Dollar Tree to sell Family Dollar for $1B

Dollar Tree is selling its Family Dollar stores to a group of private-equity investors for about $1 billion.

Bridge Capital Management and Macellum Capital Management are the buyers of the discount store chain.

Family Dollar is frequently located in urban areas and sells items such as groceries, cleaning products and other products at a variety of prices. Dollar Tree, on the other hand, sells mostly party supplies, knickknacks and crafts in suburban areas. That store had products priced at a dollar for most of its existence, but in 2021, it raised the prices of items to $1.25 to $1.50 and sometimes higher.

“This is a major milestone in our multi-year transformation journey to help us fully achieve our potential,” CEO Mike Creedon said.

Family Dollar will keep its headquarters in Chesapeake, Virginia.

There are 7,613 Family Dollar stores in the U.S. Dollar Tree has more than 8,000 locations in the U.S. and Canada.

The company also has 1,200 “combo” stores that are both Family Dollar and Dollar Tree locations.

The store along Statesville Avenue in north Charlotte abruptly closed months ago and now has a fence around it.

For many who are loyal to the retailer, it is their only option for the things they need.

“Because it’s affordable and it’s in walking distance,” said customer Shirley Massey. “A lot of people don’t have transportation. They can’t get to Walmart.”

The store is a more cost-effective lifeline for many.

“Small things, hair products, everything, stuff for the house,” Massey said.

Chief economist at Piedmont Crescent Capital, Mark Vitner, explained what may be behind the lopsided sale.

“My sense is that the Family Dollar integration has become too much of a drag on their management's time, and they figure that taking their losses now is probably the best thing to do,” Vitner said.

Vitner pointed out that while Dollar Tree has been refreshed over time, nothing much has changed with Family Dollar.

“The stores just need to be upgraded, and I’m surprised that Dollar Tree did not do that,” he said.

However, a sale doesn’t necessarily mean all bad news, the economist said.

“They’re being purchased by a private equity firm which has some experience in turning around retailers, so I would imagine that would call for closing under-performing stores, and possibly opening stores,” he said.

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