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USA Today
23-04-2025
- Business
- USA Today
Dollar Tree earnings call reveals sale of Family Dollar, expansion of stores
Dollar Tree earnings call reveals sale of Family Dollar, expansion of stores Dollar Tree is selling off its Family Dollar stores for about $1 billion in a move the company says strengthens both companies – and lets Dollar Tree focus on growth. Private equity firms Brigade Capital Management and Macellum Capital Management will purchase Family Dollar, the companies announced Wednesday; Dollar Tree estimated about $804 million in net proceeds from the sale, which it expects to close by June 2025. Dollar Tree, which acquired Family Dollar in 2015 for about $9 billion, began considering a sale or spinoff of Family Dollar in June 2024 as a way to restructure the company amid a challenging retail climate with inflation and competition from big-box retailers such as Walmart and online retailers including Amazon, Shein and Temu. Dollar Tree closed about 600 Family Dollar stores in 2024 and had plans to close another 370 – along with 30 Dollar Tree stores – when the leases came up on on those locations. CEO Michael Creedon, who moved from chief operating officer to interim CEO and then CEO during Dollar Tree's restructuring in recent months, said the separation from Family Dollar puts Dollar Tree in position to "achieve its full potential," in a call with investment analysts Wednesday. 'We will continue to grow and optimize our Dollar Tree business to maximize value for Dollar Tree associates, customers, and shareholders with an enhanced focus on compelling initiatives, including our expanded assortment, significant planned new store openings across the United States, and transactions that advance our growth strategy," Creedon said in a press release announcing the Family Dollar sale. Store closings: 27 Kohl's stores are set to close Saturday. See list of the closures in 15 states Dollar Tree adding, upgrading stores Dollar Tree, which has 2,900 Dollar Tree stores after opening 525 during the past year, expects to open about 300 new stores in 2025, Creedon said. The discount retailer is also upgrading stores to handle items priced as high as $7. Among stores being upgraded are some among the 170 leases of 99 Cents Only Stores in Arizona, California, Nevada, and Texas acquired in May 2024. About 1,000 combination Family Dollar-Dollar Tree stores will be sold in the deal. Dollar Tree reported net sales of $5 billion – excluding sales from Family Dollar stores – a 2% increase in same-store sales during the three-month period ending Feb. 1, 2025. Store traffic in Dollar Tree stores rose 0.7% and shoppers spent 1.3% more per total purchase. Total fourth quarter sales including from Family Dollar were $8.26 billion, which surpassed the $8.23 billion estimated by analysts polled by S&P Global Market Intelligence. Dollar Tree CEO on higher-income shoppers: 'Everybody's hurting' Traditionally, middle-income shoppers account for about half of Dollar Tree customers, Creedon said. However, increased traffic and sales is being driven in part by "stronger demand from higher-income customers who increasingly see Dollar Tree as a cost-effective source for an expanding range of products," he said. Lower-income customers "need us particularly to make their wallet go farther, in between paychecks," Creedon said. But during "this inflationary environment, all shoppers across all income cohorts, including the higher income, is finding Dollar Tree as part of their solution," he said. "It doesn't matter how much money you make everybody's hurting right now." Tariffs could lead to some higher prices at Dollar Tree Dollar Tree had "mitigated" the effects of the first round of tariffs levied on products from China by about 90%, through negotiations, changing product specifications and buying from suppliers in different countries. But higher prices could be an option depending on how future tariffs on goods from Mexico and Canada play out, Creedon said. For instance, he said, "we're the best in the nation for prayer candles. They're made in Mexico and so we want to make sure we can still offer them. So we will look at targeted pricing on things like that." Dollar Tree's break with Family Dollar marks the end of a costly merger it hoped would bolster it against competitors such as Dollar General, which also bid on Family Dollar at the time. Family Dollar stores had also been hit with some issues over the past two years including a 2023 recall of products including toothpaste, pain relievers and other over-the-counter medicines that had been stored improperly, but were shipped to stores. In 2024, Family Dollar agreed to pay the Justice Department $41.6 million for storing food, cosmetics, drugs and medical devices in a rat-infested warehouse in Arkansas for several years, court records show. "It is truly 'addition by subtraction' as Family Dollar had been a consistent weight on topline performance, margin rate, and management time," Evercore analyst Michael Montani told Reuters. Dollar Tree shares, which had been down 11% so far this year, were up more than 9% in early trading Wednesday. Contributing: Emily DeLetter, Jonathan Limehouse and Anthony Robledo of USA TODAY, Reuters. Follow Mike Snider on Threads, Bluesky and X: mikegsnider & @ & @mikesnider. What's everyone talking about? 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Yahoo
