247 Insights
- Dollar Tree Inc. (NASDAQ: DLTR) may want to sell Family Dollar.
- The discount chains are struggling with inflation and an overabundance of stores.
Family Dollar, Dollar Tree—which is which? Dollar Tree Inc. (NASDAQ: DLTR) owns Family Dollar, and it may want to sell it.
According to The Wall Street Journal, Dollar Tree has hired JPMorgan to examine Family Dollar sales. Dollar Tree stores are mostly in the suburbs, while Family Dollar is more urban.
The two brands are also moving in different directions. Dollar Tree will shutter nearly 1,000 Family Dollar stores over several years and add over 100 locations of its own.
One reason for the decision may be that the combined brand stores have too many locations. The total has been put at just over 16,700. Walmart, their major competitor, has about 4,500. Its footprint may be smaller, but its sales are tremendously large. Shoppers show which chain they like the most using their feet.
Another reason the more urban banner may be struggling is inflation. And parent Dollar Tree is not immune. In several earnings conference calls of the past several months, retailers have said inflation has eroded business. That even extends to McDonald’s.
Dollar Tree’s stock is down 20% this year, while the S&P 500 is 12% higher. The drop in the stock is due partially to earnings. However, the real culprit may be inflation. With headwinds, over 16,000 stores with 16,000 sets of rents and employees may be too much.
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