Dollar Tree Working With Bankers To Explore Sale Of Family Dollar

A Family Dollar at 4325 St Barnabas Road in Marlow Heights, Maryland.
A Family Dollar At 4325 St Barnabas Road In Marlow Heights, Maryland.

Massive discount retailer Dollar Tree is looking at options, including a sale, for a subsidiary that it acquired less than a decade ago.

The company announced Wednesday it is weighing a “sale, spin-off or other disposition” of Family Dollar, which makes up just less than half of its overall portfolio.

This comes after Dollar Tree in March announced plans to close 1,000 stores, including 600 Family Dollar locations, in the first half of this year.

The company said it retained J.P. Morgan Securities as its financial adviser and Davis Polk & Wardwell as its legal adviser for the review. Dollar Tree’s stock plunged following the news Wednesday morning, and it was down 4.5% as of 12:30 p.m.

The company, which has more than 16,000 stores across 48 states, is known for selling merchandise for as little as $1, although it has raised prices in recent years. Its Dollar Tree stores tend to be in suburban locations and feature party supplies and trinkets, while Family Dollar stores are largely in urban locations and sell more necessity-based products.

“The unique needs of each banner at this time — transformation at Family Dollar and growth acceleration at Dollar Tree — lead us to the decision to conduct a thorough review of strategic alternatives for the Family Dollar business,” Dollar Tree CEO Rick Dreiling said in a statement.

“Our goal is to position both the Dollar Tree and Family Dollar banners to progress further and faster, and to determine whether the exclusive attention of a dedicated team will benefit both, while creating value for Dollar Tree shareholders and other stakeholders,” he added.

The announcement in March that the company would offload nearly 1,000 stores came after it reported a net loss of $1.7B in the fiscal quarter that ended Feb. 3.

In its quarterly report released Wednesday, the company said it has closed 550 stores as part of the portfolio optimization and plans to shutter another 150 by the end of the fiscal year.

Meanwhile, the company is taking advantage of a competitor filing for Chapter 11 bankruptcy in April. Last week, Dollar Tree announced that it picked up 170 former 99 Cents Only stores across Arizona, California, Nevada and Texas. It plans to open them as Dollar Tree stores this fall.

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