the criteria for the Supplemental Nutrition Assistance Program (SNAP), formerly called the food stamp program — a move that is likely to result in about 1 million Americans losing benefits.

States implementing SNAP changes this year include Florida, Georgia, Alabama and Tennessee, which have some of the highest concentration of Dollar General stores.

Dollar General has been cutting prices to fight aggressive competition from Wal-Mart and others amid falling grocery prices.

The company's shares were down 4.3 percent at $74 in light premarket trading on Thursday.