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Dollar Tree considering sale or spin-off of Family Dollar, WSJ reports; shares rise

Published 06/24/2024, 04:30 PM
© Reuters.

Dollar Tree (NASDAQ:DLTR) is collaborating with financial advisers to conduct a strategic review of its Family Dollar business, considering options such as a potential sale or spinoff, Wall Street Journal reported on Wednesday.

Dollar Tree has engaged JPMorgan Chase to lead the review.

According to the report, the company is expected to announce these plans publicly later on Wednesday when it reports its first-quarter results.

DLTR shares rose as much as 5% in premarket trading, before losing some of those gains.

The move comes as part of a broader transformation effort under Chief Executive Richard Dreiling, who took over the company in January 2023. Dreiling is focused on accelerating revenue and profit growth amid challenges such as inflation and increased theft.

Analysts have weighed in on the potential separation of Dollar Tree and Family Dollar. UBS analyst Michael Lasser estimated in a May research note that a sum-of-the-parts analysis could value Dollar Tree at around $160 per share, with Family Dollar contributing approximately $10 per share.

Earlier this year, Dollar Tree announced plans to close nearly 1,000 Family Dollar stores over several years, while simultaneously planning to open hundreds more Dollar Tree locations. This restructuring is part of Dreiling's strategy to enhance the company’s financial performance.

DLTR stock closed Tuesday at $120.30, giving it a market capitalization of about $26 billion. The stock has declined approximately 15% this year.

By Vahid Karaahmetovic

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