11-04-2025
- Business
- Yahoo
Family Dollar to Close Down Over 1,000 Stores
A major shake-up is on the horizon for one of America's most familiar discount chains. Earlier this month, Dollar Tree — which bought Family Dollar in 2015 for nearly $9 billion — announced it is selling the brand to Brigade Capital Management and Macellum Capital for only $1 billion. As a result, more than 1,000 combo stores that house both Family Dollar and Dollar Tree under one roof are shutting down, leaving shoppers and industry watchers alike wondering what this means for the future of the discount retail market in the country. As previously mentioned, private equity firms Brigade Capital Management and Macellum Capital Management are stepping in with plans to breathe new life into the struggling Family Dollar brand. While the transaction still requires regulatory approval, it's expected to move forward sometime in the next quarter. 'After weighing our options, the leadership team and Board believe that handing the reins of Family Dollar to Brigade and Macellum offers the best path forward,' Dollar Tree said in a statement. 'This deal delivers value for our shareholders and gives Family Dollar a better shot at a comeback.' Family Dollar currently operates around 8,000 stores across the United States, primarily serving lower-income neighborhoods in urban areas. Despite offering budget-friendly merchandise typically priced between $1 and $10, the retailer has faced ongoing challenges that even deep discounts couldn't overcome. According to FinanceBuzz, over 1,900 Family Dollar stores are slated to close, including more than 600 locations that shut down in 2024, as well as over 1,000 combo stores that feature both Family Dollar and Dollar Tree in a single building. These closures will primarily impact lower-income communities, where families rely on discount stores for essential, budget-friendly household goods. Though the sale of Family Dollar is expected to be finalized by June 2025 and specific closure locations have yet to be announced, here are the Family Dollar stores that have already closed: Alabama • 534 Lawrence St., Slocomb Florida • 233 E. State St., Jacksonville • 7001 Merrill Road, Jacksonville • 556 Monument Road, Jacksonville • 540 W. Brevard St., Tallahassee Illinois • 3116 N. Sterling Ave., Peoria • 820 NE Jefferson St., Peoria Kansas • 800 Kansas Ave., Kansas City • 1999 N. 63rd Drive, Kansas City • 826 N. Roosevelt St., Marion • 309 E. 9th St., Peabody • 322 E 13th St N., Wichita Kentucky • 431 W. Oak St., Louisville • 1250 Bardstown Road, Louisville Minnesota • 507 N Sibley Ave., Litchfield Missouri • 200 E. Tilden St., Humansville • 503 E. Main St., Willow Springs Nebraska • 1820 10th St., Gering New Jersey • 6 Highway 36 East, Middletown • Chambers St., Trenton • E. State St., Trenton North Carolina • 4840 Carolina Beach Road, Wilmington • 1313 Greenfield St., Wilmington Ohio • 19 N. Arlington St., Akron • 580 Vernon Odom Blvd., Akron • 360 N. Main St., Amsterdam • 2138 Route 45, Austinburg • 15978 Cleveland-East Liverpool Road, Beloit • 531 W. Plane St., Bethel • 8920 State Route 160, Bidwell • 7990 Reading Road, Cincinnati • 5527 Bridgetown Road, Cincinnati • 3407 Harrison Ave., Cincinnati • 229 Waycross Road, Cincinnati • 9302 Miles Ave., Cleveland • 1250 E. 105th St., Cleveland • 2372 Cleveland Ave., Columbus • 3577 E. Livingston Ave., Columbus • 675 E. Hudson St., Columbus • 2191 E. 5th Ave., Columbus • 16160 Township Road 287, Conesville • 349 Cambridge St. N., Cumberland • 440 N. James H. McGee Blvd., Dayton • 15 Walnut St., East Liverpool • 400 Oberlin Road, Elyria • 2101 Central Point Parkway, Lima • 7731 State Route 139, Lucasville • 6704 N. Ridge Road, Madison • 8050 Hamilton Ave., Mount Healthy • 199 S. Riverside Drive, New Miami • 11045 Main St., New Middletown • 650 N. University Blvd., Middletown • 511 S. Breiel Blvd., Middletown • 930 Elm St., Raccine • 519 S. 2nd St., Ripley • 1121 N. Reynolds Road, Toledo • 440 N. James H. McGee Blvd., West Dayton • 4450 Mahoning Ave., Youngstown • 8578 Market St., Youngstown Pennsylvania • 1325 Point Breeze Avenue, Philadelphia • 4701 West Girard Avenue, Philadelphia • 1925 West Allegheny Avenue, Philadelphia • 1955 West Hunting Park Avenue, Philadelphia • 2201 West Cambria Street, Philadelphia • 2459 Kensington Avenue, Philadelphia • 3300 Penn Ave., Pittsburgh • 400 E. Pittsburgh Ave., Greenburg South Carolina • 4403 Jefferson Davis Highway, Clearwater Texas • 304 State Highway 185 N., Seadrift Virginia • 3516 Campbell Ave., Lynchburg • 408 Federal St., Lynchburg West Virginia • 388 Beverly Pike, Elkins Wisconsin • 320 Lincoln Ave., Fennimore Family Dollar's struggles have accumulated over time. According to analysts, these include inconsistent pricing that failed to reflect its discount appeal, an aggressive expansion strategy that overextended the company's resources, and fierce competition from retail giants like Walmart, resulting in retail burnout. 'The sale wraps up a rocky era for Dollar Tree,' wrote Neil Saunders, a retail expert at GlobalData, in a note to clients on April 2nd (via El Adelantado). 