Dollar Tree: Time to Get Serious about Family Dollar

Knocking down a few aisles and sweeping the place up a bit hasn’t proven effective for Dollar Tree Inc. in addressing the performance gap between the Family Dollar stores it acquired in 2015 and its Dollar Tree fleet. Through the first half of 2018, Dollar Tree same store sales were up 3.8% but down 0.5% at Family Dollar, pretty much par for the course for the last couple of years.

Now, though, Dollar Tree Inc. execs may be ready to make some decisive moves to address the performance discrepancies. After renovating 377 stores in 2017, the company will complete 500 renovations this year with promises to increase that number for 2019. In conjunction with increasing the pace of renovations, company executives also recently stated that they will close an unspecified number of poorly performing stores and convert some Family Dollar stores to the Dollar Tree banner.

It will be interesting to see how aggressive the company gets with Family Dollar in 2019. The graphic below paints a picture of a company that, to date, has been reticent to make large scale changes to the Dollar Tree-Family Dollar dynamic in its store portfolio. The rebannering option was off the table entirely in 2017, and since the acquisition, all expansion plans seem to have been geared towards achieving parity in new-store openings between the two brands.