Can an Ex-CEO Get Dollar General Back on Track?

Dollar General reappointed Todd Vasos as CEO following four straight quarters of earnings shortfalls.

Gone is Jeff Owen, who replaced Vasos as CEO in November 2022. At Dollar General for nearly 30 years, Owen was formerly COO before taking the top post.

“The Board has tremendous respect for Jeff and greatly appreciates his many contributions to the company, especially during his long tenure leading our retail operations,” said Michael Calbert, chairman of Dollar General’s board. “However, at this time the board has determined that a change in leadership is necessary to restore stability and confidence in the company moving forward.”

Vasos, who served as Dollar General’s CEO from June 2015 to November 2022, continued as senior advisor until his retirement in April and remained on the board. Over his seven-year tenure, Vasos added 7,000 stores, expanded annual revenue by more than 80%, and more than doubled its market capitalization.

Vasos is "acutely aware of the challenges facing our business and the industry more broadly," said Calbert.

Dollar General also slightly lowered its annual guidance again after reducing it while reporting second-quarter and first-quarter results.

The U.S.’s largest dollar store operator was expected to benefit as consumers trade down to dollar stores to save money amid an inflationary climate, but any gains have been offset by a sharp pullback in spending by its core lower-income consumers.

Owen said on Dollar General’s second-quarter call, “Our customer, what she's telling us is that certainly as gas prices are less than last year, but they're accelerating throughout 2023, and she's still feeling the headwinds of the SNAP reduction and also the lack of tax refunds. And her savings are gone. And so, certainly, she is still living with the inflationary pressure.”

Dollar General has also been impacted by capacity issues last year that led to elevated inventory levels as well as higher shrink. The company is implementing targeted price reductions to reinforce its value positioning and making investments in labor to improve in-store service levels and in demand forecasting tools to improve inventory flow.

Shares of Dollar General jumped nearly 8% on Friday after the news of the hiring, although several analysts reduced their price targets on the stock.

Telsey Advisory Group analyst Joe Feldman said in a note, according to Reuters, "The move is a clear acknowledgment of rising investor concerns about the company's future related to a clouded business strategy, choppy execution, consistent earnings misses, and a decline in the share price of (about) 60% since Owen took over."