Deep-discounter Dollar Tree (NASDAQ:DLTR) announced the CEO of the Family Dollar chain it bought last year for $8.5 billion is stepping down from his position effective Jan. 15. The division's president and COO, who was just appointed in July, will assume the reins.
Does it matter?
One of the key differences between the competing bids Dollar Tree and rival Dollar General (NYSE:DG) made for Family Dollar was whether the existing management team would remain in place. Dollar Tree had given assurances Family Dollar CEO Howard Levine would stay on; Dollar General made no such promises. There's little wonder why Family Dollar preferred Dollar Tree's offer to Dollar General's, even though the latter had offered half a billion dollars more money (that, and the lower antitrust hurdles it would have to get over).
But it was billionaire activist investor Carl Icahn that got the ball rolling on ousting Levine, as he criticized management for allowing Family Dollar to lag its peers across virtually all metrics and all time frames.
That heightened the risk for Dollar Tree after it won the bidding war. It needed to integrate completely different business models and corporate cultures, but would keep in place the team that had led to subpar performance.
However, Dollar Tree CEO Bob Sasser says having Levine stay on was critical to the success of the integration. "It was very important to me for Howard to remain with our company and to contribute to the combination of our two large organizations. He has been an integral leader at Family Dollar for more than two decades, and has accumulated a tremendous amount of knowledge and experience."
But with his exit, Dollar Tree may now be better able to put its own imprimatur on the Family Dollar business, which could help the company better meet the competitive threats in the deep-discount space.