Dollar Tree Mulls Sale Of Family Dollar Unit

Dollar Tree, Inc. is exploring the sale of its unit Family Dollar Stores LLC as the discount retail chain plans to continue to aggressively grow the Dollar Tree banner through compelling initiatives. ...

RTT Staff Writer•Wednesday, June 5, 2024•2 min read

Dollar Tree, Inc. is exploring the sale of its unit Family Dollar Stores LLC as the discount retail chain plans to continue to aggressively grow the Dollar Tree banner through compelling initiatives.

The company said it has initiated a formal review of strategic alternatives of the Family Dollar business segment, which could include a potential sale, spin off or other disposition of the business, among others.

Dollar Tree has not set a deadline or definitive timetable for the completion of the strategic alternatives review process. It also said that there can be no assurance that the process will result in any deal.

In mid March, Dollar Tree had announced its plans to close around 970 underperforming Family Dollar stores, in which around 600 in the first half, as part of its comprehensive store portfolio optimization review. The remaining Family Dollar stores as well as around 30 Dollar Tree stores were to close over the next several years, at the end of each store’s current lease term.

Rick Dreiling, Chairman and Chief Executive Officer, Dollar Tree, now said, “We are already beginning to see progress in this targeted strategy in the streamlined Family Dollar banner. At the same time, we continue to aggressively grow the Dollar Tree banner through compelling initiatives like our expanded multi-price offerings, significant planned new store openings across the United States, and accretive transactions.”

According to Dreiling, the planned thorough review of strategic alternatives for the Family Dollar business reflects the unique needs of each banner at this time, i.e., the transformation at Family Dollar and growth acceleration at Dollar Tree.

Dollar Tree has retained J.P. Morgan Securities LLC as its financial advisor and Davis Polk & Wardwell LLP as its legal advisor to assist in the review.

The company earlier had said that it was placing a greater emphasis on opening more Dollar Trees than historically done in the past due to the returns and performance, and the vast majority of new store openings in fiscal 2024 will be Dollar Trees.

While reporting a hefty net loss in its fourth quarter compared to a last year profit, despite revenue growth, the company had said the store closure decision was taken based on an evaluation of then market conditions and individual store performance, among other factors.

In late February, Family Dollar was fined $41.675 million by the U.S. Department of Justice after pleading guilty to holding consumer products including food and drugs in rodent-infested warehouse in West Memphis, Arkansas. It was the largest-ever monetary criminal penalty in a food safety case, the DOJ then noted.

Family Dollar in February 2022 had recalled all drugs, medical devices, cosmetics, and human and animal food products sold since January 1, 2021 in the 404 stores that had been serviced by the warehouse.