Dollar Tree Offloads Family Dollar to Private Equity for $1 Billion

Dollar Tree has announced the sale of Family Dollar to two private equity firms, Brigade Capital Management and Macellum Capital Management, aiming to streamline operations after years of difficulty managing the brand.

Dollar Tree has officially announced the sale of Family Dollar to Brigade Capital Management and Macellum Capital Management for just over $1 billion, a substantial drop from the $9 billion it invested in the retailer nearly a decade ago. In a statement released Wednesday, Dollar Tree’s CEO Michael Creedon described the sale as a "major milestone in our multiyear transformation journey," reflecting a significant pivot in the company's strategy.

Acquired by Dollar Tree in 2015, Family Dollar was expected to help both brands expand their customer bases. However, the integration faced numerous challenges. Last year, Dollar Tree reported it would close nearly 1,000 of Family Dollar’s approximately 8,000 stores due to operational struggles. The decision to sell was announced in June, highlighting issues such as inflation and theft, as well as the waning effects of federal pandemic-era assistance, which have particularly affected low-income shoppers, the primary customers of Family Dollar.

In contrast, Dollar Tree has more locations in suburban areas and typically serves a more affluent consumer demographic. As part of a wider report, Dollar Tree also announced its latest quarterly earnings, citing potential hurdles to sales growth, including tariffs and other barriers that may affect trade and inventory.

This news aligns with a troubling trend among U.S. retailers. Companies like Walgreens reportedly plan to close approximately 1,200 stores in the next three years, while Party City announced it would shut down all its locations. Additionally, the operator of Forever 21 in the U.S. recently filed for bankruptcy, struggling to keep pace with the competitive online retail environment.

As the retail landscape continues to shift, Dollar Tree's decision represents a significant recalibration aimed at focusing on its core brand amidst a turbulent economic backdrop.