Dollar Tree Sells Family Dollar for $1 Billion

Dollar Tree, a discount retailer based in Virginia, announced on Wednesday, March 26, that it will sell its Family Dollar chain for $1 billion to two private equity firms, officially ending a decade-long integration effort.

Ten years ago, Dollar Tree acquired Family Dollar with over 7,000 stores for over $8 billion. Since then, they have been exploring integration. Last year, Dollar Tree announced plans to close hundreds of Family Dollar stores.

According to reports from the Associated Press, the company announced on Wednesday that it would sell Family Dollar to Brigade Capital Management and Macellum Capital Management, stating that this move will help them focus on developing their core business.

Mike Creedon, the current CEO of Dollar Tree, stated: “This is an important milestone in our multi-year transformation journey, helping us unlock our full potential.”

During a conference call, Creedon pointed out that Dollar Tree and Family Dollar are “two different businesses with limited synergies.” He added that after the sale, both parties will be able to focus on their individual development.

Analyst Scot Ciccarelli from Truist Securities shares a similar view. In a report to clients, he mentioned that “Family Dollar’s turnaround efforts have consumed a significant amount of management attention and resources, and now the company can shift its focus back to expanding and optimizing Dollar Tree.”

Despite recent price increases in recent years, budget-friendly chain stores like Dollar Tree still face challenges due to limited operating space. As American consumer confidence in the economic outlook decreases, spending has become more conservative.

CEO Creedon stated that Dollar Tree’s customers value value for money, and not only the middle-income group but also demand from high-income consumers is increasing, viewing it as an affordable and diverse shopping channel.

He added that to address the 20% tariffs imposed by the Trump administration on Chinese goods, the company is mitigating the impact through negotiations and diversification of imports.

Family Dollar’s headquarters relocated from North Carolina to Chesapeake, Virginia after the acquisition, and will remain there even after the sale.

“This transaction provides a rare opportunity for us to revive this iconic enterprise,” said Jonathan Duskin, CEO and partner of Macellum.

The transaction is expected to be completed in the late second quarter.

On Wednesday afternoon, Dollar Tree’s stock price rose by more than 4%.