Dollar General — Journey from a family-owned business to a publicly-traded company

Dollar General

Dollar General is one of the biggest discount retailers, if not the most prominent discount store chain, in America. Unsurprisingly, the precursor of Dollar General was a wholesale store opened by its founders, J.L Turner and Cal Turner, all the way back in 1939. It is safe to say that the idea of selling items for no more than a dollar changed the trajectory of their business.

Though the initial stores of Dollar General used to hold up to its name and traditionally sold goods for $1, over the years, the majority of the items sold in the store cost more than a dollar owing to reasons such as high inflation and a comparatively expensive supply chain. Nevertheless, its business as a discount store is thriving to this day.

Institutional investors control 96 percent of Dollar General Corporation’s outstanding shares

Dollar General today is a publicly-traded company and as reported by CNN Business, 96 percent of the company’s outstanding shares are controlled by institutional investors (referring to organizations such as mutual funds, pension, and insurance companies that invest money on behalf of other people).

For instance, T. Rowe Price Associates, Inc. is the largest shareholder of Dollar General owning 7.99 percent stake valued at $3.8 billion. It is followed by The Vanguard Group, Inc., and Capital Research and Management Company as the second and third largest shareholders respectively.

In June 2015, former chief operating officer Todd Vasos replaced Rick Dreiling as the chief executive of Dollar General while Dreiling, who was the CEO from 2008 to 2015, remained as senior advisor and chairman until his retirement in 2016, Reuters reported.

Moreover, Dreiling is not only credited with making Dollar General the ‘top U.S deep-discount retailer’ but also for leading its management during its return to the public market in 2009, two years after it became a privately-owned company. Currently, other important people of the company include Michael Calbert as chairman of the board and John Garrat as chief financial officer.

According to CNN Money, Dollar General Corporation, which was bought out by the private-equity firm Kohlberg Kravis Roberts & Co. (KKR) in 2007, filed for an initial public offering to institutional investors at $750 million in August 2009. Also, the offer priced the value of its 34.1 million shares at $21 per share.

Following Cal Turner Jr’s retirement in 2002, David Perdue took over as chief executive of the company and served till June 2007

Dollar General’s news center publication mentions that Cal Turner Jr joined the company in 1965 as vice president and later served as the president and CEO from 1977 to 2002. Under his tenure, the company size increased from 671 stores with 2700 workers to 6113 stores with 53,000 workers. Moreover, the total sales rose to $6.1 billion from $129 million.

Following his retirement in 2002, David Perdue, who was the former president and CEO of Reebok, was named the CEO of Dollar General, as per their press release. Thus, for the first time in more than six decades, the company was to be headed by someone outside of the Turner family. In the announcement, Turner had said;

“I place my full support and confidence in the board and our company under David’s leadership, and I look forward to assisting with the transition. The search committee and the entire board were impressed with David’s diverse background. David Perdue is a multi-dimensional executive with a proven record of making things happen.”

Additionally, Turner went on to say that Perdue “understands strategic planning, finance, sourcing, retail, supply-side logistics, distribution, and brand building”, citing his success with well-known consumer brands such as Reebok, Sara Lee, and Haggar.

“Dollar General is a great company with clear mission and purpose – making life better for its customers. I look forward to working with the board and management in building on the previous success of this great company,” said Perdue in his acceptance of the position of CEO.

However, as per The New York Times, in light of slowed profit growth over the years mostly attributed to the increased expansion of its stores and stiff competition from Walmart stores, an investment group led by Kohlberg Kravis Roberts & Co was set to acquire Dollar General for $6.9 billion in 2007.

Subsequently, Nashville Business Journal reported the resignation of David Perdue in June 2007 after the company’s board approved of a private acquisition by Kohlberg Kravis Roberts & Co. at a valuation of $7.65 billion. He was replaced by David Bere, who was the company’s president and chief operating officer, as the interim CEO.

For 63 years, Dollar General was a family-owned business for three generations of the Turner family

Cal Turner Jr. with his father, Hurley Calister “Cal” Turner outside a store in Scottsville, Kentucky, where their company began. (Photo – Courtesy of Turner Family)

The origin of Dollar General can be traced to 1939 when James Luthor “J.L” Turner and his only child, Hurley Calister “Cal” Turner opened a store selling wholesale dry goods, known as J.L Turner and Son Wholesale, with an investment of $5000 each. However, in the 1940s, the second world war’s adverse impact on wholesale businesses prompted Cal Turner to move towards retailing.

According to NashvillePost, following the shift of focus to retail, Turner’s business raked in annual sales of $2 million at the beginning of the 1950s. Moreover, by the mid-50s, the business expanded and 35 department stores were opened in Kentucky and Tennessee.

However, 1955 witnessed a major turning point for the business as Turner, inspired by the success of “Dollar Days” sales in department stores, thought about opening retail stores where the items would be sold for a dollar. Therefore, on June 1, 1955, he transformed the Turner Department Store in Springfield, Kentucky to the first Dollar General Store.

Though the stores generated massive success and revenue over the years, The New York Times reported that few analysts (notably J. Gary Dennis of a Nashville brokerage firm) deemed its business as “bottom-of-the-barrel retailing”, alluding that the customers who shopped at Dollar General were economically challenged people belonging to the low-income group of the society. In response to it, Cal Turner had said;

“We do serve those people, but we also appeal to the top. Every millionaire in town comes in, too. Good values bring them in. You have to have quality to build a business…Value is what it’s all about, getting what you pay for, knowing what you’re buying, and finding what you’re looking for.”

With annual sales averaging around $40 million and net income of $1.5 million, the business became a publicly-traded company as Dollar General Corporation in 1968. Also, by 1977, Cal Turner retired from the post of president and was succeeded by his son, Cal Turner Jr. Shortly after his retirement in 2002, Retail Merchandiser Magazine presented Turner Jr with a Lifetime Achievement Award in 2003. While accepting the award, he said;

“Dollar General’s success speaks well as to what can happen in retailing when you partner with employees and where you have a lifelong commitment to your customers, trying to give them a better life. It’s been an incredible experience, and it’s all about family. I urge other retailers to consider this strategy for your best performance because retailing is really about real-world ministry.”

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