Shares of Dollar General (NYSE:DG) stock rose over 7% overnight on news that former CEO Todd Vasos is returning to the job.
Vasos left last November and was succeeded by Jeff Owens, who has now since left the company.
Vasos led the discount retailer to glory from 2015 until his 2022 retirement. The stock’s value rose by over 200% while the dividend more than doubled. Since he left, however, the stock’s value has collapsed, falling 59%.
DG stock opened this morning at $111.28 per share, and its market capitalization is about $24 billion on 2022 sales of nearly $38 billion.
Hail Vasos!
Under Owens, Dollar General’s growth slowed to a crawl, and net income fell. DG first began seeking a successor to Vasos in 2021, conducting a nationwide search before settling on Owens, a 30-year veteran of the company.
Vasos both grew the chain and changed its image from that of an urban “food desert” and rural “junk store” into a chain of general stores. In contrast to Family Dollar, owned by rival DollarTree (NASDAQ:DLTR), Vasos lets managers stock what is sold. Thus, some units featured fresh vegetables, others high-end merchandise, and some even sold liquor.
Vasos also launched a trinket chain called Popshelf in upscale suburban locations. I called Vasos “the best retailer you never heard of.”
Under Owens, Dollar General tried to combine the two chains, which have vastly different markets. He also slowed the opening of new stores. During his tenure, DG faced renewed criticism over wages, staffing levels, and crime.
Many of the criticisms extend back to Vasos’ time in charge. He now needs to deal with those issues.
DG Stock: What Happens Next?
When Vasos left, Dollar General stock was selling at a premium to its revenue based on high profitability and growth. Now it sells at a discount to sales. Vasos’ second act will be harder than his first.
As of this writing, Dana Blankenhorn held a LONG position in DG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
