(Reuters) – Dollar Tree plans to explore options including a potential sale or spinoff of Family Dollar, the Wall Street Journal reported on Wednesday, citing people familiar with the matter.
Shares of Dollar Tree rose 2% in premarket trading following the report.
The company has been grappling with weak demand on the back of stiff competition from larger players such as Walmart and Target, who have also been pushing to offer products at lower price points to attract inflation-hit consumers to their stores.
Family Dollar, which Dollar Tree bought for $8.5 billion in 2015, has been the main underperformer for the company.
Dollar Tree had said in November last year it was going to review the business. It outlined plans to shutter 970 of its Family Dollar stores earlier in 2024.
CEO Richard Dreiling had noted in March that the Family Dollar business was continuing to be hurt by macroeconomic uncertainties.
The company, like many retailers, has seen sales take a hit from consumers paring back spending on higher-margin products like electronics and furnishings since 2022. In an attempt to revive demand, it has also introduced products at price points such as $3 and $5.
Dollar Tree currently has a market capitalization of $26 billion. It has raked in about $31 billion in annual revenue, of which Family Dollar accounted for 45%.
According to the WSJ report, Dollar Tree is expected to announce its plans publicly later on Wednesday when it reports its first-quarter results. The company has retained JPMorgan Chase to lead the review, the report said.
Dollar Tree did not immediately respond to a Reuters request for comment.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Nivedita Bhattacharjee, Sonia Cheema and Shilpi Majumdar)
