GOODLETTSVILLE, Tenn. - Dollar General Corp. lost nearly a third of its market value yesterday after the discount retailer said it would restate earnings for the past three years and is investigating allegations of fraud linked to accounting irregularities.
Dollar General shares lost $2.44 billion in market value as they plummeted nearly 31 percent, or $7.38, to close at $16.50 on the New York Stock Exchange. Twenty-three million shares were traded.
The $1.81 a share that Dollar General earned in fiscal 1998, 1999 and 2000 combined will be reduced by 7 cents a share, the company said in a statement. The company didn't provide details on the alleged irregularities. Cabot Pyle, a company spokesman, declined to comment further.
The restatement comes three months after Dollar General blamed a loss of inventory through theft or paperwork errors for a profit shortfall last year.
The disclosure surprised investors of Dollar General, which had reported an average rise in profit of 19 percent over the past five years. Before yesterday the stock had risen 27 percent this year.
"There was a perception on Wall Street that this was a high-quality, well-managed company," said Adam Friedman, senior portfolio manager at National City Corp., which owns 204,716 Dollar General shares. "We're seeing today that the company is not as Wall Street perceived. Nobody wants to own it if you can't trust the numbers."
The company last year reported net income of $206 million on sales of $4.55 billion.
The company and the audit committee are reviewing allegations of fraudulent behavior and are reviewing the company's internal accounting. Chief Financial Officer Brian Burr quit in February after 23 months on the job.
Dollar General, with headquarters in Goodlettsville, said it expects to delay the filing of its annual report with the Securities and Exchange Commission. The company also will postpone the release of its fiscal first-quarter results, originally scheduled for May 14.
The accounting firm of Deloitte & Touche LLP audited the company's financial statements for the past three years, according to Dollar General's previous annual reports. Deb Harrington, a Deloite spokeswoman, couldn't immediately be reached for comment.
An SEC spokesman, John Heine, declined to comment.
"Staff at the commission can neither confirm nor deny the existence or nonexistence of any investigations," he said.
The restatement won't affect future earnings, said Dollar General, which has more than 5,000 stores. The company still forecasts profit this year of 71 cents to 73 cents a share. Analysts' average estimate is 73 cents, according to Thomson Financial/First Call.
The retailer hired the international law firm of Dechert to assist its investigation of the suspected accounting fraud, the company said. The accounting firm, Andersen Worldwide, also has been retained.