Dive Brief:
- Dollar Tree Inc. said Thursday that its board of directors appointed Michael Creedon as the company’s new CEO following an internal and external candidate search.
- Creedon led the company as the interim chief executive officer since early November. He joined the retailer in 2022 as chief operating officer. Earlier this year, he took on expanded responsibilities in that role, overseeing merchandising and supply chain for the retailer’s Dollar Tree and Family Dollar banners.
- Creedon succeeds Rick Dreiling as CEO. Dreiling resigned in November due to personal health reasons. He had served as the company’s CEO for about two years.
Dive Insight:
Creedon will likely lead the business through several challenges in the coming year.
The challenges ahead include regaining momentum after several quarters that missed earnings expectations, completing a store portfolio review that will see the closure of nearly 1,000 locations — most under the Family Dollar banner — and the continuation of a strategic review that could involve the possible sale or spinoff of the entire Family Dollar brand. For the third quarter, Dollar Tree’s consolidated net sales rose 3.5% to $7.56 billion, while overall same-store sales were up 1.8%. Comparable sales at Dollar Tree also rose 1.8%, and same-store sales at Family Dollar were up 1.9%.
Telsey Advisory Group analysts said in a note earlier this month that uncertainty looms over the outcome of Family Dollar’s strategic review, as whatever decision the company makes could significantly affect the company’s forward-looking strategy and performance. The impact of potential tariffs is also an issue to watch because Dollar Tree’s supply chain is highly exposed to China, the analysts said.
In its latest 10-K, Dollar Tree said imported merchandise is about 41% to 43% of the company’s total retail value purchases. About 15% to 17% of Family Dollar’s purchases are directly imported. The company also said a significant portion of goods bought from domestic vendors is likely imported.
While the effects of potential tariffs under President-elect Trump’s administration isn’t clear, Creedon said during a recent earnings call the company has plans in place to shift supply sources for many of its products to other countries. Additionally, the retailer may also negotiate lower costs with suppliers, change product specifications or sizes, or discontinue noneconomical items.
“In terms of the changes, our focus is on the successful execution of the Family Dollar strategic review and setting up Dollar Tree for a multiyear kind of next chapter if you will,” Creedon said, according to a call transcript. “That's my focus. That's what the board's charged me with. And when we look at the pluses and minuses of that, we're going to continue to test and learn.”
Dollar Tree has seen several leadership changes in recent months and more are on the horizon. Chief Financial Officer Jeff Davis plans to leave the company, likely early next year, after the filing of the retailer’s 10-K.
