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Dollar Tree is selling its Family Dollar business as the discount chain store tries to turn around its mounting losses under a new leader.
Dollar Tree agreed to sell its Family Dollar business to private equity firms Brigade Capital Management and Macellum Capital Management for roughly $1 billion, the company announced during its fourth-quarter earnings on Wednesday.
The deal is expected to close in 90 days with the Family Dollar business remaining headquartered in Chesapeake, Virginia.
DOLLAR TREE TO CLOSE AROUND 1K FAMILY DOLLAR STORES
The sale to the consortium of private equity investors is a fraction of the roughly $9 billion the company paid for it in 2015, when it outbid Dollar General for the brand.
A sign is posted in front of a Family Dollar store on March 13, 2024 in Fairfield, California. (Justin Sullivan/Getty Images / Getty Images)
Dollar Tree CEO Mike Creedon, who took the helm in December 2024, said the Family Dollar sale will allow the company to “fully dedicate ourselves to Dollar Tree’s long-term growth, profitability, and returns on capital.”
“This is a major milestone in our multi-year transformation journey to help us fully achieve our potential,” said Creedon, adding that the company will continue to grow and optimize the Dollar Tree business.
The company plans to drive this growth through an “expanded assortment, significant new store openings across the United States, and strategic transactions that advance our growth strategy,” he added.
The company in December raised its full-year sales guidance after reporting profits and sales that surpassed Wall Street expectations, despite the loss of the head of finance. Earlier this month, the company announced that Stewart Glendinning will become the new CFO, after previously focusing on enterprise-wide transformation initiatives, including reviewing strategic alternatives for the Family Dollar business.
A cyclist rides past a Family Dollar store in the Humboldt Park neighborhood on Aug. 2, 2022 in Chicago. (Scott Olson/Getty Images / Getty Images)
The company has been contending with back-to-back quarters of losses as demand waned. While the stores benefited as consumers were faced with rising costs, they have struggled to drive traffic due to stiff competition between Walmart, Target and fast fashion retailers like Temu and Shein.
To combat this, the company began to slim down operations, particularly with Family Dollar stores, which had contended with softer same-store sales due to unexpected costs from a recall of various over-the-counter drugs and medical devices in nearly two dozen states in 2023.
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Last year, the company announced it was closing nearly 1,000 stores, including 600 of its Family Dollar stores, in the first half of 2024. The company also said an additional 370 Family…
Read More: Dollar Tree selling Family Dollar in ‘multi-year transformation journey’