Dollar Tree to sell Family Dollar for $1 billion after bosses announced 1,000 store closures
DOLLAR Tree is to sell its Family Dollar business in a deal worth $1 billion, chiefs have announced.
The sale comes months after execs completed its wave of shutdowns that saw 1,000 Family Dollar outlets closed across the US.
Dollar Tree confirmed the news of a sale in a statement today.
Family Dollar will be bought by the consortium, Brigade Capital Management and Macellum Capital Management.
Mike Creedon, the CEO of Dollar Tree, has welcomed the deal.
"This is a major milestone in our multi-year transformation journey to help us fully achieve our potential," he said.
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Creedon revealed that Dollar Tree's portfolio of stores will be increased.
There are more than 16,000 Dollar Tree stores across the US and the budget-friendly brand has a presence in 48 states.
Creedon also teased the chain's future plans, including "compelling" initiatives, and product expansion.
Dollar Tree bought Family Dollar for $9 billion in 2015, staving off competition from fellow budget retailer Dollar General.
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Family Dollar stores are located in cities and sell goods between $1 and $10.
But, retail experts have linked relatively high prices to the company's downfall, per CNN.
And, low-income Americans shopping behavior has also impacted the brand.
"The dollar store sector seems to be facing existential uncertainties," UBS analyst Michael Lasser revealed in a note seen by CNN.
Todd Vasos, CEO of Dollar Tree's rival, Dollar General, warned its shoppers have been impacted by inflation.
"Many of our customers report they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities," he said on an earnings call in March.
US braces for '45,000 store closures'
Some 45,000 bricks-and-mortar stores could close in the next five years, experts have warned.
Several major retailers have announced store closures or gone out of business altogether in recent years.
In 2023, chains such as Foot Locker announced plans to close up to 400 outlets by 2026.
While, other well-known retailers like Tuesday Morning and Mitchell Gold + Bob Williams filed for bankruptcy in 2023.
Bed Bath & Beyond has closed all of its brick-and-mortar stores and is now an online-only retailer.
The most affected retailers have been clothing, consumer electronics, sporting goods, hobby, book, music, and home furnishing stores since the start of 2019.
UBS has predicted the total number of retail stores will drop by 45k from 958k to 913k.
Despite that, the report says that certain stores should thrive while others decline.
It said retailers such as Walmart, Costco, Home Depot, and Target, could be among the winners.
Rick Dreiling, who was the CEO of Dollar Tree before resigning in November, confirmed that the retailer was looking to transform the fortunes of Family Dollar - despite the mass closures.
"We have been on a multi-year journey to transform the organization and fully unlock its intrinsic value," he said.
"Moving forward with a streamlined portfolio should help accelerate Family Dollar's transformation and improve the long-term returns of business."
Around 600 Family Dollar outlets slammed shut in the first half of last year.
And, 370 locations closed their doors after leases expired.
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Dollar Tree has undergone a recent leadership change as Jeff Davis stepped down as chief financial officer in December.
He had been in the role since November 2022.