Dollar Tree ($DLTR) shares saw an increase early Tuesday as the discount retailer announced the resignation of Rick Dreiling, who stepped down as chairman and chief executive due to health issues. Dreiling, who had held the CEO position since January 2023, officially resigned effective November 3, as stated in a late Monday announcement.
Michael Creedon Jr., the Chief Operating Officer, has been appointed as interim CEO while the company's board seeks a permanent replacement from both internal and external candidates. "With my health presenting some new challenges over the past two months, the time is right for me to step away and focus on myself and my family," Dreiling remarked in the announcement.
Following this news, Dollar Tree shares experienced a rise of 3.8% in premarket trading. Additionally, the board elected Edward Kelly III, the lead independent director, to take on the role of chairman. Truist Securities highlighted in a late Monday note that while Mr. Dreiling's resignation is unfortunate, it was not entirely unexpected, considering he missed the last earnings call and has been dealing with health challenges.
The firm's analysis suggested that the strategy to quickly turn around Family Dollar and drive improvements at Dollar Tree had not materialized as hoped. Dollar Tree also reiterated its outlook for the third quarter, indicating that its same-store net sales have "tracked well" during the quarter. As of September, the retailer projected adjusted earnings to fall between $1.05 and $1.15 per share and sales to range from $7.4 billion to $7.6 billion.
Current consensus estimates on Capital IQ anticipate a normalized EPS of $1.06 and revenue of $7.44 billion for the quarter. The financial results are expected to be released in December, and the company reaffirmed its commitment to review strategic alternatives for the Family Dollar segment, which may involve potential sale or spinoff options. "We are excited about our current trajectory and are focused on delivering a successful holiday season," Creedon stated.
"We will continue accelerating growth at Dollar Tree, and we remain concentrated on identifying the best path forward for Family Dollar." The dollar store market has faced certain challenges, as economic pressures impact low- and middle-income shoppers amid heightened competition, particularly from Walmart ($WMT), as indicated by Truist.
Nevertheless, the brokerage firm remains optimistic that Dollar Tree is "differentiated enough" to provide genuine value for both consumers and investors. Price: 69.35, Change: +2.54, Percent Change: +3.80.