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Dollar Tree last month unveiled plans to start selling most goods for $1.25 at all its namesake stores, in an effort to cushion the impact of spiraling freight costs and other pandemic-driven challenges.
“The board should undertake a thoughtful and deliberative review of the company’s strategy,” Mantle Ridge said, adding that Dollar Tree should examine the possibility of hiring former Dollar General Corp (NYSE:DG) Chief Executive Officer Richard Dreiling to a leadership role.
J.P. Morgan analysts said last month the involvement of Dreiling at Dollar Tree could be a “potential game-changer”, adding that he was the architect of Dollar General’s turnaround story from 2008 to 2015 that saw its revenue double.
Mantle Ridge said one of its representatives and three advisers met with Dollar Tree’s board to discuss the matters, and it expected to continue such talks.
The activist investor added that its affiliate delivered a notice to Dollar Tree’s corporate secretary on Friday nominating 11 candidates for election to the company’s board at its 2022 annual stockholders meeting.
None of the 11 nominees are currently on Dollar Tree’s board.
Mantle Ridge disclosed a $1.8 billion stake in Dollar Tree in November, representing 5.7% of shares outstanding and an economic interest that would represent another 4.2% of shares.
Dollar Tree later that month reported a 4% rise in net sales, even as its net income declined.
Citi analyst Paul Lejuez at that time called the quarter “not great”, even as he said the presence of Mantle Ridge is likely to keep investors hopeful that changes will persist at Dollar Tree, resulting in stronger sales and profitability.
