Dollar Tree (DLTR) stock jumped over 6% in pre-market trading following a Wall Street Journal report that the discount retailer is close to selling its Family Dollar chain for approximately $1 billion to private equity (PE) investors. Meanwhile, Dollar Tree is scheduled to release its fourth-quarter Fiscal 2024 earnings results before the market opens on Wednesday, March 26.
Dollar Tree is a leading discount retail chain in the U.S., offering a wide range of products at low fixed prices. The company acquired Family Dollar in 2015 for approximately $9 billion, outbidding its rival Dollar General (DG).
More Details About the Sale
According to the WSJ report, PE firms Brigade Capital Management and Macellum Capital Management are set to acquire Family Dollar. Moreover, it is anticipated that the deal could be announced alongside Dollar Tree’s quarterly earnings release today.
Dollar Tree is undergoing a restructuring as it faces growing competition from major retailers like Walmart (WMT), as well as e-commerce giants such as Amazon (AMZN), Shein, and PDD’s (PDD) Temu. Consequently, the company announced plans to evaluate strategic alternatives for its Family Dollar business in June 2024. In early 2024, the company announced plans to shut down approximately 1,000 Family Dollar stores as it grappled with inflation, rising theft, and other challenges affecting the retail sector. Overall, analysts have praised the company’s move to divest Family Dollar to focus on growth initiatives and pursue new strategic investments.
According to a Reuters report in February, private equity firms, including Brigade Capital, Apollo Global Management (APO), and Sycamore Partners, had shown interest in purchasing Family Dollar.
Is Dollar Tree Stock a Good Buy?
According to TipRanks, DLTR stock has received a Moderate Buy consensus rating, with five Buys, six Holds, and one Sell assigned in the last three months. The average price target for Dollar Tree stock is $81.08, suggesting a potential upside of 21% from the current level.
Year-to-date, DLTR stock has declined by over 10%.
