You are here
GOODLETTSVILLE, Tenn. - Troubled national discount chain Dollar General Corp. yesterday named a member of its board president, and revealed a major restructuring that includes plans to close about 400 under-performing stores during fiscal 2007.
The closings, which it did not specify, would represent about 5 percent of its current total of units.
David L. Bere', who has been a member of the company's board of directors since 2002, will serve as president and c.o.o. effective Dec. 4.
Other steps that Dollar General will take next year to increase its long-term profitability include decelerating its new store growth rate through fiscal 2008, remodeling or relocating a number of stores to improve productivity, and eliminating its "packaway" inventory management model by the end of fiscal 2007, allowing for newer and fresher merchandise.
The company said it expects that these actions will drive better-disciplined inventory management and a more productive store base; and will enable stronger, more profitable growth in the future.
Dollar General also said it plans to invest up to $500 million over the next two years in a share repurchase program.
Bere' most recently served as corporate v.p. of Ralcorp Holdings, Inc. and as the president and c.e.o. of Bakery Chef, Inc., a manufacturer of frozen bakery products that was acquired by Ralcorp Holdings, Inc. in December 2003. Additionally, Bere' spent 17 years at the Quaker Oats Company, where he served as president of the Breakfast Division and the Golden Grain Division.
As part of its new store strategy, the company expects to open a total of approximately 600 new stores in fiscal 2006. Going forward, the company plans to open approximately 300 and 400 new stores in fiscal 2007 and 2008, respectively, and to relocate or remodel approximately 300 stores in each of these years. The company plans to return to a higher rate of store openings thereafter, beginning in fiscal 2009, when it plans to open approximately 700 new stores and relocate or remodel 450 stores.
Dollar General estimated the pre-tax exit costs and charges related to its real estate plan to be $74 million. It will record an estimated $16 million of these costs and charges in the third quarter of fiscal 2006, primarily related to asset impairments (including $8 million of below-cost inventory adjustments and $8 million of fixed assets) in the stores to be closed. It said it expects to record the remaining $58 million of these costs and charges primarily in fiscal 2007.
As of Nov. 24, 2006, Dollar General operated 8,276 neighborhood stores.