Attention, America! Dollar Tree announces major closures of over 370 stores nationwide

Dollar Tree is divesting its Family Dollar stores for $1 billion to better develop both companies. The sale, which closes sometime in June 2025 provides Dollar Tree to develop their business with proceeds worth about $804 million.

This decision comes on the heels of Dollar Tree's restructuring plan to address the challenging retail environment. Dollar Tree intends to expand the number of Dollar Tree stores and invest in existing stores or new locations, to the tune of an expected 300 new stores in 2025. In essence, the sale closes out an expensive merger that is essential to getting Dollar Tree performance developed in an increasingly competitive marketplace.

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Dollar Tree announces closures of stores across the United States

Dollar Tree has announced the sale of its Family Dollar stores for approximately $1 billion, a move the company believes will benefit both businesses and allow Dollar Tree to focus on its growth.

Private equity firms Brigade Capital Management and Macellum Capital Management will acquire Family Dollar, with Dollar Tree expecting to receive around $804 million in net proceeds from the sale, which is slated to close by June 2025.

Dollar Tree initially bought Family Dollar in 2015 for nearly $9 billion, but began considering selling or spinning off Family Dollar in June 2024 as part of a restructuring effort to adapt to a tough retail environment. This environment marked by inflation and competition from major retailers like Walmart, Amazon, Shein, and Temu. In 2024, the company closed around 600 Family Dollar stores and planned to close an additional 370 stores, as well as 30 Dollar Tree locations, when the leases for those properties expired.

CEO Michael Creedon, who took over as CEO after Dollar Tree’s restructuring, stated that separating from Family Dollar will enable Dollar Tree to "achieve its full potential." He highlighted the company’s plan to continue expanding, with a focus on new store openings and initiatives to optimize its Dollar Tree operations.

As part of its strategy, Dollar Tree is upgrading its stores to carry items priced up to $7 and has plans to open around 300 new stores in 2025. The company is also selling about 1,000 combined Family Dollar-Dollar Tree stores as part of the deal.

Dollar Tree reported a 2% increase in same-store sales during the quarter ending February 1, 2025, with net sales reaching $5 billion, excluding Family Dollar sales. However, total sales for the quarter, including Family Dollar, totaled $8.26 billion, exceeding analysts' expectations.

CEO Creedon also noted that Dollar Tree is seeing increased traffic and higher demand from higher-income customers, who are using the store as an affordable source for a wide range of products. Despite the challenges posed by inflation, Creedon said the store’s appeal extends across all income groups, with customers seeking cost-effective solutions.

Dollar Tree has also managed to mitigate the impact of tariffs on products from China by about 90%, but higher prices may be necessary depending on future tariffs on goods from Mexico and Canada.

The sale of Family Dollar marks the end of an expensive merger for Dollar Tree, which hoped the acquisition would help it compete with rivals like Dollar General. Family Dollar has faced several issues, including a product recall in 2023 and a $41.6 million settlement with the Justice Department over improper storage practices.

Following the announcement, Dollar Tree’s shares, which had dropped by 11% earlier this year, rose by over 9% in early trading.