Dollar Tree said on Wednesday a consortium of private-equity investors will buy its Family Dollar business for about $1 billion, bringing an end to its nearly year-long search for potential buyers for the troubled discount-store chain.
The 66-year-old business, which Dollar Tree bought in 2015 for about $9 billion, had been grappling with competition from big-box retailers such as Walmart, and online retailers including Amazon, Shein and Temu.
Dollar Tree’s shares were up 3% in premarket trading after the sale of Family Dollar to Brigade Capital Management and Macellum Capital Management.
“It is truly ‘addition by subtraction’ as Family Dollar had been a consistent weight on topline performance, margin rate, and management time,” said Evercore analyst Michael Montani.
The Family Dollar chain struggled with sales of higher-margin discretionary items such as home decor and apparel, as consumers pared back spending due to inflation.
The company last year announced the closure of over 900 Family Dollar stores, and sweeping changes to its top management, bringing in insider Michael Creedon to replace industry veteran Rick Dreiling as its CEO after he stepped down due to health reasons.
Excluding sales from the Family Dollar banner, the company posted net sales of $5 billion for the quarter ended February 1, a marginal rise from $4.96 billion reported a year ago.
The company benefited from introducing multiple price tiers during the holiday season.
“This is a better result than what we have seen from many retailers,” said Truist analyst Scot Ciccarelli in a note.
Dollar Tree expects 2025 net sales from continuing operations to be of $18.5 billion to $19.1 billion.
It sees a 30 to 35 cents impact on its full-year earnings due to the sale in the first two quarters of the fiscal year.
