What happened
It's been an abysmal year for Dollar General (DG 0.18%) shareholders, with shares down as much as 59% year to date. The stock actually hit its low for 2023 yesterday. But today is a much brighter day for investors, with Dollar General stock up 8% as of 10:30 a.m. ET.
Dollar General stock is up after the company announced that its current CEO is out, effective immediately. In his place, the company is bringing back former CEO Todd Vasos. In conjunction with this announcement, it also updated its financial guidance for the year. But the update wasn't all good.
So what
Vasos was Dollar General's CEO from June 2015 through November 2022. Based on the stock's market-crushing performance during that time, investors are thrilled to have him back at the helm.
Dollar General's profits are taking a hit in 2023, and its sales are hitting a plateau. There are macroeconomic reasons that sales could be stagnating. But the company faces self-inflicted setbacks as well, especially in its supply chain management.
The problems likely aren't as bad as the market fears, and things look fixable. The hope is that Vasos can restore Dollar General to operational excellence, which is why the stock is up today.
Now what
Dollar General's possible resurgence won't happen immediately, and the company expects ongoing struggles in 2023. The company just updated its financial outlook, lowering the top end of its guidance for same-store sales and earnings per share (EPS).
At best, Dollar General's same-store sales in 2023 will be flat compared to 2022. And it expects EPS of $7.60 at best, which would be a 29% year-over-year drop. In short, the company has work to do in 2024.
That said, Dollar General stock trades at a low valuation, and it's intent on fixing its problems. So this might be a struggling stock to buy at a discount.