Dollar Tree, a discount retailer, announced on Wednesday that it is exploring strategic options for its Family Dollar stores, including a potential sale of the segment. Other alternatives being considered are a spinoff or another form of disposition of the business.
Nearly a decade ago, Dollar Tree acquired Family Dollar for over $8 billion after a bidding war with its competitor, Dollar General.
However, the company has faced challenges in integrating Family Dollar into its operations. Recently, Dollar Tree announced plans to close nearly 1,000 stores, with the majority being Family Dollar locations.
Last year, Dollar Tree initiated a comprehensive review of Family Dollar, which included the planned closure of approximately 970 underperforming Family Dollar stores. The company stated that it does not have a specific deadline or timeline for completing its review of strategic alternatives.
The announcement regarding Family Dollar comes about a week after Dollar Tree revealed its plans to re-open nearly 200 closed 99 Cents Only stores in Texas, Arizona, Nevada, and California as Dollar Tree locations. The company secured the leases for these stores through bankruptcy proceedings, and the U.S. Bankruptcy Court for the District of Delaware approved the transfer of designation rights for 170 locations, along with some of the furniture, equipment, and fixtures inside.
Alongside the Family Dollar announcement, Dollar Tree released its fiscal first-quarter financial results. The company reported an adjusted profit of $1.43 per share on revenue of $7.63 billion, meeting the expectations of analysts surveyed by Zacks Investment Research.
For the second quarter, Dollar Tree expects earnings between $1 and $1.10 per share, with revenue ranging from $7.3 billion to $7.6 billion. Analysts polled by FactSet predict earnings of $1.19 per share on revenue of $7.59 billion.
Looking at the full year, Dollar Tree anticipates earnings between $6.50 and $7 per share on revenue ranging from $31 billion to $32 billion. Wall Street analysts expect earnings of $6.89 per share on revenue of $31.36 billion.
As of May 4, Dollar Tree, which operates stores under the brands Family Dollar, Dollar Tree Canada, and its namesake, had 16,397 stores across 48 states and five Canadian provinces.
Following the announcement, shares of Dollar Tree Inc., based in Chesapeake, Virginia, fell by approximately 2% before the market opened.
The Associated Press contributed to this article.