Dollar Tree considers selling or spinning off Family Dollar

Chesapeake-based Fortune 500 discount retailer Dollar Tree is considering selling or spinning off its Family Dollar brand, which it acquired in 2015 for $8.5 billion.

“Dollar Tree has been on a multiyear journey to help the company fully achieve its potential,” CEO and Chairman Rick Dreiling said in a statement Wednesday. “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.”

Dreiling noted that “unique needs” of each of its brands has led Dollar Tree to examine selling or spinning off Family Dollar. The company has not set a timeline for making a decision.

Dollar Tree acquired Family Dollar for $8.5 billion in 2015, overcoming antitrust concerns and competing bidders. As of Feb. 3, Dollar Tree was operating more than 8,350 Family Dollar stores across the continental United States. In its 2024 first quarter earnings report, Dollar Tree said it would close 370 Family Dollar stores (and 30 Dollar Tree stores) over the next several years at the end of each store’s current lease term. As the end of the first quarter of this year, it had closed 550 retail locations, including Dollar Tree stores, and expects to close another 150 by the end of this fiscal year.

The move comes shortly after Dollar Tree announced its intention to acquire 99 Cents Only, another discount retailer in the western part of the country.

Following the January 2023 C-suite shakeup that brought in Dreiling as the company’s new CEO, Dollar Tree continued to see executive personnel changes last year. In June, Dollar Tree Vice President of Investor Relations Randy Guiler retired after 10 years, to be succeeded by Robert LaFleur, who joined from Chewy. In August, Jonathan Leiken joined Dollar Tree as executive vice president, chief legal officer and secretary, and Diane Randolph, a former chief information officer for major retailers, joined Dollar Tree’s board of directors.

The company’s first quarter sales increased 4.2% year-over-year to $7.63 billion. Family Dollar’s same-store net sales grew .1%.

Dollar Tree, which ranks No. 143 on the 2024 Fortune 500, posted $30.6 billion in revenue for fiscal 2023. Dollar Tree shares were trading for $114.55 as of 11:30 a.m. June 5, down from a year-to-date high of $150.02 on March 7.