Dollar Tree is making some big changes, which include offshoring its Family Dollar chain to private equity firms and increasing prices to combat President Donald Trump's imposed tariffs.
AP reports that Dollar Tree announced the sale of its struggling Family Dollar brand to Brigade Capital Management and Macellum Capital Management for $1 billion. The announcement, made during a March 26 analyst call, comes a year after the company revealed plans to close hundreds of the discount stores.
Family Dollar is known for its variety of household essentials, from groceries to laundry detergent, with many locations serving underserved urban communities. The store closures and potential closures under new ownership could significantly impact residents who rely on these stores for everyday necessities.
While Dollar Tree says the sale will allow it to focus on its core business, there's a greater concern about how it will affect the communities the chain stores serve.
"The lower income consumer will be losing a critical place to be able to purchase value products," said Marshal Cohen, chief industry advisor at marketing research firm Circana. "They're losing the breadth of the assortment and the depth of the discount and the convenience."
In addition to offloading Family Dollar, Dollar Tree reported an increase in higher-income customers amid inflation. As a result, the discount retailer anticipates raising prices in response to Trump's tariffs.
Trump's tariffs on certain goods from China, Mexico, and Canada and the possibility of higher duties on global trading partners have heightened concerns among retailers about strained household budgets. While Dollar Tree plans to counter the impact through supplier negotiations and shifting manufacturing, it may also raise prices on some items.
Dollar Tree has expanded its pricing model beyond the standard $1.25 it originated on. In recent years, the company has introduced higher-priced items at approximately 2,900 multi-price stores, with products ranging from $1.50 to $7.