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Dollar Tree Inc. CEO Mike Witynski will leave the Chesapeake-based Fortune 500 discount retailer and its board effective Jan. 29, with Executive Chairman Rick Dreiling becoming the next CEO, the company announced Tuesday.
Witynski, who joined Dollar Tree in 2010, played a key role in the company’s 2015 acquisition of the Family Dollar retail chain. He was named president and CEO in 2020. During his pandemic-era tenure as CEO, the company controversially raised prices to $1.25 for most retail items in its dollar stores beginning in November 2021, resulting in backlash among some customers.
Dollar Tree’s third quarter 2022 sales grew 8.1% year over year to $6.93 billion, but rival retailer Dollar General’s sales rose 11% to $9.5 billion during the same period.
While the company had a good third quarter, the most recent earnings report available, it took three years for Dollar Tree to produce those kind of results, and that’s a relatively long time from a business standpoint, noted Reuben Gregg Brewer, a contributing analyst with Motley Fool.
In his 2017 autobiography, the late Dollar Tree co-founder Macon Brock wrote that the dollar concept was “sacred. … Ditch the dollar, I believed, and we’d surrender our niche.” At the time of Witynski’s announcement that Dollar Tree was raising prices, Scott Mushkin, an analyst and co-founder at R5 Capital, told CNN that “it will be a shock to [Dollar Tree’s] loyal customer base. It could end up being one the worst decisions in retail history if it is not dialed back.”
In the past year, there’s been a shakeup in Dollar Tree’s C-suite. Dreiling, former chairman and CEO of Dollar General, became the board’s executive chairman in March 2022 following a proxy battle with activist investor group Mantle Ridge LP.
“The opportunity to work with the talented and dedicated team at Dollar Tree has been the most rewarding of my career. During this especially dynamic period, we made the historic and consequential move to ‘break the dollar,’ and also rose to the historic opportunity to retool the company’s leadership ranks to face the challenges ahead with fresh eyes,” Witynski said in a statement. “As I depart, I have full confidence that this team will continue to move the company forward through the years ahead.”
Brewer said the timing of the price increase — before Witynski left — was not a coincidence. The heavy lifting was already done and the new leadership would have a clean slate to work with and the ability to say they didn’t raise prices, he said.
Edward Kelly, senior equity analyst at Wells Fargo Securities, weighed in on the leadership change in a note. He noted that Witynski is the final member of the prior management team to go, with the bulk of the other changes to be completed soon after Dreiling’s arrival.
“While many of the issues that made DLTR vulnerable to activism were not Witynski’s doing, we believe this move represents the final step of management house cleaning that is typical of these situations,” he wrote about Witynski’s departure.
Dreiling also thanked his predecessor.
“We greatly appreciate Mike’s contribution over his career with Dollar Tree, which included the acquisition and integration of Family Dollar, navigating COVID, and contributing to the company’s current transformation strategy,” Dreiling said in a statement. “Dollar Tree will continue to thrive, grow and win in the marketplace in this next chapter, and I’m thrilled for the opportunity to work with the extraordinary Dollar Tree team to advance our focus on delighting customers, associates and other key stakeholders.”
Kelly, with Wells Fargo, pointed out Dreiling’s temporary position. “It’s important to note that DLTR did not name Dreiling as an interim CEO, suggesting he will be focused on leading the company for the foreseeable future. We believe Dreiling is less than one year into a five-year employment agreement, and expect the board to revisit succession planning at the appropriate time when the company is clearly on the path to achieving its long-term vision. This move is a statement of commitment from Dreiling,” he wrote.
He also noted that 2023 will be “another year of repositioning for DLTR and that consensus is too high. Today’s news probably only supports this view. That being said, we expect this guidance to be bought into what should be an action packed and positive analyst day this spring. We do expect 2023 guidance to be provided on the Q4 call, which creates a tricky near-term setup.”
Dollar Tree, which operates more than 16,000 Dollar Tree and Family Dollar stores in the United States and Canada and employs more than 200,000 people, will report its fourth-quarter earnings March 1.