Dollar Tree is selling off Family Dollar. What does that mean for NJ locations?

• Dollar Tree is selling off the beleaguered Family Dollar for $1 billion — a fraction of the $8.5 billion it was bought for 10 years ago

Dollar Tree is selling off the beleaguered Family Dollar for $1 billion — a fraction of the $8.5 billion it was bought for 10 years ago — to a private equity firm, raising uncertainty for the fate of the 99 Family Dollar stores in New Jersey.

Family Dollar is being sold to Brigade Capital Management and Macellum Capital Management — two private equity firms — pending regulatory approval that is likely to happen in the next quarter. 

"After a thorough review of potential alternatives for the Family Dollar business segment, the Dollar Tree leadership team and board of directors determined that a sale of Family Dollar to Brigade and Macellum best unlocks value for Dollar Tree shareholders and positions Family Dollar for future success," Dollar Tree said in a statement.

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Family Dollar's headquarters will remain in Chesapeake, Virginia, after moving the headquarters from North Carolina, according to the Wednesday announcement.

“This is a major milestone in our multi-year transformation journey to help us fully achieve our potential,” Dollar Tree Chief Executive Officer Mike Creedon said Wednesday.

Representatives for Dollar Tree did not return emails Wednesday morning on what locations in New Jersey could be impacted by the sale. 

Neil Saunders, a retail analyst and managing director of GlobalData, said that Dollar Tree, after its acquisition of Family Dollar, struggled with supply chain issues and poor store locations. 

The firm has roughly 8,000 U.S stores and offers goods in the $1 to $10 price range for a typically lower-income customer base.

What happens after a private equity takeover

NPR reported in 2023 that private equity firms are known for buying out a firm, laying off employees and cutting other costs in a bid to turn a profit. 

In another case, this one involving bankrupt restaurant chain Red Lobster, NBC reported that the chain was bought out by a private equity firm which embarked on a process known as “asset-stripping.” 

The land on which Red Lobster’s restaurants sat was sold off by the firm, Golden Gate Capital. Red Lobster then had to pay rent on stores it previously owned, costing $200 million in additional expenses, according to NBC.  

“Private equity has a habit of playing financial games with retailers for short-term returns,” said Saunders, the retail analyst. 

But private equity firms have also bought companies and turned them around to make a profit, personal finance website Investopedia reported. 

Some NJ stores have closed already

Last year, the Asbury Park Press reported that the Family Dollar Store on Route 36 in Middletown previously posted closing signs and slashed prices by 50%

The Trentonian reported that two Trenton Family Dollar locations closed, one on East State Street and the other on Chambers Street.

And in 2024, nearly 100 Family Dollar employees were let go, according to public filings.

NJ locations that could be impacted

Last year, Dollar Tree said it would close 600 Family Dollar stores in the first half of 2024, plus 370 Family Dollar and 30 Dollar Tree stores in the coming years.

Saunders said that there may be additional Family Dollar store closures “to get rid of loss-making shops,” but noted that Dollar Tree has already closed several “badly performing stores,” meaning it’s less likely there would be additional store closures. 

These are where Family Dollar stores are located in North Jersey, according to its website:

• Belleville
• Clifton
• East Orange
• Hackensack
• Hawthorne
• Irvington
• Jersey City
• Lodi
• Newark
• Orange
• Passaic
• Paterson
• Roselle Park
• Somerset
• Teaneck
• Union City
• West Orange

Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record. 

Email: munozd@northjersey.com; Twitter:@danielmunoz100 and Facebook