Dive Brief:

• Dollar Tree Executive Chairman Bob Sasser is set to retire ahead of the company's annual shareholder meeting, the company announced Friday. 
• Sasser first joined Dollar Tree in 1999 as chief operating officer and went on to serve as CEO from 2003 to 2017 before taking on the executive chair role. 
• On retiring, Sasser will take on the honorary title of chairman emeritus in recognition of his time with the retailer. His retirement, according to Wells Fargo analysts, could set the stage for a settlement with activist investor Mantle Ridge. 

Dive Insight:

Sasser has overseen a massive expansion of Dollar Tree, taking the form of an ongoing build-out of its namesake footprint as well as the acquisition of Family Dollar in 2015. During his tenure, the company has grown from $1 billion in sales to more than $25 billion.

The entire sector has grown at a rapid clip since the Great Recession, and the growing income inequality it fueled, even as other retail sectors struggled and consolidated.

Nor are dollar stores done growing. By late January, Dollar General had more store openings (1,102) planned for 2022 than every other retailer combined, according to Coresight Research.

That's on top of last year's more than 1,000 new stores that Dollar General announced. Dollar Tree's planned announcements came in a distant second for 2021 at 393, with the company's Family Dollar banner adding another 200.

The disparities in expansion between Dollar General and Dollar Tree mirror the differences in performance between the two discounters. Between fiscal 2016 and 2020, Dollar General's sales grew from about $22 billion to $33.7 billion. Meanwhile, Dollar Trees's sales (including both of its banners), grew more sluggishly, from $20.7 billion to $25.5 billion. 

Disparities continued into last year, which was marked by global supply chain turmoil. In that environment, Dollar Tree, which has bound itself to the $1 price point for more than a generation of consumers, had less room to pass on higher freight and supply costs to its customers than Dollar General and other general merchandisers. Instead, it took a hit on profits. 

In the fall, Dollar Tree announced it would raise prices to $1.25 for a majority of its assortment, a move meant to raise profits but one that could also put off some shoppers, especially as the increase was well above inflation to date.   

As it grapples with long-term challenges and underperforms its rival, Dollar Tree has been fending off activist investors, including Mantle Ridge, which by December held a 5.7% stake in the retailer. 

The company has described Mantle Ridge as acting in an "unwarrantedly aggressive and hostile manner" after Mantle Ridge notified the company of its intent to nominate an entirely new board. Mantle Ridge has also, according to Dollar Tree, suggested former Dollar General CEO Richard Dreiling should take over the executive chairman spot. 

The departure of Sasser, who is 70, "raises the potential for a settlement with the activist," Wells Fargo analysts Edward Kelly and Anthony Bonadio said in a research note Friday. They added, "This move seems to signal that the company could be softening on its stance, opening the door for greater change."