Dollar Tree Sells Family Dollar For $1 Billion
In a big shakeup, Dollar Tree Inc. sold its troubled Family Dollar business to investment firms Brigade Capital Management and Macellum Capital Management. The $1 billion deal means they lost $8 billion from what they paid in 2015.
“This is a major milestone in our multi-year transformation journey to help us fully achieve our potential,” said CEO Mike Creedon to Fox Business.
The company plans to close 600 Family Dollar stores immediately. Another 370 locations will shut down when their leases run out. They’re also getting rid of 30 Dollar Tree stores in the coming years.
Money problems led to this big change. The company’s stock dropped more than 40% since January. They kept losing money quarter after quarter as customers spent less.
The deal should be done in about three months. Family Dollar will stay based in Chesapeake, Virginia. JPMorgan Securities LLC and Davis Polk & Wardwell LLP are helping the seller, while Jefferies LLC is working with the buyers.
Safety concerns hurt them badly in 2023. They had to pull medications and medical supplies from stores in 23 states, which hurt their bottom line.
Big box stores cut into their business like Walmart and Target, along with new players Temu and Shein, took away their customers. Family Dollar kept seeing fewer sales at their stores throughout the year.
Stewart Glendinning came on as CFO last March. His job was to completely overhaul how stores run.
Things looked up when the company beat Wall Street’s expectations for both earnings and sales last December, suggesting better times ahead.
Now that Family Dollar is sold, Dollar Tree is focusing on building up its main brand with new products and smart partnerships.
