Associated Press Business Writer Michelle Chapman
Dollar Tree sells family dollars for $1 billion to a pair of private equity companies after a decade of trying to win bargain chain fit.
Dollar Tree Inc. acquired family dollars for over $8 billion in 2015 after a bid war with rival dollars generals.
GlobalData Managing Director Neil Saunders said after acquiring the rival chain, Dollar Tree is struggling with supply chain issues, poor store locations and other operational difficulties.
“Essentially, dollar trees are much more than you can chew,” he said.
Last year, Dollar Tree announced it plans to close hundreds of family dollar stores.
Dollar Tree has been scouting family dollar options for a while and said its core business could be focused on by selling to Brigade Capital Management and Macellum Capital Management on Wednesday.
“This is a major milestone in our multi-year transformation journey to help us achieve our full potential,” said Mike Creedon, who became Dollar Tree’s permanent CEO late last year.
During the conference call, Creedon pointed out that Dollar Tree and Family Dollar are “two different businesses with limited synergy.” The sale will allow each individual to focus on their specific needs, he added.
Truist Securities analyst Scot Ciccarelli agrees.
“The family dollar turnaround effort was consuming a huge amount of both management focus and financial resources. The company is now able to focus all its efforts on growing and optimizing the dollar tree,” he wrote in his client notes.
Digging chains like the Dollar Tree have been increasing some of their prices in recent years, and have found that there is little room to pilot them. Americans have stepped up their spending as consumer confidence in the economy slides.
After sales to Dollar Tree, Family Dollar moved its headquarters from North Carolina to Chesapeake, Virginia, and will maintain its headquarters in Virginia.
“The transaction presented a unique opportunity to play a key role in revitalizing the iconic business,” said Jonathan Duskin, CEO and partner of Macellum.
Sanders said the brigade and macelam must fix some issues with family dollars. These include many of its rivals and a price that is not sharp in its non-loyal customer base.
The agreement is expected to close later in the second quarter.
Dollar Tree shares rose 2.8% in noon trading.
Original issue: March 26, 2025 8:22am EDT
