Dollar Tree spins off Family Dollar stores for $1 billion

Dollar Tree’s decade-long effort to fold the Family Dollar chain into its business is ending after agreeing to sell the bargain store chain to a pair of private equity firms for $1 billion.

Dollar Tree Inc. bought Family Dollar with its over 7,000 stores ten years ago for more than $8 billion.

Last year Dollar Tree announced that it planned to close hundreds of Family Dollar stores.

Family Dollar carries a range of household staples, from food to laundry detergent. The stores are largely located in underserved, urban areas. 

Dollar Tree had been scouting options for Family Dollar for a while and said Wednesday that the sale to Brigade Capital Management and Macellum Capital Management will allow it to focus on its core business.

Dollar Tree, whose customer base is about 50% middle-income shoppers, are found in many suburban locations. Its shelves are more likely to feature seasonal goods, party supplies, crafts and snacks.

Bargain chains like Dollar Tree, which have raised some of their prices in recent years, are finding that they have little room to maneuver. Americans have tightened their spending as consumer confidence in the economy slides.

Family Dollar, which moved its headquarters from North Carolina to Chesapeake, Virginia, after the sale to Dollar Tree, will maintain its headquarters in Virginia.

Shares of Dollar Tree rose 3% Wednesday.



AP Photo/Charlie Neibergall