Dollar Tree Reportedly Mulls Sale Of Family Dollar; Stock Up

(RTTNews) - Discount retail chain Dollar Tree, Inc. is exploring the sale of its unit Family Dollar Stores LLC, the Wall Street Journal reported citing people familiar with the matter.

Following the news, Dollar Tree shares were gaining around 3 percent in pre-market activity on the Nasdaq, to trade at $123.73.

The company is working with financial advisers to conduct a strategic review of its Family Dollar business to explore options including a potential sale or spinoff. It is likely to announce the plans related to Family Dollar when it reports first-quarter results later in the day.

As per the report, the Chesapeake, Virginia -based company has tapped bankers at JPMorgan for the strategic review.

In mid March, Dollar Tree had announced its plans to close around 970 underperforming Family Dollar stores, in which around 600 in the first half, as part of its comprehensive store portfolio optimization review. The remaining Family Dollar stores as well as around 30 Dollar Tree stores were to close over the next several years, at the end of each store's current lease term.

Dollar Tree's comprehensive store portfolio optimization review involved identifying stores for closure, relocation, or re-bannering.

According to Rick Dreiling, Chairman and Chief Executive Officer, the decisive steps were expected to strengthen the Family Dollar brand and better position it to achieve its full potential.

Dollar Tree then had added that it was placing a greater emphasis on opening more Dollar Trees than historically done in the past due to the returns and performance, and the vast majority of new store openings in fiscal 2024 will be Dollar Trees.

While reporting a hefty net loss in its fourth quarter compared to a last year profit, despite revenue growth, the company said the store closure decision was taken based on an evaluation of then market conditions and individual store performance, among other factors.

In late February, Family Dollar was fined $41.675 million by the U.S. Department of Justice after pleading guilty to holding consumer products including food and drugs in rodent-infested warehouse in West Memphis, Arkansas. It was the largest-ever monetary criminal penalty in a food safety case, the DOJ then noted.

Family Dollar in February 2022 had recalled all drugs, medical devices, cosmetics, and human and animal food products sold since January 1, 2021 in the 404 stores that had been serviced by the warehouse.

As of February 3, Dollar Tree operated 16,774 stores under the brands of Dollar Tree, Family Dollar, and Dollar Tree Canada.