Dollar Tree has confirmed a deal to sell its Family Dollar segment to investment companies Brigade Capital Management and Macellum Capital Management for $1bn.
The deal is subject to standard adjustments at closing and follows an exhaustive evaluation of various options for the Family Dollar segment. Dollar Tree acquired Family Dollar in 2015 for $9bn.
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Reuters reports that the chain has been facing competition from Walmart, and e-commerce retailers Amazon, Shein and Temu.
The company closed 798 Family Dollar outlets over the fiscal year 2024 (FY24), reducing its store count to 7,622 from 8,359 in FY23.
Dollar Tree CEO Mike Creedon stated: “This is a major milestone in our multi-year transformation journey to help us fully achieve our potential.
“We will continue to grow and optimise our Dollar Tree business to maximise value for Dollar Tree associates, customers and shareholders with an enhanced focus on compelling initiatives, including our expanded assortment, significant planned new store openings across the United States, and transactions that advance our growth strategy.
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By GlobalData“Under the experienced, dynamic leadership of Family Dollar president Jason Nordin, and with the financial support of Brigade and Macellum, Family Dollar will be well-positioned for growth as a private company. With the support of a dedicated team, [it] will be able to strengthen its commitment to providing affordable and essential goods to customers so they can do more with less.”
Dollar Tree anticipates netting $804m from the sale and expects tax benefits of $350m due to losses on the sale.
Dollar Tree reported a 4.7% increase in net sales to $17.6bn in FY24 year-to-date, and same-store sales growth of 1.8%.
The company attributed the growth partly to a 1.6% rise in customer traffic and a marginal rise of 0.1% in average ticket prices.
The company’s gross profit also saw an increase of 4.5% to $6.3bn with a steady gross margin of 35.8%.
Looking ahead to fiscal 2025, Dollar Tree projects net sales from continuing operations to range between $18.5bn and $19.1, anticipating comparable store net sales growth between 3% and 5%.
