In the late 2000s, Dollar General stood as a prominent player in the discount retail sector, with 41% market share and more than 8,000 stores. However, the company was not as profitable compared to even smaller competitors, and sales growth relied almost entirely on new store openings. In the first nine months of 2006, Dollar General reported negative same-store sales growth and began missing analysts’ expectations. During this time, the company’s stock price underperformed the broader retail index and reached a 52-week low.
These issues, coupled with the impact of the economic downturn from the Great Financial Crisis, highlighted the need for a strategic overhaul to reinvigorate Dollar General’s full potential. KKR acquired the company for $7.3 billion (including debt) in 2007, which represented a multiple of 10.9x off of $670 million of EBITDA.