The deal pending regulatory approval is far less than the $9 billion Dollar Tree spent in 2015 to buy Family Dollar|Michael Rivera|CC BY-SA 4.0
Dollar Tree is selling discount retailer Family Dollar for $1 billion to private equity groups Brigade Capital Management and Macellum Capital Management less than a decade after acquiring it.
The deal pending regulatory approval is far less than the $9 billion Dollar Tree spent in 2015 to buy Family Dollar. The PE firms will take over the struggling chain, which has 8,000 stores catering to low-income urban shoppers.
What went wrong?
Family Dollar has faced issues like messy locations, poor maintenance, and stiff competition from Walmart and Dollar General. It sells items between $1 - $10 and targets lower-income customers. However, the stores’ proximity to other Dollar stores cannibalized its own sales.
The store chain was also fined $41.6 million for selling products from a rat-infested warehouse and never fully recovered. It announced plans in 2024 to close over 900 stores after failing to meet sales goals.
Meanwhile, inflation and President Donald Trump’s tariffs have squeezed parent Dollar Tree’s operating costs. It already raised its iconic $1 price to $1.25 in 2021.
With 40% of sales reliant on imported goods, Dollar Tree may hike prices further to mitigate tariff impacts, according to KeyBanc Capital Markets analysis.
As low-income customers cut back spending, Dollar Tree aims to stabilize by focusing on middle-income shoppers and strategic sourcing.