Discount retailer Dollar Tree is considering strategic options for its Family Dollar stores, including a potential sale of the segment. The company acquired Family Dollar nearly a decade ago for over $8 billion after a bidding war with Dollar General. However, Dollar Tree has faced challenges in integrating Family Dollar into its business and recently announced plans to close nearly 1,000 stores, most of which are Family Dollar locations. Last year, Dollar Tree initiated a review of Family Dollar, which included the closure of about 970 underperforming locations. The company has not set a deadline for completing its review of strategic alternatives.
Following the Family Dollar announcement, Dollar Tree revealed plans to re-open nearly 200 shuttered 99 Cents Only stores as Dollar Tree locations from Texas to California. The designation rights for 170 locations in Texas, Arizona, Nevada, and California were transferred, along with some furniture, equipment, and fixtures, with approval from the U.S. Bankruptcy Court. Additionally, Dollar Tree reported its fiscal first-quarter financial results, with an adjusted profit of $1.43 per share on revenue of $7.63 billion, meeting analyst expectations. For the second quarter, Dollar Tree anticipates earnings in the range of $1 to $1.10 per share with revenue of $7.3 billion to $7.6 billion.
Analysts predict earnings of $1.19 per share on revenue of $7.59 billion for the second quarter. For the full year, Dollar Tree expects earnings between $6.50 and $7 per share on revenue of $31 billion to $32 billion, while Wall Street is looking for earnings of $6.89 per share on revenue of $31.36 billion. Dollar Tree operates under various brands, including Family Dollar, Dollar Tree Canada, and its namesake, with 16,397 stores across 48 states and five Canadian provinces as of May 4. Shares of Dollar Tree Inc. fell approximately 5% in afternoon trading.
Dollar Tree’s decision to explore strategic options for Family Dollar comes after the company’s challenges in integrating the segment into its business. The planned closure of nearly 1,000 underperforming Family Dollar stores indicates the company’s efforts to streamline operations and improve profitability. Additionally, the re-opening of shuttered 99 Cents Only stores as Dollar Tree locations demonstrates the company’s commitment to expanding its presence in key markets. Despite the challenges, Dollar Tree’s financial performance in the first quarter met analyst expectations, with a reported profit of $1.43 per share on revenue of $7.63 billion.
Looking ahead, Dollar Tree anticipates continued growth with earnings projections for the second quarter and full year. Analysts have varying expectations for the company’s financial performance, with predictions for earnings and revenue in line with or slightly below Dollar Tree’s forecasts. As Dollar Tree navigates through its strategic review and operational changes, investors will likely monitor the company’s progress closely.Overall, Dollar Tree’s announcement reflects its efforts to address challenges within the Family Dollar segment while also focusing on opportunities for growth and profitability in the retail industry.
