Dollar General's shares slumped 29.74% to a more-than-six-year low Thursday after the discount retailer slashed its annual sales and profit forecasts, as competition for budget-conscious shoppers intensifies in the U.S.

Dollar stores have come under pressure as deep-pocketed rivals such as Walmart and Target have doubled down on offering low-priced daily essentials. The rapid rise of Temu, China's PDD Holdings' e-commerce platform, has also weighed on the business.

"(Dollar General's results) show the challenge of maintaining market share with Walmart winning in a slower growth environment," Evercore ISI analyst Michael Montani said.

Dollar General's core customer base, which contributes about 60% of overall sales, comprises households earning less than $35,000 annually.

"While middle and higher income households are seeking value as well, they don't claim to feel the same level of pressure as low-income households, as customers have felt more pressure on their spending," CEO Todd Vasos said on a post-earnings call.

Dollar General now expects fiscal 2024 same-store sales to rise 1% to 1.6%, down from the prior forecast of 2% to 2.7%, and annual earnings per share to be $5.50 to $6.20, compared with the previous forecast of $6.80 to $7.55.

"Dollar store operators are clearly struggling in the current macroeconomic environment ... To regain foot traffic, Dollar General will likely need to cut prices and increase promotions," Arun Sundaram, an analyst with CFRA Research said.

Dollar General's shares touched their lowest since June 2018 at $88.20 and were on track for their worst day on record. Rival Dollar Tree's stock was down about 9%.

Dollar General's margins fell to 30% in the second quarter, compared to 31.1% a year earlier, hurt by increased markdowns, inventory damages and retail shrink, which includes losses from theft or damage.

Company executives said increased promotional activity would pressure sales and margins for the duration of the year.

The company posted net sales of $10.21 billion for the three months ended Aug. 2, compared with analysts' average estimate of $10.37 billion, according to LSEG data.

Its profit of $1.70 per share also missed estimates of $1.79.