Dollar Tree Inc. said Monday that Rick Dreiling has quit as CEO of the discount store chain because of health issues.
But even though shares went up because of the company’s outlook for the third quarter, an expert said the change in leadership comes at a bad time for the business. This is because dollar stores are facing more competition and problems from a possible Trump presidency.
Michael Creedon, who is currently the company’s COO, has been named Dollar Tree’s DLTR -0.54% temporary CEO while the board looks for a permanent replacement. Dollar Tree said that both internal and external candidates would be considered for the job. Edward Kelly, who is Dollar Tree’s lead independent director, has been chosen as chairman. The company said that Dreiling quit as chairman and CEO on Sunday.
Dreiling said in a statement, “My health has been giving me some new problems over the past two months. It’s time for me to take a break and focus on myself and my family.” “Being an employee of Dollar Tree and Family Dollar since 2022 has been an honor for me.”
The company stuck to its third-quarter forecast on Monday, saying that same-store sales “tracked well through the quarter,” even though higher prices are making it hard for low-income customers. The chain also said that its study of Family Dollar’s strategy was “making progress.”
Dollar Tree (DLTR -0.54%), which owns Family Dollar, saw its stock rise 5.2% after the market closed on Monday.
In a Monday research note, BMO analyst Kelly Bania said that Creedon was seen as a good candidate to take over as CEO permanently. Creedon joined Dollar Tree in 2022 after working as a senior executive at Advance Auto Parts Inc. AAP 2.50%, Tyco International, and ADT Security. But she said that the picture for the third quarter might only be good for a short time.
“The stock could benefit in the short term from relief that the F3Q25 is tracking in line,” she said. “However, we believe this could be a difficult time to deal with management turnover, given potential headwinds” from possible tariffs from the Trump administration or scheduled Jan. 1 salary-threshold increases from the Labor Department.
“On top of that, we still think that dollar stores’ competitive situation could get worse,” she said. She also said that Walmart Inc. (WMT 1.42%) and Amazon.com Inc. (AMZN 1.71%) were giving government assistance customers more perks.
Dollar Tree’s stock was down 53% for the year as of Monday night. In September, shares dropped a lot after the store revealed earnings for the second quarter that were much lower than what Wall Street had expected and lowered its outlook for the whole year.
He said at the time, “As we have seen for several quarters now, demand from Family Dollar’s core lower-income customer remains weak.”
Plus, some analysts say that over the years, dollar shops’ selection of goods has become more focused on items that people don’t have to have. People have been buying more expensive necessities and less of those things.
Dollar Tree first said this year that it was going to look over Family Dollar, which it bought in 2015. As part of that study, a “possible sale, spin-off, or other disposition of the business” was looked at.
