Dollar General Returning CEO Seeks To Make Up For Company’s Low Performance

Discounter store Dollar General has been fending off controversy, notably the fact that they owe the Federal Occupations Safety and Health Administration over $21 million in fines over safety concerns, including blocked fire exits and extremely hazardous situations. Their competition, Dollar Tree, allegedly faces similar workplace issues, including rat infestation in warehouses, messy aisles, and understaffed stores (all of which were addressed on Last Week Tonight with John Oliver). There has, not surprisingly, been an effect on the bottom line.

Dollar General’s CEO, Todd Vassos, recently addressed plans to salvage the company’s public relations issues and unsatisfactory performance in recent times during an earnings call with investors. It was his first since he came out of retirement in October, following Jeff Owen’s exit less than a year after taking over from him. He assured that more workers would be stationed in front of stores to help customers (the lack of which has been a major problem), and new store openings would be kept under control. He added that underperforming items will be taken off the shelves, and high-demand items will be kept in stock.

Dollar General has had a tough year

Despite topping Wall Street’s fiscal third quarter expectations and being the fastest-growing retailer by store count, Dollar General has experienced slower sales, federal scrutiny, and a fall in stock price this year. “We have some hard work yet ahead of us, but we know what to do,” Todd said. “We’ve done it before, and we are absolutely set on doing it again, as quickly as possible.”

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Based on a survey of analysts by LSEG, formerly Refinitiv, the retailer recorded $1.26 earnings per share and $9.69 billion in revenue over the three-month period that ended on November 3 — a fairly lower margin from Wall Street’s forecast and their year-ago period. Their shares dropped by 46% this year, closing at $133.92 on Wednesday. They also underperformed the 18% gains of the S&P 500.

Riddled with fines

Shareholders called for an independent, third-party audit into worker safety earlier this year, which was declined, causing problems in the long run. Worse still, shoppers are now opting for ways to save from inflation by buying fewer items. Todd aims to fix these issues by prioritizing storefront staff, reducing reliance on self-checkout, which he considers “a secondary checkout vehicle, not a primary,” and improving inventory management.

Todd plans to open 800 stores, remodel 1,500 stores, and relocate 85 stores in the coming fiscal year while holding off on real estate to focus on existing outlets. He assured on the hourlong earnings call that the company has “looked at every element of our business that touches our consumer” to inform their new strategy.