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Dollar Tree (DLTR) said Wednesday that it would sell its Family Dollar business to a pair of private equity firms for $1 billion, a fraction of the amount it paid for the struggling unit several years ago.
Brigade Capital Management and Macelleum Capital Management are the two firms set to buy the budget retailer. Macelleum has led acquisition investor campaigns at Bed, Bath & Beyond and Kohl’s (KSS).
Dollar Tree originally paid $9 billion to acquire the 65-year-old business in 2015. The company has struggled to grow Family Dollar, announcing in 2024 that it would close some 1,000 locations as inflation, retail theft, and other issues took a toll. In June, Dollar Tree had said it would review whether to sell or spin off the brand.
“This is a major milestone in our multi-year transformation journey to help us fully achieve our potential,” Dollar Tree CEO Mike Creedon said in a statement.
“Under the experienced, dynamic leadership of Family Dollar President Jason Nordin, and with the financial support of Brigade and Macellum, Family Dollar will be well-positioned for growth as a private company,” he added.
Dollar Tree shares rose as much as 7% in pre-market trading, before paring back some of those gains. The stock is currently up almost 4%.
On Wednesday, the discount retailer also posted net sales of $5 billion from its fourth quarter, which ended on Feb. 1, a small increase from $4.96 billion last year. That’s excluding sales from Family Dollar stores. Dollar Tree expects 2025 net sales from its continuing operations to be in the range of $18.5 billion and $19.1 billion.
The company expected first-quarter 2025 sales to be between $4.5 billion and $4.6 billion, based on same-store sales growth of between 3% and 5%. It forecasts adjusted diluted earnings per share to be between $1.10 and $1.25.
Full-year earnings will be hit by between 30 cents and 35 cents per share, due to costs associated with maintaining Family Dollar’s operations, according to the company. Its forecast for adjusted diluted earnings per share came in at between $5 and $5.50.
The proposed sale is subject to regulatory approval. The company said it is expected to close during the second quarter of 2025. The sale is expected to deliver net proceeds of about $804 million with the economic impact of tax benefits from losses on the sale reaching $350 million, Dollar Tree said.