Senior executives of Dollar General (NYSE: DG) must be rubbing their hands in glee. The company stock saw a sharp rise in its stock price on the back of the company's strong earnings in the first quarter. The share price rose by close to 84 cents.
With this, the company's stock price has risen to $74.98, an increase of 3% over the last price. It is the company's biggest price increase since March 12.
Analysts were optimistic about the company's chances in the first quarter (they had predicted earnings to the tune of 81 cents per share), but the company has surprised everyone with its results. The company's growth was bolstered by solid sales in sectors like candy, health and tobacco products.
Company's rivals, Family Dollar Stores Inc. and Dollar Tree Inc. to merge
The earnings come in good time for the company and its shareholders. Two of its biggest rivals, Family Dollar Stores Inc. (NYSE: FDO) and Dollar Tree Inc. (NASDAQ: DLTR) are in the process of merging their business and the new conglomerate is expected to give stiff competition to the Dollar Store.
Family Dollar Stores Inc. refused a takeover bid by Dollar General in favor of a bid by Dollar Tree Inc. The bid was rejected despite the Dollar General Inc. bid being higher. Family Dollar Stores Inc. chief executives were worried that the Dollar General Inc. takeover would not pass anti-trust scrutiny. On the other hand, they were sure that the Dollar Tree Inc. bid would be more amenable to anti-trust hawks. Family Dollar Stores Inc. stockholders have already given their go-ahead to the deal and if all goes well, the merger will be done next month.
Rick Dreiling, CEO of Dollar General Inc. retires
It is a tumultuous time for Dollar General Inc., because it is in the midst of a senior management change. Rick Dreiling, the current CEO and chairman is retiring. He will be succeeded as CEO by the incumbent Chief Operating Officer, Todd J Vasos. Todd Vasos will also be elevated to the Board of Directors. Rick Dreiling will remain on the board as a senior advisor and Chairman until January 29th, 2016.
The Dollar Store is headquartered in Goodlettsville, Tennessee. It is one of the largest chains of variety stores in the US with over 11,500 stores in 40 US states. The company is not actually a dollar store. In fact, most of the products in the store cost over $1.