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Dollar General: Our Take on the Chairman and CEO's Resignation

Takeaway: The resignation of DGs chairman and CEO likely signals either a slowdown in the growth trajectory or simply that growth is hard to come by.

(Editor's Note: Here is an excerpt from a note our Retail Team published to institutional subscribers earlier today.)


DG - Dollar General CEO Announces Retirement Plans (PRESS RELEASE)

(http://investor.shareholder.com/dollar/releasedetail.cfm?ReleaseID=856844)

"Dollar General Corporation announced that its chairman and chief executive officer, Rick Dreiling, 60, has informed the Board of Directors of his intent to retire as CEO effective May 30, 2015 or upon the appointment of a successor. Dreiling has agreed to serve, at the discretion of the Board, as chairman during a transition period following the appointment of a new CEO."

"Dreiling has served as CEO since January 2008 and was named chairman of the Board in December 2008. Under his leadership, the Company's annual sales have increased more than 80 percent to $17.5 billion in 2013 and store count has increased by 38 percent to more than 11,000 stores in 40 states."

Our Takeaway:

Dreiling was critical in leading DG in the two years leading up to its (re) IPO in December 2009.

Since that point, he's executed on the real estate growth strategy, but also in a meaningful shift into consumables. We've been vocal about the category shift being largely played out at DG (and FDO).

And although there is admittedly still room for the company to expand (and fill out) its footprint, we can't imagine that a CEO switch at this point does not signal either a change in the growth trajectory, or the likelihood that growth is simply harder to come by.

That's a similar theme these days in retail -- DG, TGT, JCP, KSS.