Dollar Tree has announced its decision to sell Family Dollar to private equity firms Brigade Capital Management and Macellum Capital Management for $1 billion.
The sale marks a significant financial loss for Dollar Tree, which originally purchased Family Dollar for $9 billion in 2015 in an effort to expand its reach in the discount retail sector.
Dollar Tree’s acquisition of Family Dollar was initially seen as a way to compete with larger discount retailers like Walmart and Dollar General, but the integration proved difficult. The chain struggled with operational challenges, store upkeep issues, and increased competition. Over the past year, Dollar Tree has closed nearly 1,000 Family Dollar locations and began exploring options for a potential sale.
Messy stores, over-expansion, and pricing issues have contributed to Family Dollar’s decline. Some locations were in poor condition, while others were placed too close together, reducing profitability. Despite efforts to renovate stores, analysts note that many remain poorly maintained.
In addition, inflation and shifting consumer habits have posed challenges for dollar stores in general. Many low-income customers—the primary demographic for Family Dollar—have cut back on spending, further impacting sales.
The transaction is expected to close in the second quarter of 2025, pending regulatory approval. Duncan MacNaughton, a former Family Dollar executive, will take over as chairman after the sale is finalized. Wells Fargo, RBC Capital Markets, and WhiteHawk Capital Partners will provide financing for the deal.
Dollar Tree CEO Mike Creedon called the sale a “major milestone” in the company’s ongoing transformation, stating that Dollar Tree will continue to expand its own store network despite Family Dollar’s sale.
The broader dollar store industry is also facing uncertain times. Competitor Dollar General has announced plans to remodel existing stores and add 575 new locations this year, while other discount retailers, including 99 Cents Only, have struggled or filed for bankruptcy.
Additionally, concerns over potential tariffs on imported goods could further impact the sector. Around 40% of Dollar Tree’s sales rely on imports, and the company has warned that it may need to adjust product pricing or availability if trade restrictions increase costs.
CNN, Axios, and the New York Times contributed to this report.
