Dollar Tree has announced the sale of its struggling Family Dollar business to private equity firms Brigade Capital Management and Macellum Capital Management for roughly $1 billion. The deal, revealed during the company’s fourth-quarter earnings report, is expected to close within 90 days. Family Dollar will remain headquartered in Chesapeake, Virginia, under the new ownership.
The sale marks a significant loss for Dollar Tree, which acquired Family Dollar for approximately $9 billion in 2015 after outbidding rival Dollar General. The steep markdown underscores the chain’s struggle to turn the business around after years of underperformance. Despite initial hopes of expanding its market share with the acquisition, Family Dollar failed to gain traction, facing operational challenges, increased competition, and weaker same-store sales.
Dollar Tree’s new CEO, Mike Creedon, who took the helm in December 2024, called the sale a “major milestone” in the company’s multi-year transformation plan. He emphasized that shedding Family Dollar will allow the company to focus on Dollar Tree’s long-term growth, profitability, and return on capital. Creedon outlined plans for aggressive expansion, including opening new stores across the U.S., optimizing existing locations, and introducing a wider product assortment.
The sale comes after Dollar Tree announced plans last year to close nearly 1,000 stores, including 600 Family Dollar locations, in response to mounting losses. An additional 370 Family Dollar and 30 Dollar Tree stores are also slated for closure over the next few years as their leases expire. The closures reflect the company’s struggle to compete with retail giants such as Walmart and Target, as well as fast-fashion retailers like Temu and Shein.
Despite the challenges, Dollar Tree has shown signs of resilience. In December, the company raised its full-year sales guidance after reporting stronger-than-expected profits and sales. However, its stock remains under pressure, having dropped more than 40% year to date.
JPMorgan Securities LLC and Davis Polk & Wardwell LLP are advising Dollar Tree on the sale, while Jefferies LLC is serving as the lead financial adviser for Brigade and Macellum. Financing for the transaction is being provided by Wells Fargo, RBC Capital Markets, and WhiteHawk Capital Partners.
