Dollar Tree to sell Family Dollar chain for $1 billion

Dollar Tree will sell its ailing Family Dollar business for a fraction of its acquisition cost almost 10 years ago.

Several months after saying that it would consider selling Family Dollar, Dollar Tree on Wednesday said it would sell the business to two private equity firms for $1 billion. Family Dollar had 7,600 stores as of Feb. 1.

Dollar Tree outbid its competitor Dollar General to acquire the Family Dollar discount chain for $8.5 billion in 2015. But Dollar Tree has since struggled to distinguish Family Dollar from rivals including big-box stores such as Walmart and e-commerce sites, and it faced broader headwinds such as inflation. In 2024, Dollar Tree said it would close 1,000 Family Dollar stores after it missed profit targets.

The Family Dollar business recorded an operating loss of $1.8 billion in Dollar Tree’s latest fiscal year, which ended Feb. 1. Dollar Tree also recorded a loss of billions on paper for the fourth quarter related to Family Dollar as it wrote off the value of the brand and its assets.

Characterizing the sale as a “major milestone,” chief executive Mike Creedon said Wednesday that Dollar Tree intends to open new stores and pursue other initiatives including “transactions that advance our growth strategy.”

The sale of Family Dollar to Brigade Capital Management and Macellum Capital Management is expected to close in 90 days.

Dollar Tree expects $804 million in net proceeds from the sale, and $350 million in tax benefits from losses on the sale, the company said in its quarterly financial report released Wednesday.

Dollar Tree’s stock rose more than 4 percent Wednesday morning.