The retailer has already closed hundreds of Family Dollar stores this year alone
Despite boasting lower prices in a time of persistent inflation, discount stores are taking a hit this year.
After dealing with a lawsuit over a rat-infested warehouse, raising prices (again), and announcing the closure of nearly 1,000 stores throughout this year, Dollar Trees subsidiary Family Dollarisstruggling.
Now, Dollar Tree has announced that its exploring the sale of the Family Dollar brand.
Dollar Tree has been on a multi-year journey to help the company achieve its full potential, said Rick Dreiling, chairman and CEO of Dollar Tree.
The unique needs of each banner at this time transformation at Family Dollar and growth acceleration at Dollar Tree lead us to the decision to conduct a thorough review of strategic alternatives for the Family Dollar business. Our goal is to position both the Dollar Tree and Family Dollar banners to progress further and faster, and to determine whether the exclusive attention of a dedicated team will benefit both, while creating value for Dollar Tree shareholders and other stakeholders.
Family Dollars transformation
Currently, it remains unclear what the outcome will be regarding Family Dollar and Dollar Tree. This strategic review could lead to the eventual sale of the company, or it could be a spinoff or revitalization of the brand and its stores.
However, Dollar Tree has also struggled as of late. In March 2024, the company announced the closure of nearly 1,000 stores across the country as its net sales decreased nearly 3.5% in the fourth quarter of 2023, dropping to $9.9 billion.
Many of these stores had been under-invested for years, and the capital investment required to fix them could not deliver an acceptable rate of return, Dreiling said.
This downward trend has only continued into 2024. While Dollar Trees same-store sales went up over 1.5% in the first quarter of the year, Family Dollar only saw a 0.1% increase.
The company is already projecting that the second quarter will be much of the same with steady growth for Dollar Tree, and stagnancy for Family Dollar.
The company explained that a definitive plan or timeline for a decision hasnt been made, and it will be working with Davis Polk & Wardwell LLP and J.P. Morgan Securities LLC on the final decision.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-06-06 11:07:06
