Dollar Tree considers potential sale of its Family Dollar chain

Dollar Tree said Wednesday that it is considering “a potential sale, spin off or other disposition” of its Family Dollar chain of stores.

The announcement comes months after the discount store reported dismal sales in its latest earnings. Dollar Tree lost $1.7 billion in its fourth quarter ended February 3, down sharply from earnings of $452.2 million a year ago, the company said in March. Revenue climbed to $8.6 billion, from $7.7 billion, but fell slightly short of Wall Street forecasts. 

Dollar Tree acquired Family Dollar for more than $8 billion almost a decade ago after a bidding war with rival Dollar General, but it has had difficulty absorbing the chain.  

“After almost 10 years of trying to make the Family Dollar acquisition work, Dollar Tree has seemingly thrown in the towel,” Neil Saunders, managing director of GlobalData, said in an email. “The Family Dollar business just isn’t delivering the growth and profit needed, and the amount of work required to bring it up to scratch is considerable. Dollar Tree has figured that it is better off selling or spinning off the Family Dollar business so that it can concentrate on its core operation which is performing much better.”

— This is a developing story that will be updated later.

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