Dollar General (DG.N) is reaching back to happier days. The $25 billion retailer on Thursday announced that ex-boss Todd Vasos is returning to his corner office to lead the company for “the foreseeable future.” He replaces Jeff Owen, in the job for less than a year. In that time, shares plummeted 60%, compared to rival Dollar Tree’s (DLTR.O) gentler decline of roughly a fifth. Meanwhile, Dollar General has repeatedly missed analyst expectations as net profit margin fell from nearly 7% to estimates of 3% for this quarter, according to LSEG. For the third time in 2023, the company cut its guidance for full-year results, now expecting store sales to decline.
Stuck in such a deep rut, it’s easy to see why Vasos was beckoned back. Under his previous stint from 2015 until 2022, shares returned an annualized 19%, beating Dollar Tree, Walmart (WMT.N) and Big Lots (BIG.N). But tapping prior CEOs has met mixed results. Shares of Walt Disney (DIS.N), which re-installed Bob Iger as boss in November, are near a 10-year low. Starbucks (SBUX.O), at least, had it better when Howard Schultz came back for a third turn as CEO between April 2022 and March 2023, outperforming McDonald’s (MCD.N). Dollar General faces plenty of challenges shared by all retailers, from rising wages to shifting consumer spending. Simply bringing back a former boss doesn’t guarantee the old magic will return. (By Jennifer Saba)
(The author is a Reuters Breakingviews columnist. The opinions expressed are their own. Refiles to fix editing byline.)
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