Dollar Tree, Inc. capped its fiscal 2024 with a strong fourth quarter performance, reporting $5 billion in net sales and a 2.0% increase in same-store sales as it prepares to part ways with Family Dollar.
The discount retailer officially entered into an agreement to sell the Family Dollar business to Brigade Capital Management and Macellum Capital Management for just over $1 billion. The sale, expected to close in the second quarter of 2025, concludes a multiyear strategic review and marks a major pivot for the company after a decade-long integration effort.
“This transaction allows us to fully dedicate ourselves to unlocking Dollar Tree’s long-term potential,” said CEO Mike Creedon. “The momentum we’re seeing in customer response to our broader assortment and multi-price format gives us confidence heading into 2025.”
Fourth-quarter performance
Dollar Tree’s net sales climbed 0.7% compared to the same period last year, while same-store sales rose 2.0%, driven by both increased traffic and a higher average ticket. The company opened 33 new Dollar Tree stores in the quarter and now operates nearly 2,900 locations under its “Dollar Tree 3.0” format—offering products beyond the traditional $1.25 price point.
Adjusted earnings per share from continuing operations landed at $2.11, narrowly missing analyst expectations, though net income from continuing operations totaled $400.2 million. After accounting for the Family Dollar division as discontinued operations, the company reported a net loss of $3.7 billion for the quarter.
Gross margin contracted to 37.6%, reflecting higher shrink, markdowns, and distribution costs. Operating income also declined 26.5% to $534 million.
Family Dollar exit and future impact
Dollar Tree’s sale of Family Dollar, which it acquired for over $8 billion in 2015, is expected to yield approximately $804 million in net proceeds. The deal includes tax benefits valued at $350 million and comes as Dollar Tree looks to reduce financial drag and refocus its capital on core operations.
Analysts have praised the move, noting that Family Dollar had long underperformed due to operational inefficiencies and poor store locations. “Family Dollar’s turnaround consumed immense managerial and financial resources,” said Scot Ciccarelli of Truist Securities. “This sale allows Dollar Tree to concentrate on higher-return areas.”
Family Dollar will continue to operate from its Virginia headquarters under new ownership. Dollar Tree will provide transition services through mid-2025 but warned that only half of those cost reimbursements will hit the books this year, slightly dragging earnings.
Outlook for fiscal 2025
Dollar Tree expects full-year net sales between $18.5 billion and $19.1 billion, with comparable store sales projected to grow 3% to 5%. Adjusted EPS is expected to fall between $5.00 and $5.50, including a $0.30–$0.35 negative impact due to the timing of transition reimbursements from Family Dollar.
For Q1 FY25, the company projects $4.5–$4.6 billion in revenue and EPS of $1.10–$1.25.
In 2024, Dollar Tree generated $2.2 billion in operating cash flow and repurchased $403.6 million worth of stock. It also secured new $1.5 billion and $1 billion credit facilities ahead of $1 billion in senior notes maturing this May.
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