Dollar Tree Reviewing 'Strategic Alternatives' For Family Dollar
Dollar Tree is reviewing strategic alternatives for Family Dollar that include a potential sale of the business, a spin-off, or other disposition.
Rick Dreiling, chairman and chief executive officer of Dollar Tree, said the unique needs of each retail banner — the transformation at Family Dollar and growth acceleration at Dollar Tree — led the company to its decision to review alternatives for Family Dollar.
“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,” he said.
Dollar Tree officials have not set a deadline or definitive timetable for the completion of the review process.
In 2023, Dollar Tree completed a comprehensive review of the Family Dollar portfolio that included the planned closure of approximately 970 underperforming stores as part of an effort to focus on enhancing investments in the remaining Family Dollar locations.
“We are already beginning to see progress in this targeted strategy in the streamlined Family Dollar banner,” Dreiling said.
An area of strength at Family Dollar has been its private label product assortment. In March, Dreiling noted in an investor conference call the retailer launched approximately 250 new store brand SKUs and converted more than 300 controlled brands to private brands.
“The private brand program is one of the most significant initiatives underway at Family Dollar, and I’m excited that we have a highly competitive offering that expands our assortment across multiple categories and offers consumers national brand equivalent products at compelling values,” he said.
Dreiling noted at the time the continued growth in sales of private label products had the company ahead of schedule to meet its year-end own brand penetration rate goal of 15%. By 2026, the retailer has set a goal of 20% for private label brand penetration.
News of Dollar Tree’s review of Family Dollar comes the same day Dollar Tree reported company-wide first-quarter net sales of $7.63 billion, an increase of 4.2% when compared to the first quarter of the prior fiscal year. Enterprise same-store net sales increased 1.0%, driven by a 2.1% increase in traffic, offset by a 1.1% decrease in average ticket.
Dollar Tree same-store net sales increased 1.7%, driven by a 2.8% increase in traffic, offset by a 1.1% decrease in average ticket. Family Dollar’s same-store net sales increased 0.1%, driven by a 0.9% increase in traffic, offset by a 0.8% decrease in average ticket. Same-store net sales results for the Family Dollar segment do not include any stores that were closed during the first quarter as part of our previously announced portfolio optimization.
Net income was $300.1 million and diluted earnings per share was $1.38. On a non-GAAP basis, adjusted net income was $311.5 million and adjusted diluted EPS was $1.43. Net income and EPS in the first quarter were flat when compared to the first quarter of the prior fiscal year.