Dollar Tree is selling off its Family Dollar stores for about $1 billion in a move the company says strengthens both companies – and lets Dollar Tree focus on growth.
Private equity firms Brigade Capital Management and Macellum Capital Management will purchase Family Dollar, the companies announced Wednesday; Dollar Tree estimated about $804 million in net proceeds from the sale, which it expects to close by June 2025.
Dollar Tree, which acquired Family Dollar in 2015 for about $9 billion, began considering a sale or spinoff of Family Dollar in June 2024 as a way to restructure the company amid a challenging retail climate with inflation and competition from big-box retailers such as Walmart and online retailers including Amazon, Shein and Temu.
Dollar Tree closed about 600 Family Dollar stores in 2024 and had plans to close another 370 – along with 30 Dollar Tree stores – when the leases came up on on those locations.
CEO Michael Creedon, who moved from chief operating officer to interim CEO and then CEO during Dollar Tree’s restructuring in recent months, said the separation from Family Dollar puts Dollar Tree in position to “achieve its full potential,” in a call with investment analysts Wednesday.
“We will continue to grow and optimize our Dollar Tree business to maximize value for Dollar Tree associates, customers, and shareholders with an enhanced focus on compelling initiatives, including our expanded assortment, significant planned new store openings across the United States, and transactions that advance our growth strategy,” Creedon said in a press release announcing the Family Dollar sale.
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Dollar Tree, which has 2,900 Dollar Tree stores after opening 525 during the past year, expects to open about 300 new stores in 2025, Creedon said. The discount retailer is also upgrading stores to handle items priced as high as $7. Among stores being upgraded are some among the 170 leases of 99 Cents Only Stores in Arizona, California, Nevada, and Texas acquired in May 2024.
About 1,000 combination Family Dollar-Dollar Tree stores will be sold in the deal.
Dollar Tree reported net sales of $5 billion – excluding sales from Family Dollar stores – a 2% increase in same-store sales during the three-month period ending Feb. 1, 2025. Store traffic in Dollar Tree stores rose 0.7% and shoppers spent 1.3% more per total purchase.
Total fourth quarter sales including from Family Dollar were $8.26 billion, which surpassed the $8.23 billion estimated by analysts polled by S&P Global Market Intelligence.