Good morning. Dollar General is one of the retailers that has grappled with “shrink,” an industry term that primarily defines theft from stores. But the company has been undertaking measures to address the issue, and CFO Kelly Dilts says those efforts are starting to produce some bright spots.
“Shrink,” more precisely, is a term retailers use for inventory loss often attributed to theft by shoppers and employees, or damage or errors. It’s estimated that retail businesses typically lose around 1.4% to 1.6% of their annual revenue to shrink.
Dollar General (No. 111 in the Fortune 500), has put forth ongoing efforts—most notably tearing out its self-checkout kiosks—to stem shrink. “The first thing that I’m excited about is both the shrink and damage lines are well in our control,” Dilts said in reference to gross margin during an earnings call on Thursday. She added: “It’s good to see that we have a positive trajectory right now, and we’re really already winning.” Dilts credited the improvement to the company’s Back-to-Basics strategy.
The retailer’s mitigation efforts drove a year-over-year shrink improvement of 68 basis points in Q4, she said. Improvements have continued through the early part of the first quarter, and “we anticipate this benefit should continue throughout 2025,” she noted.
That’s more upbeat than Dilts’ comments on a December 2023 earnings call: “Shrink has been pretty significant for us for a while, and it’s definitely going to carry into 2024.” In March 2024, the company reported that shrink was one of the factors that drove gross profit, as a percentage of net sales, down 138 basis points to 29.5% in Q4 of fiscal year 2023, compared to 30.9% in Q4 of fiscal year 2022.
Stemming shrink
A big part of the strategy to combat shrink was in the checkout aisle. After using an AI solution to analyze hundreds of thousands of purchases at self-checkout, Dollar General determined which stores had the highest levels of theft and mis-scanned items. That determined the company’s decision, led by CEO Todd Vasos, to eliminate the option of self-checkout in the vast majority of its stores.
Vasos announced on an earnings call in March 2024 plans to convert the self-checkout systems in about 9,000 stores to allow for cashiers. Then in May, he said that Dollar General eliminated self-checkout options at 3,000 additional stores, bringing the total to 12,000.
Removing self-checkout was actually an about-face for Dollar General. In 2022, the company expanded self-checkout to a total of more than 11,000 stores as part of a Fast Track initiative. But that was before Vasos returned to the company as CEO in October 2023 to activate a turnaround plan. He was previously CEO from 2015 to 2022. Dilts was promoted to CFO in May 2023.
Overall, to combat shrink, retailers undertake “a data-driven approach to measure the areas where losses are actually occurring,” Jennifer Fagan, EY’s retail partner, writes in a recent Fortune opinion piece. “Doing so enables the deployment of targeted mitigation techniques with the greatest potential impact,” according to Fagan.
Dollar General is attracting bargain shoppers amid an uncertain economy. For the quarter that ended Jan. 31, the company’s net sales increased 4.5% year over year to $10.3 billion, and same-day-store sales increased 1.2%, both beating Wall Street estimates. Its stock price went up 7% closing at $79.95 on Thursday.
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
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Fortune 500 Power Moves
Adrian Ding was appointed CFO of Yum China Holdings, Inc. (No. 368), effective March 6. Ding has been serving as acting CFO since October 2024. He joined the company in March 2019 as VP of corporate finance and served as chief investment officer. Ding led the acquisitions of KFC joint venture stakes. He also played a key role in driving Yum China's listing on the Hong Kong Stock Exchange. Additionally, he served as general manager of the company's Lavazza joint venture.
Every Friday morning, the weekly Fortune 500 Power Moves column tracks Fortune 500 company C-suite shifts—see the most recent edition.
More notable moves:
Nchacha Etta will be stepping down from his role as EVP and CFO of Omnicell, Inc. (Nasdaq:OMCL) a health care technology company, effective Sept. 15, or until a successor is named. Etta will continue in the role during the company's national search for a new CFO. Etta joined Omnicell in 2023.
