Dollar General Attempts A Turnaround, Brings Back Former CEO- C-Suite Transition

Turnaround situations are notorious for rarely turning around. They do have a reputation for delivering spectacular returns, if and when a company can actually turn things around. Once a company has lost its way, it is very difficult to regain market share or become profitable even if new management is at the helm.

We discussed this briefly in a Twitter thread after an insider purchase at General Electric (GE) by Larry Culp. Despite his excellent management of Danaher (DIS) from 2000 to 2014, Culp had a hard time turning around a behemoth like GE in the nearly 3.5 years since he took the top job.

We speculated that maybe 2023 is the year when things finally turn around for GE and turn around they did. The stock is up 95% this year, far exceeding the performance of the S&P 500. When we dug in under the hood of GE, we liked the turnaround story so much that we made the company a spotlight idea in the June 2023 special situations newsletter. We summarized our thesis about GE as follows:

• Wiping out essentially all its debt and with the potential for double digit revenue growth in the future, GE is positioned as a good long-term opportunity.
• The company is led by Larry Culp, who spearheaded multiple spinoffs and divestitures at GE to leave the company lean, profitable and debt free.
• Mr. Culp is known for his time at the Danaher Corporation, where he increased revenue and the market cap five-fold.

With a few noteworthy exceptions, executives returning to assume their previous roles often find success elusive. Walt Disney (DIS), under the renewed leadership of Bob Iger might be one of those exceptions. Howard Schultz who served as Starbucks (SBUX) CEO three times, played a pivotal role in building a corporate success story and leading a successful rebound for the company.

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