'They definitely bit off more than they could scan at the register.' Family Dollar's sell-off comes when the dollar store sector is facing significant challenges. Inflation has driven up operational costs, and lower-income shoppers—who make up the majority of Family Dollar's clientele—are feeling the financial strain. Additionally, tariffs implemented during President Donald Trump's administration have placed extra pressure on the shelves. During a recent call with analysts, Dollar Tree CEO Michael Creedon acknowledged that the said tariffs have caused 'uncertainty and volatility,' but Dollar Tree is making adjustments by switching suppliers and contemplating price hikes to help mitigate the impact. When Dollar Tree acquired Family Dollar, the expectation was that it would provide the competitive edge needed to challenge retail giants. The merger aimed to attract more shoppers, cut costs, and prevent Dollar General—its biggest rival, with a stronghold in rural America—from gaining further ground. However, what was meant to be a savvy bargain buy quickly turned into a costly misstep. Analysts argue that the two brands struggled to mesh, leaving Dollar Tree overwhelmed by the sprawling network of Family Dollar stores. Things took a turn for the worse when many of these stores turned out to be in worse shape than expected. Efforts to boost sales, such as adding beer to the shelves, fizzled out almost immediately. Additionally, many locations were located close to one another, cannibalizing each other's foot traffic rather than attracting new customers. Just a year later, an activist investor raised concerns, urging Dollar Tree to offload the underperforming Family Dollar brand. Shortly after, the company announced plans to close hundreds of locations. Though thousands of Family Dollar stores have received some cosmetic improvements in recent years, analysts note that many still appear to be stuck in the past, with outdated interiors that suggest they've seen better—and far more profitable—times. This move also signals that consolidation within the budget retail space may not always guarantee success. While the initial merger promised expanded market reach and cost savings, the reality proved more complicated as operational inefficiencies and brand clashes took their toll. For the future of the budget retail industry, Dollar Tree's sell-off could lead to a wave of similar restructuring. As companies reconsider their strategies for maintaining a foothold in the discount sector, we may see more brands either divesting underperforming segments or focusing on refining their core offerings. This could ultimately reshape the competitive landscape, with retailers needing to rethink how they cater to lower-income consumers in an era of financial uncertainty. Read the original article on GEEKSPIN. Affiliate links on GEEKSPIN may earn us and our partners a commission. Sign in to access your portfolio
Yahoo
09-04-2025
- Business
- Yahoo
Why Is Macy's (M) Stock Rocketing Higher Today
Shares of department store chain Macy's (NYSE:M) jumped 17% in the afternoon session after markets rallied sharply on news that President Trump announced a 90-day tariff pause. Reciprocal tariffs were also dropped to 10% for most countries, sparking renewed optimism amid ongoing trade talks. The major stock indices rose as investors, growing impatient of seemingly irrational tariff actions, welcomed the pause as a sign of a more measured path forward. However, Trump was quick to note that China was not part of the pause. Instead, he prepared to raise tariffs on Chinese goods to 125% after China announced retaliatory tariffs on US imports. This tough stance on China stood in sharp contrast to the softer tone toward others. In a week marked by growing uncertainty, this news eased some of the pressure. The questions remain whether we are out of the woods and can sustain the rally or not. Is now the time to buy Macy's? Access our full analysis report here, it's free. Macy's shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today's move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. The biggest move we wrote about over the last year was 9 months ago when the stock dropped 15.3% on the news that the company announced the termination of acquisition discussions with Arkhouse Management and Brigade Capital Management. In March 2024, Arkhouse Management and Brigade Capital submitted a proposal to acquire all outstanding shares of Macy's they don't already own for $24.00 per share in cash. Macy's Board concluded that the proposal lacked "certainty of financing at a compelling value." Moving on, Macy's announced a new strategy dubbed "A Bold New Chapter." It noted that the strategy involves "strengthening the Macy's brand, accelerating luxury growth and simplifying and modernizing end-to-end operations." Overall, the announcement implied there was no certainty investors would be able to sell their shares at the previously stated offer price. Macy's is down 29.4% since the beginning of the year, and at $11.71 per share, it is trading 42.6% below its 52-week high of $20.38 from May 2024. Investors who bought $1,000 worth of Macy's shares 5 years ago would now be looking at an investment worth $1,756. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. We prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story. Sign in to access your portfolio
Yahoo
30-03-2025
- Business
- Yahoo
Dollar Tree's Big Announcement Comes As a Surprise
