Jeff Owen’s short stint as chief executive of
Dollar General
came to an abrupt end Thursday, after the company said he would be stepping down effective immediately.
Todd Vasos,
Dollar General
‘s (ticker: DG) former CEO, will be coming out of retirement to lead the company for the foreseeable future. Vasos previously led the company from June 2015 through November 2022, when he handed over the reins to Owen.
“At this time the Board has determined that a change in leadership is necessary to restore stability and confidence in the Company moving forward,” said Michael Calbert, chairman of the company’s board of directors.
Investors rallied behind the news, with the stock up 7.8% to $109.81 in after-hours trading.
The leadership update was surprising and necessary, wrote Oppenheimer analyst Rupesh Parikh in a note to clients.
“Following significant execution challenges in recent quarters, we believe this change will be well-received by investors and could help to reinstill confidence in the longer-term DG bull case,” he wrote. Parikh has a Perform rating on the stock.
The past year has been a tough one for Dollar General. Shares are down nearly 60% year to date as the company has been plagued by a series of disappointing earnings results. Dollar General slashed its guidance in its latest quarter, reported late August.
Macroeconomic pressures have played a role in the company’s struggles. Dollar General’s core consumers have been squeezed by rising interest rates and inflation, curbing their ability to keep spending. Shoplifting has worsened as well, the company said, which has taken a toll on margins.
But there have also been a series of company-level missteps that have weighed on its financial performance, as Barron’s previously reported. The company is in the early stages of a new investment strategy, which includes spending on higher wages, store remodeling, and supply chain improvements. In August, the company estimated those investments would present a drag of up to $170 million on operating profit in the second half of 2023.
Dollar General updated its guidance for fiscal 2023 on Thursday. The company now expects sales growth of between 1.5% to 2.5%, a narrower range than its previous expectation of 1.3% to 3.3%. Earnings per share will range between $7.10 and $7.60, compared with previous expectations of between $7.10 to $8.30.
Write to Sabrina Escobar at [email protected]
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