Dollar General’s CEO to Retire Amid Industry Merger PressureLindsey Rupp
Dollar General Corp. Chief Executive Officer Rick Dreiling plans to retire in 2015, sending the company on a search for a new leader at a tumultuous time for the dollar-store industry. The shares fell the most in a year.
Dreiling, 60, plans to step down as CEO by May 30 of next year or whenever a successor is hired, according to a statement today. He intends to remain as chairman during a transition period following the appointment of a new CEO.
Since Dreiling took the helm in 2008, Dollar General’s annual sales have risen 80 percent to $17.5 billion while its store count has grown 38 percent to more than 11,000. Other chains haven’t done as well, putting pressure on the industry to consolidate. Dollar General is seen as a potential acquirer of smaller rival Family Dollar Stores Inc., which billionaire investor Carl Icahn has said should put itself up for sale.
“The stock had gone up a lot on the speculation they would take over Family Dollar -- it couldn’t be possible if he’s leaving in a year,” Joan Storms, a Los Angeles-based analyst at Wedbush Securities, said in an interview. “Then it takes maybe a year to find a successor and they have to fit into the role first, so by that time Family Dollar may be long sold.” She rates the shares outperform.
Dollar General fell 7.3 percent to $57.19 at the close in New York, the biggest daily decline since June 2013. Through yesterday, the stock had gained 21 percent in the past year.
The Goodlettsville, Tennessee-based company plans to conduct an internal and external search for a new leader.
“Dollar General is in a strong position today, and I’m confident it has excellent prospects for the future,” Dreiling said in the statement.
Investors may also be worried about the company’s performance under new leadership as the Dollar General’s target customer faces economic challenges, Storms said.
“When you have a change in leadership, sometimes there’s missteps,” she said. “At a time when they’ve really unlocked the low-hanging fruit, now it’s going to be a little more challenging to continue to make the business grow the way it has.”