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Corvex Management Lowers Its Stake in Dollar General

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Corvex lowers its stake in Dollar General

Corvex Management lowered its stake in Dollar General (DG). The position accounted for 0.62% of the fund’s total portfolio in the fourth quarter. The fund lowered its position by 1,483,408 shares in 3Q14. Currently, it owns 713,621 shares.

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Dollar General announces record 4Q14 results

In March 2015, Dollar General reported revenue of $4.94 billion in 4Q14—compared to revenue of $4.49 billion in 4Q13. The firm’s net income also increased from $322 million EPS (earnings per share), or $1.01 per share, in 4Q13 to $355 million EPS, or $1.17 per share, in 4Q14.

Same-store sales increased 4.9% due to increased customer traffic as well as its average transaction amount.

Family Dollar shareholders reject merger deal with Dollar General

In the last few months, Dollar General was in the race to acquire Family Dollar (FDO)—along with Dollar Tree (DLTR). Dollar General proposed to acquire Family Dollar for $9.5 billion. However, Family Dollar shareholders approved a $8.7 billion cash and stock merger with Dollar Tree instead. Shareholder approval was delayed twice. Dollar General offered a more lucrative deal to Family Dollar.

Dollar General accounts for 1.01% of the Consumer Discretionary Select Sector SPDR Fund (XLY). It has 0.17% exposure to the iShares Russell Midcap Value ETF (IWS). Family Dollar and Dollar Tree are also part of XLY. They account for 0.34% and 0.74% of XLY, respectively. The Consumer Discretionary Select Sector SPDR Fund also holds 6.35% of Home Depot (HD) and 5.11% of Amazon (AMZN).

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Dollar General focuses on growth and increasing retail stores

Earlier this year, Dollar General outlined its plans for fiscal 2015—mainly focusing on the growth and expansion of its retail stores. As of January 2015, Dollar General had a total of 11,800 stores. It’s planning to open an additional 730 stores by the end of 2015. It plans to open another 900 stores in 2016.

In 2015, Dollar General plans to relocate and remodel ~875 stores.

Shareholder value

In fiscal 2014, Dollar General increased shareholder value by repurchasing 14.1 million shares for $800 million under its share repurchase program. Since 2011, the firm repurchased 44 million shares for ~$2.3 billion.

Overview of Dollar General

Dollar General operates more than 11,000 stores across the US—mainly in the Southern, Southwestern, Midwestern, and Eastern regions of the country. The discount retailer offers a broad selection of merchandise including:

  • food
  • paper
  • cleaning supplies
  • pet care items
  • tobacco products
  • seasonal goods
  • home decor
  • kitchenware
  • basic apparel

In the next part of this series, we’ll review Corvex Management’s decreased position in Monsanto.

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