An exterior view of a Dollar Tree store in Bloomsburg, Pennsylvania.
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dollar tree announced Wednesday that it is considering selling its more grocery-focused Family Dollar brand.
The company recently unveiled plans to close nearly 1,000 Family Dollar stores in an attempt to revive its struggling business. The discounter said Wednesday it closed more than 500 stores in the fiscal first quarter.
“We are already starting to see progress in this targeted strategy under the streamlined Family Dollar banner,” the company said. said in a press release. “The unique needs of each banner at this time – Family Dollar’s transformation and Dollar Tree’s growth acceleration – prompted our decision to conduct a thorough review of strategic alternatives for the Family Dollar business.”
Dollar Tree acquired Family Dollar in 2015 for nearly $9 billion. Since then, the company has struggled with major rivals, Dollar General.
The company has not set a deadline or firm timeline for the sales review process and is working with advisers JPMorgan Chase & Co. and Davis Polk & Wardwell on the review.
Dollar Tree shares fell about 2% in early trading Wednesday.
The update coincided with Dollar Tree’s first fiscal quarter earnings report, in which Family Dollar lagged.
Same-store sales for the company’s Dollar Tree brand rose 1.7%, while sales at Family Dollar rose just 0.1%. Corporate sales grew 1%.
Revenue increased to US$7.63 billion, an increase of approximately 4% from US$7.32 billion in the same period last year.
The company said it expects second-quarter sales to be between $7.3 billion and $7.6 billion, with sales in the Dollar Tree banner growing between 2% and 4% and sales in the Family Dollar segment being roughly flat. .
This is what discount stores do first fiscal quarter Compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: $1.43, expected $1.42
- income: $7.63 billion vs. $7.63 billion expected
The company reported net income of $300.1 million, or 1.38 cents a share, for the three months ended May 4, compared with $299 million, or $1.35 a share, a year earlier. After adjusting for one-time items, including the cost of closing stores, the company reported earnings of $1.43 per share.
The company also noted that a tornado on April 28 destroyed the company’s distribution center in Marietta, Oklahoma, causing losses totaling $117 million as of early May. and the facility itself sustained significant damage.
The company said it expects the losses incurred to be covered through insurance claims.
The dollar store market is going through tough times as lower-end consumers exit in the face of higher costs. While the shift to cost-cutting efforts sounds like it will benefit dollar stores, discounters are increasingly losing market share to value retailers like these. Walmart and e-commerce retailers like Temu.
Dollar Tree’s fourth-quarter earnings report said holiday quarter sales fell short of expectations, while its main competitors Dollar General exceeded estimates.
Dollar Tree has been in the midst of a broader transformation effort since current CEO Richard Dreiling, a former Dollar General executive, took the helm in early 2023.
In 2024, the company’s stock price has fallen by about 15%.
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