Randy Greben was appointed CFO of Fossil Group, Inc. (Nasdaq: FOSL), a lifestyle accessories company, effective March 17. He replaces Andrew Skobe, interim CFO. Greben most recently served as chief financial and operating officer at Casper Sleep, Inc. Previously, he was CFO and treasurer of the meal kit company Blue Apron.
Marya Burgio Wlos was named EVP and CFO of Community Financial System, Inc. (NYSE: CBU) and Community Bank, N.A., effective March 31. Joseph E. Sutaris, will retire from his role of EVP and CFO, remaining until July 1. Wlos has served as managing director and COO of the Investment Bank at M&T Bank since January 2021. She previously served as head of management accounting and finance at M&T Bank.
Steve Rosen was appointed CFO of the beauty brand Stila Cosmetics. Rosen has over 30 years of experience in the cosmetics industry. He most recently served as CFO for ZO Skin Health. Before that, Rosen spent 22 years at Estée Lauder in various finance and M&A roles for brands such as Crème de la Mer, Jo Malone, Aramis, Designer Fragrances, and BECCA Cosmetics.
Jeff Scissons was promoted to CFO of ALLETE, Inc. (NYSE: ALE), an energy company. He succeeds Steven W. Morris, who recently announced his plan to retire in July. Scissons joined the company in 2013 and was promoted to ALLETE VP and corporate treasurer in 2024.
Brad E. Schwartz was appointed EVP and CFO of First National Corporation (Nasdaq: FXNC) and First Bank (the “Bank”), effective March 31. Schwartz is the retired president and COO of TowneBank and was formerly CEO, CFO, and COO of Monarch Bank before its acquisition by TowneBank. He also served as CFO of two other Virginia community banks.
John Verkamp was appointed CFO of Wheels Up Experience Inc. (NYSE: UP), a global private aviation company. Verkamp is expected to join the company on March 31. He served as VP and CFO of the gas power global services business of GE Vernova and previously held various financial leadership positions in the GE family of companies, including CFO of Gas Power Commercial and Services, CFO of Avio Aero, and chief risk officer at GE Aviation.
Big Deal
“The Big Shift: How Gen Z is Rewriting the Rules of Hourly Work,” a new report by tech company Deputy, highlights the evolving dynamics of the hourly workforce. A trend in this year’s report is the rise of “micro-shifts”—short, flexible shifts (six hours or less) to balance both employee and workplace needs. Micro-shifts are most popular in the hospitality and service industries where there is less regulatory constraint compared to sectors like health care, according to the report.
“Micro-shifts aren’t about working less—they’re about working smarter,” Silvija Martincevic, CEO of Deputy, said in a statement. “Today’s workers, especially Gen Z, prioritize flexibility.”
Another finding in the report is that 29% of Gen Zers surveyed are actively job-seeking, while 32% are focused on career progression within their current roles. Their top priorities are competitive wages and a positive workplace culture.
Going deeper
Here are four Fortune weekend reads:
“CEO pay is surging amid a roaring bonus rebound” by Amanda Gerut
“Jamie Dimon has joined the chorus of CEOs cautioning Trump on tariffs: ‘Uncertainty is not a good thing’” by Eleanor Pringle
“Book fight: Meta is trying to stop a former employee from promoting a tell-all book but her publisher is defending the memoir” by Lila MacLellan
“These 4 M’s are the key to successful aging, expert reveals” by Alexa Mikhail
Overheard
“Clearly, Apple has more wood to chop around its Apple Intelligence vision and officially coming to market with its Siri revamp now set for iPhone 17...you get one chance to do this right and Apple and Cook need perfection before it goes live.”
—Wedbush tech analyst Dan Ives wrote in a note to investors on Thursday regarding Apple's upcoming AI developments. “Our view is Apple will make new time highs in 2025 despite the brutal sell-off to start the year,” Ives wrote.
