Major Strategic Moves Often Come with Management Changes, says Professor Mike Lord

5.4.2012 Article, Faculty News, General

Newcomers take over key positions at Family Dollar
reposted from Charlotte Business Journal | by Jennifer Thomas

Family Dollar Stores Inc. has overhauled its top leadership team as the discount retailer expands its nationwide footprint.

Last month, the Matthews-based chain named Mary Winston as its next chief financial officer. In October, she'll replace CFO Ken Smith, who has been with Family Dollar for 22 years. The company also announced Dorlisa Flur, who had been promoted to vice chair of strategy and chief administrative officer in September, is leaving Family Dollar.

Those moves followed the September arrival of Mike Bloom as president and chief operating officer.

And in December, Family Dollar promoted Paul White to executive vice president and chief merchandising officer.

All are veterans of the retail industry. And each has experience in the fast-growing consumables category, which includes food and health-and-beauty products. Family Dollar is targeting that sector for growth.

"This is continuing the course, aligning toward our objectives and our goals," company spokesman Josh Braverman says of the management changes.

Howard Levine, son of company founder Leon Levine, remains chairman and chief executive of growing chain.

Braverman notes the changes come as Family Dollar continues to seek ways to be more efficient, align its resources and stay focused on its mission in the increasingly crowded dollar-store market.

Winston has more than 25 years of financial-management and leadership experience. She most recently was CFO and senior vice president of Pennsylvania grocery-store chain Giant Eagle Inc.

Bloom spent 20 years with CVS Caremark Corp., most recently overseeing merchandising, supply chain, marketing and advertising at the drugstore chain.

White previously was chief executive at Goody’s, where he steered the company’s exit from bankruptcy. His other retail experience includes senior merchandising roles at Shopko Stores and The May Department Stores Co.

They’ve replaced some Family Dollar veterans.

For example, Bloom took over for Jim Kelly, who had been part of the company’s management team for 15 years. Flur had been with the company for eight years.

"I think they're just strengthening their bench," says Nick Mitchell, who follows Family Dollar for Cleveland-based Northcoast Research.

The changes follow a year in which Family Dollar faced — and rejected — an unsolicited buyout offer of up to $7.6 billion from New York-based hedge fund Trian Partners.

The company also announced layoffs of about 100 of the 1,500 employees at its corporate offices. (Family Dollar has more than 50,000 employees nationwide and operates more than 7,100 stores in 45 states.)

Mitchell says Trian's takeover offer may have played a minor role in the management changes.

But more important, he says, the shift provides an opportunity for Family Dollar to ramp up its performance by improving sales and increasing its operating dollars per square foot.

Improved performance also will prevent other companies from attempting a takeover of Family Dollar, while also making the company more competitive with its chief rival, Dollar General Corp., Mitchell says.

The management changes put the right people in place for the next four to five years, he adds.

Meanwhile, Family Dollar continues to invest in expanding its business. It has projected capital expenditures of up to $600 million in fiscal 2012, which ends in August, to support store openings and renovations, to purchase stores and expand its supply chain.

The company is adding as many as 500 stores this fiscal year. Family Dollar also is expanding its offerings of food and health-and-beauty items by more than 1,000 products.

Major strategic moves and management changes often go hand-in-hand, says Mike Lord, a business-management professor at Wake Forest University in Winston-Salem.

"Key personnel are heavily influenced by their own particular background and experience, so they tend to set the direction of things, regardless of what’s on paper," he says.