Dollar Tree has been in the headlines quite a bit lately. Usually, it's because they have some pretty low prices for their products. Another reason has been because it has been rumored that their prices are increasing again. However, they are making headlines again, and it's not for the usual reasons we think, and this isn't a rumor. A few days ago, Dollar Tree announced that it would sell a portion of its business. Family Dollar, the chain it acquired about ten years ago, is selling to two private equity firms, Brigade Capital Management and Macellum Capital Management, for a billion dollars. Although acquiring Family Dollar may have seemed like a good idea at the time, it has caused a lot of problems for Dollar Tree, specifically related to supply chain issues and other operational challenges. Selling Family Dollar will allow Dollar Tree to focus on its core needs and maximize its potential. The seemingly similar store chains are much more different than one would expect. Family Dollar's target audience is lower-income customers in densely populated urban areas, while Dollar Tree's target audience tends to be suburban middle-income shoppers. Separating the two may prove to be beneficial for Dollar Tree in the long run. The deal is currently in progress and is expected to finish in the second quarter of this year. Although this does seem like a solid move in the right direction for Dollar Tree, the impact of tariffs has yet to be seen. The tariffs on Chinese, Canadian, and Mexican goods could affect the products in the store. One positive note is that higher-income shoppers are demanding more of the Dollar Tree product line. There are plenty of things influencing the future of Dollar Tree. The sale of Family Dollar, tariffs, and growing demands from higher-income shoppers have given it a one-two punch. However, leaders seem optimistic so far, and so does the stock, which has recently been on the UP for the Parade Home & Garden newsletter for a weekly dose of our favorite house hacks, decor trends and shopping deals
Reuters
26-03-2025
- Business
- Reuters
Dismal dollar-store deal upends recession logic
NEW YORK, March 26 (Reuters Breakingviews) - Dollar Tree's (DLTR.O), opens new tab latest bargain is its own operations. The discount retail chain is handing its down-market Family Dollar brand to a group of private equity firms for the meager price of $1 billion. As the economy weakens, stores that cater to price-sensitive customers might seem like a safe haven. Looming tariffs and cuts to government subsidies turn that logic on its head. On Tuesday, Dollar Tree announced the sale, opens new tab to Brigade Capital Management and Macellum Capital Management, wrapping up a decade-long failed experiment. In 2015, it acquired Family Dollar for $9 billion, calling it a 'transformational opportunity' to reach a 'broader array of customers.' Dollar Tree skews to middle-income consumers, who make up about half of its base, especially when they're searching for oddball seasonal items like Halloween decorations. Like retail giant Walmart, it's even drawing in higher-income shoppers, a sign that wallets are stretching. Family Dollar, meanwhile, caters to those on lower incomes buying staples like groceries. The rationale for combining went sideways, opens new tab. Family Dollar's down-at-heel stores located in urban centers required more investment to spruce up than could be justified. Neglect invites trouble in retail: Family Dollar's net sales for the year ending February fell 2% from the prior year, compared to Dollar Tree's increase of 5%. It is less profitable, too, notching a gross margin of 25% versus the more-upscale brand's 36%. This sagging business has dragged down Dollar Tree's valuation. Its enterprise trades at under 15 times trailing-twelve-month operating income, according to Visible Alpha, versus 18 times for rival Dollar General (DG.N), opens new tab. With shares down 45% over the past year, that made the company an eager seller. Brigade and Macellum paid only 9 times Family Dollar's operating income of $108 million during its last fiscal year, after stripping out various write-downs and the cost of running a sale process. Buying a down-market chain on the cheap might seem well-timed. Consumer confidence, opens new tab dropped to its lowest level in four years in March. Analysts see recession risks rising. Yet President Donald Trump's constant tariff threats add dire uncertainty. After all, Dollar Tree sources 40% of its inventory from China, according to Jefferies. Furthermore, the Republican hunt for government spending to cut could hit programs that subsidize food purchases for those on low incomes. Even small deviations can hurt. In September, Dollar Tree trimmed its annual forecast, sending its share price down by more than a fifth. Income from continuing operations fell 18% last year. The margin of error, always razor-thin in retail, is narrowing even further. Follow @jennifersaba, opens new tab on X Dollar Tree said on March 26 that it had agreed to sell its Family Dollar chain of stores for $1 billion to Brigade Capital Management and Macellum Capital Management. Dollar Tree bought the discount retailer for about $9 billion in 2015. For more insights like these, click here, opens new tab to try Breakingviews for free. Editing by Jonathan Guilford and Maya Nandhini
