Discount store company Dollar Tree announced Wednesday it is exploring a potential sale of its struggling Family Dollar brand and has retained JPMorgan Chase to lead a review of the business.
Dollar Tree said in a statement that the “formal review of strategic alternatives” for the Family Dollar business segment could include “a potential sale, spin off or other disposition of the business.” The announcement comes after Dollar Tree said it would close around 1,000 Family Dollar stores in the coming years due to poor market conditions and store performance.
“Dollar Tree has been on a multi-year journey to help the Company fully achieve its potential,” Rick Dreiling, chairman and CEO of Dollar Tree, Inc., said in a statement. “Last year, we announced a comprehensive review of the Family Dollar portfolio, including the planned closure of approximately 970 underperforming Family Dollar stores to focus on enhanced investments in remaining Family Dollar stores that present favorable opportunities for long-term growth and transformation, with more attractive returns on capital. We are already beginning to see progress in this targeted strategy in the streamlined Family Dollar banner.”
Dollar Tree purchased the Family Dollar chain for around $9 billion in 2015, but it has required more investment for its turnaround, The Wall Street Journal reports.
DOLLAR STORE CHAIN TO CLOSE 1,000 STORES AS EXPERTS POINT TO INFLATION AND CRIME BEING TOP FACTORS
The newspaper says Dollar Tree stores are mostly in suburban areas and cater to consumers looking for things such as party supplies and crafts, while Family Dollar stores are more urban-based and are focused on groceries, cleaning products and other essential items at various price levels.
Dreiling, the former CEO of rival Dollar General, took over Dollar Tree in January 2023 and said he is determined to accelerate revenue and profit growth while fighting inflation and retail theft, it added.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DLTR | DOLLAR TREE INC. | 120.30 | -0.68 | -0.56% |
“Dollar Tree has not set a deadline or definitive timetable for the completion of the strategic alternatives review process, and there can be no assurance that this process will result in any transaction or particular outcome,” the company also said Wednesday.
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The company said in March that in the first half of 2024, Dollar Tree plans on closing approximately 600 Family Dollar stores, while an additional 370 Family Dollar and 30 Dollar Tree stores will close over the next several years at the end of each store’s current lease term.
Between the Dollar Tree and Family Dollar brands, the parent company currently oversees a total of 16,774 stores.
While Dollar Tree executives reportedly unveiled plans to install more security cases and hire more guards to curb shrink, also known as theft or shoplifting, Storch Advisors CEO Jerry Storch has told Fox News Digital the closure of dollar stores is not primarily caused by theft, but instead suggested inflation was the biggest factor.
“Because you can’t obviously sell things for the traditional dollar if prices have gone up too much, so you have to break the dollar, and they have done that and go higher and higher,” he said. “Then it’s hard with that customer base who, was financially stressed by inflation, to raise prices enough to make up for the rising prices of their products.”
FOX Business’ Kendall Tietz contributed to this report.
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