Dollar Tree to Divest Family Dollar for $1 Billion

Dollar Tree has decided to sell its Family Dollar business for $1 billion to private equity firms Brigade Capital Management and Macellum Capital Management. This decision marks the end of Dollar Tree's challenging ten-year ownership of the Family Dollar chain, which it originally acquired for over $8 billion. Since the acquisition, Dollar Tree struggled with integrating Family Dollar due to supply chain issues, poor store locations, and operational difficulties, leading to significant management focus and financial resource allocation. Furthermore, numerous Family Dollar stores are in underserved urban areas, raising concerns about the impact of store closures on low-income consumers. Brigade and Macellum are expected to address several challenges within Family Dollar, including pricing and customer loyalty issues. This divestment will allow Dollar Tree to concentrate on optimizing its core business, better suited to its middle-income suburban customer base and product offerings. The deal, set to conclude later in the second quarter, is viewed as a strategic move for Dollar Tree, which seeks to mitigate potential tariff risks and respond to shifts in consumer spending behavior.