GOODLETTSVILLE, Tenn. — Dollar General has reached an agreement to settle a lawsuit brought by shareholders over the retailer’s acquisition by a private investment firm.
A charge of $34.5 million related to the settlement led to a net loss of $7.3 million for the third quarter, which ended Oct. 31, despite robust sales and higher gross profit margins, Dollar General said Wednesday. The lawsuit charged that the company “rushed” into a deal with an affiliate of Kohlberg Kravis Roberts in 2007 at an “inadequate” price of $22 per share, or $7.3 billion. Dollar General officials on Wednesday said the settlement would be “beneficial to the company in order to avoid costly and time consuming litigation and to put this matter behind us.”
Sales for the 12-week quarter increased 12.4% to $12.6 billion, with comparable-store sales increasing 10.6%. Officials credited the sales improvements to better store conditions and more frequent shopper visits. Gross profit rates improved to 29.7% from 28% in the same period last year, due to higher average markups, improved inventory shrink, fewer markdowns, and more efficient transportation and logistics. Separately on Wednesday, Dollar general said that Rick Dreiling, its chief executive officer, has also been named chairman of the board. Dreiling will continue to serve as CEO.
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