Dollar Tree Loses the Albatross Around Its Neck

After nearly a decade of discord and strategic missteps, Dollar Tree is shedding Family Dollar in a $1 billion deal. The sale to Brigade Capital Management and Macellum Capital Management, announced Wednesday, is expected to close in the second quarter and shuts the book on Dollar Tree's long struggle to integrate Family Dollar, which it acquired for over $8 billion in 2015. Dollar Tree CEO Mike Creedon called it "a major milestone in our multi-year transformation journey to help us fully achieve our potential."

The AP reports Dollar Tree faced multiple hurdles with Family Dollar, such as supply chain issues, challenging store locations, and economic factors like reduced consumer spending. Last March, Dollar Tree announced it would shutter nearly 1,000 of Family Dollar's 8,000 stores; three months later, it said it was looking to sell. The New York Times reports location was a persistent factor in the struggle: Family Dollar stores are mostly in urban areas and cater to low-income shoppers who have been hit hard by inflation. Dollar Tree has more of a suburban presence, and those who shop there have higher incomes, relatively speaking.

What's in the cards for Dollar Tree post-sale? The Wall Street Journal predicts: The company should be able "to invest for more growth and keep making bets ... for instance, it last year acquired leases for a group of 99 Cents Only Stores." (This content was created with the help of AI. Read our AI policy.)