Dollar Tree is exploring sale of Family Dollar brand

Discount store company Dollar Tree Announced Wednesday that The company is considering selling its struggling Family Dollar brand and has hired JPMorgan Chase to lead a review of the business.

Dollar Tree said in a statement that a “formal review of strategic options” for its Family Dollar division could include “a potential sale, spin-off or other disposition of the business.” The announcement came after Dollar Tree said it would close about 1,000 Family Dollar stores over the next few years due to declining market conditions and store performance.

“Dollar Tree has been working for several years to help this company realize its full potential,” Rick Dreiling, chairman and CEO of Dollar Tree Inc., said in a statement. “Last year, we announced a comprehensive review of the Family Dollar portfolio, which included plans to close approximately 970 underperforming Family Dollar stores, with a focus on strengthening investments in remaining Family Dollar stores that represent good opportunities for long-term growth and transformation and offer more attractive returns on capital. This targeted strategy is already beginning to show progress under the streamlined Family Dollar banner.”

Dollar Tree acquired the Family Dollar chain in 2015 for roughly $9 billion, but the company needed more investment to turn it around, The Wall Street Journal reported.

Dollar store chain to close 1,000 locations as experts say inflation and crime are key factors

The Post said Dollar Tree stores are primarily located in suburban areas and cater to shoppers looking for things like party supplies and crafts, while Family Dollar stores are more urban and focus on groceries, cleaning products and other staples at a range of price points.

Dreiling, the former CEO of rival Dollar General, will take over at Dollar Tree in January 2023 and has expressed determination to accelerate revenue and profit growth while battling inflation and retail theft, the company added.

“Dollar Tree has not set any deadline or definite timeline for the completion of its strategic options review process, and there can be no assurance that this process will result in any transaction or any particular outcome,” the company also said Wednesday.

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A sign is displayed in front of a Dollar Tree and Family Dollar store in Rio Vista, Calif. Dollar Tree announced plans earlier this year to close about 1,000 underperforming Family Dollar stores across the United States. (Getty Images/Getty Images)

The company announced in March that Dollar Tree plans to close approximately 600 Family Dollar stores in the first half of 2024, and an additional 370 Family Dollar stores and 30 Dollar Tree stores are scheduled to close over the next few years as the stores’ current leases expire.

The parent company currently manages a combined total of 16,774 stores under the Dollar Tree and Family Dollar brands.

While Dollar Tree executives have reportedly announced plans to install more security cases and hire more guards to curb losses from theft and shoplifting, Jerry Storch, CEO of Storch Advisors, told Fox News Digital that theft isn’t the main culprit behind dollar store closures, suggesting inflation is the biggest factor.

Shoppers gather outside a Family Dollar store in Bloomsburg, Pennsylvania. (Paul Weaver/SOPA Images/LightRocket via Getty Images / Getty Images)

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“If the price goes up too much, obviously they can’t sell it for the old dollar, so they have to go below the dollar, and so they’re raising the price higher and higher,” he said. “Then you have a customer base that’s struggling financially with inflation, and it becomes hard for them to raise the price enough to make up for the increased cost of the product.”

FOX Business’ Kendall Teets contributed to this report.