Dollar General Shares Tumble as CEO Resigns - Analyst Blog

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Shares of Dollar General Corporation ( DG ) tumbled over 7% on the index last Friday following the announcement of CEO Rick Dreiling's departure. Dreiling has decided to retire and will quit office on May 30, 2015 or when the company zeroes on a successor.

The board will conduct both internal and external search for Dreiling's successor. Once the CEO position is filled, Dreiling will serve as the chairman of board during transition period.

Dreiling has been at the helm for nearly six years and is credited for stabilization of the discount retail giant during the economic mayhem. Moreover, under his leadership, Dollar General has expanded its product offering leading to an 80% rise in sales to $17.5 billion. The store count increased 38% and crossed the 11,000 mark. As of May 2, 2014 the company operated 11,338 stores in 40 states.

However, this development could delay activist investor Carl Icahn's plans of selling off Family Dollar Stores Inc. ( FDO ). Speculations were rife about Family Dollar selling itself possibly to Dollar General. Icahn, who holds a 9.4% stake in Family Dollar, has pushed the retailer to sell itself after a dismal financial run as per market reports. Shares of Family Dollar also fell 1.7% on the last trading day.

Dollar General is one of the largest discount retailers in the United States. The company trades in low priced merchandise typically $10 or less. The company is committed toward better price management, cost containment, private label offering, effective inventory management, as well as merchandise and operational initiatives to drive sales and margins.

The company is also accelerating its pace of new store openings. The company opened 650 new outlets and remodeled or relocated 582 stores during fiscal 2013. During fiscal 2014, the company expects to open about 700 new stores, and to relocate or remodel about 500 stores. Dollar General has displayed a fabulous comparable-store sales growth story. Fiscal 2013 represented the 24th consecutive year of comparable-store sales growth.

Currently, Dollar General carries a Zacks Rank# 3 (Hold).  Other retail stocks worth considering include Citi Trends, Inc. ( CTRN ) and Burlington Stores, Inc. ( BURL ). Citi trends sports a Zacks Rank #1 (Strong Buy) while Burlington stores carry a Zacks Rank #2 (Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: DG , BURL , FDO , CTRN

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