Dollar Tree announced it has sold its Family Dollar business to private equity companies Brigade Capital Management and Macellum Capital Management for about $1 billion. The move ends Dollar Tree’s almost year-long hunt for prospective purchasers of the beleaguered discount-store chain.
It bought Family Dollar in 2015 for approximately $9 billion with the objective of broadening its market reach. The chain has struggled to compete with box store players like Walmart and online behemoths Amazon, Shein, and Temu. In spite of attempts to remake stores and offer multi-price points, the performance of Family Dollar was uneven.
The sale is part of Dollar Tree’s larger reorganization strategy to concentrate on its core business and increase profitability. The move is seen by analysts as a good idea, as it enables Dollar Tree to focus on its more lucrative operations. Evercore analyst Michael Montani characterized the divestiture as “addition by subtraction,” observing Family Dollar had been a steady performance drag.
To go along with the sale, Dollar Tree also expects to have a financial effect from President Donald Trump’s new tariffs in March. It projects the tariffs will have an impact on its expenses of around $20 million a month.
The Family Dollar chain has floundered in sales of its higher-margin discretionary categories like apparel and home decor, as its customers have lowered spending in light of inflation. In spite of aggressive remodeling plans and the rolling out of multi-price points, the chain’s comparable sales activity has been choppy.
This divestiture follows Dollar Tree’s announcement in June 2024 that it was looking at alternatives, such as selling or spinning off its Family Dollar banner, as a part of its restructuring process in the midst of high inflation and constrained consumer spending.
The sale of Family Dollar illustrates the challenges discount-format retailers face in a competitive environment, while further indicating Dollar Tree’s commitment to simplifying its operations and refocusing on its core brand.
