Dollar Tree Wants to End Its 'Disastrous Merger'

Company announces it would like to sell or spin off Family Dollar chain
By Kate Seamons,  Newser Staff
Posted Jun 5, 2024 11:15 AM CDT
A Decade Later, Dollar Tree Looks to Unload Family Dollar
A customer enters a Family Dollar store in Charleston, West Virginia, on March 13.   (Christopher Millette/Charleston Gazette-Mail via AP)

Dollar Tree is seeking to put an end to what CNN calls its "disastrous merger" with Family Dollar. The parent company on Wednesday announced it's looking into selling or spinning off Family Dollar, which it bought for $8.5 billion in 2015. The thinking at the time was that the pairing would help Dollar Tree go head-to-head with the likes of Walmart and Dollar General. In reality, the chains ended up having "unique needs," as Dollar Tree CEO Rick Dreiling puts it in a press release, with disparate prime locations (suburbs for Dollar Tree, urban areas for Family Dollar) and customer income levels.

The New York Times quotes a research note from analysts with the investment bank Evercore who write of the uncertainty of whether Dollar Tree will be able to find a buyer. Anyone who purchases Family Dollar "would have a lot of heavy lifting to turn the business," they write. There are about 8,000 Family Dollar stores, though the planned closure of about 1,000 of them was announced in March. Dollar Tree on Wednesday said that more than 500 locations were closed in Q1, reports CNBC.

The press release references that: "We are already beginning to see progress in this targeted strategy in the streamlined Family Dollar banner," says Dreiling. "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." Same-store sales for Dollar Tree stores were up 1.7% in Q1, compared with just 0.1% at Family Dollar. (More Dollar Tree stories.)

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