Chesapeake-based Dollar Tree will sell Family Dollar to a pair of private equity funds for $1 billion, the company announced Wednesday.
“Dollar Tree and Family Dollar are two different businesses with limited synergies and each is at a very different stage of its journey,” said Dollar Tree CEO Mike Creedon on the company’s quarterly earnings call Wednesday morning. “With the sale of Family Dollar, our leadership team can focus all our energy on growing Dollar Tree.”
The Family Dollar banner includes 8,200 stores.
The sale, expected to close by June, will cut the number of stores operated by Dollar Tree in half. Once it’s spun off, Creedon said Family Dollar will keep its headquarters in Chesapeake. Dollar Tree officials didn’t discuss the impact the sale will have on jobs, though Family Dollar announced just last week it plans to close nearly 100 more stores.
Dollar Tree bought Family Dollar for nearly $9 billion in 2015, but has struggled to make the acquisition profitable over the last decade. Last year, it shuttered more than 900 Family Dollar stores as it diversified offerings at its Dollar Tree locations to draw customers.
Dollar Tree announced last June it was looking to sell its former rival as inflation weighed on consumers and cut into Family Dollar’s sales.
Dollar Tree’s stock price has dropped precipitously over the last year, with share values now about half of what they were a year ago. Dollar Tree’s CEO and CFO both left within a month of each other late last year.
News of the sale seems to have spurred a bit of a recovery, with stock prices climbing about 5% by midday.
On its fourth-quarter earnings call, the Fortune 500 company reported sales were up a little in the last quarter of 2024, but overall profits were down slightly compared to the same period in 2023.
Dollar Tree continued to forecast sales growth for 2025 as it pushes into new store formats and offers wares at price points other than the traditional $1.
“In the current economic landscape, we continue to see value-seeking behavior across all customer groups,” Creedon said. “We are seeing stronger demand from higher-income customers who increasingly see Dollar Tree as a cost-effective source for an expanding range of products.”
He said that shift from consumers has helped offset other economic headwinds the company faced over the last year.
