Dollar General Corp. (NYSE:DG) experienced a surge in its shares as the discount retailer announced the return of Todd Vasos as its chief executive officer, effective immediately.
Vasos, who previously served as boss from June 2015 to November 2022, will resume his position "for the foreseeable future", according to the company.
Shares of Dollar General were up 8% at $109.98 on Friday morning in New York.
Vasos will continue to be a board member, a role he has held since 2015, and will succeed current chief Jeff Owen.
Owen was appointed head of the US-listed company, having been the group’s chief operating officer, back in 2022 after Vasos revealed he would be retiring.
Vasos' decision to return was based on a desire to "restore stability and confidence in the company moving forward", Dollar General stated in a company update.
Dollar General also confirmed a narrowing of its sales growth forecast for fiscal year 2023 to a range of 1.5% to 2.5%, from the previous 1.3% to 3.3%.
Additionally, the retailer expects earnings between US$7.10 to US$7.60 per share, compared to the previous forecast of US$7.10 to US$8.30 per share.
Analysts anticipate earnings of US$7.81 per share for the year and revenue of $38.73 billion, indicating a 2.4% increase from the previous year.
Shares in Dollar General are down close to 60% in 2023, having closed in the US at $101 on Thursday.
Positive trajectory: analysts
The news that Dollar General is bringing back Todd Vasos as CEO should be welcome news for the stock, according to analysts.
Jefferies see the CEO’s return as an opportunity for Dollar General to enhance store standards, subsequently boosting sales and overall box economics.
“Vasos has a strong record of executional excellence during his seven-year tenure as CEO,” Jefferies noted. “During his time away, Vasos has remained on the board of directors, which we believe may ease the transition back into the top spot at DG.”
Meanwhile, UBS analysts listed several reasons for positivity, noting Vasos' previous tenure as CEO coincided with a strong performance period for the company.
Vasos is expected to swiftly implement measures, benefitting from his prior experience and understanding of the company's challenges. What’s more, his return is likely to bring stability to the leadership team, instilling confidence among crucial personnel like regional and district managers.
“(We) think this decisive action from the board signals that it’s taking accountability for the recent performance,” UBS analysts wrote. “The results of the last year have not been consistent with the expectations of any of the company’s key stakeholders. Now, there’s reason to believe it should get better.”
-- Updates with share price, analyst comment --