Shares of Dollar General are up more than 7% before the opening bell Friday after the discount chain said Todd Vasos will be returning as CEO after a streak of disappointing quarterly profits.
The company has missed Wall Street profit projections in four of the five past quarters and shares have fallen nearly 60% this year.
The company has also wrestled with a number of labor issues.
In July a National Labor Relations Board judge said that Dollar General violated federal labor law and “clearly intended to interfere” with worker rights in efforts to quell unionization at a Connecticut store.
Violations from the Dolgen Corp., which operates Dollar General stores, included wrongfully firing an employee and making an implied threat to close the location in Barkhamsted, the NLRB decision read — adding that the company also sent corporate officials to the store and other locations across Connecticut in response to a 2021 union drive.
Beyond unionization, Dollar General has faced multiple penalties for store safety over the years — including federal citations for electrical hazards and obstructed fire exits. As of May, the Labor Department’s Occupational Safety and Health Administration had proposed more than $21 million in penalties since 2017 after conducting 240 store inspections nationwide.
Vasos stepped down as Dollar General’s top executive in 2022 after seven years. He takes over from Jeff Owen.
Under Vasos' leadership, Dollar General expanded its store base by about 7,000 locations, added nearly 60,000 net new jobs, increased annual sales revenue by more than 80%, and more than doubled its market capitalization to approximately $58 billion.
"At this time the board has determined that a change in leadership is necessary to restore stability and confidence in the company moving forward,” the company's chairman, Michael Calbert, said in a prepared statement.
While saying the switch back to Vasos is not surprising, Citi analyst Paul Lejuez said many of the issues beguiling the company took root under his control.
“While many of the issues surfaced shortly after Owen took over the CEO role, we believe many of these challenges had their origins while Vasos was CEO,” said in report published shortly after the leadership change was announced. “We do not believe there is a simple fix.”
Dollar General, based in Goodlettsville, Tennessee, expects 2023 net sales growth in a range of 1.5% to 2.5%. Its prior outlook was for sales growth between 1.3% and 3.3%.
