For Sale: Family Dollar?

It’s hard to believe that Family Dollar was the focus of a bidding war a decade ago. Now the winner of that war may be ready to concede defeat.

Family Dollar owner Dollar Tree announced this morning that it “has initiated a formal review of strategic alternatives” of the troubled chain, which could include a potential sale of the business.

The move comes about six months after the company announced plans to take a good, hard look at the Family Dollar business. “We have initiated a comprehensive review of our Family Dollar portfolio to address underperforming stores that are not aligned with our transformative vision for the company,” Dollar Tree CEO Rick Dreiling said at the time.

That review ultimately led to the decision to close nearly 1,000 Family Dollar stores across the country – 600 to start, followed by about 370 more over the next several years.

When deciding which stores to close, “we took a thoughtful and deliberate approach to address underperforming stores by considering each individual store’s performance (and) local operating environment,” Dreiling explained.

And now, the company could end up unloading the rest of Family Dollar’s more than 7,000 stores. Back in 2014, Dollar Tree and its dollar-store rival Dollar General battled for control of Family Dollar, with both making attempts to purchase their mutual rival until Dollar Tree won. Then-Dollar General CEO – none other than Rick Dreiling – called the sale to his rival “a loss not only for Family Dollar shareholders, but also for consumers across the country who will not have the opportunity to benefit from the cost savings and efficiencies that we believe would have been created by a merger between Dollar General and Family Dollar.”

And now Dreiling finds himself the CEO of Dollar Tree, overseeing the management of the troubled Family Dollar chain, which has been a drag on Dollar Tree’s performance ever since. And it’s all happening as Dollar Tree itself has been expanding, opening new stores and recently announcing the purchase of 170 stores from the bankrupt 99 Cents Only.

“Dollar Tree has been on a multi-year journey to help the company fully achieve its potential,” Dreiling said in a statement this morning. “The unique needs of each banner at this time – transformation at Family Dollar and growth acceleration at Dollar Tree – lead us to the decision to conduct a thorough review of strategic alternatives for the Family Dollar business.”

There’s no word yet on any potential buyers, or whether the chain will be sold at all – other options include spinning off Family Dollar or otherwise granting it “the exclusive attention of a dedicated team.”

While Dollar General and Dollar Tree continue expanding, it’s been a tough decade for the third wheel of dollar store chains. What happens in the weeks and months to come could determine just what kind of future is in store for Family Dollar.

Image source: Family Dollar

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