Dollar Tree Inc. DLTR, an operator of discount variety stores in North America, announced that it will rebrand all of its 222 Deals stores by the end of Jul 2016. Out of the 222 stores, 217 will be transformed into Dollar Tree stores and the rest will be turned into Family Dollar.
Dollar Tree had acquired 138 Deals stores, which offer products at reduced prices, on Mar 29, 2006. Since then, the chain has expanded to 222 stores spanning across 19 states.
Moreover, the company wants to re-banner hundreds of the more than 8,200 Family Dollar stores, it acquired on Jul 6, 2015, to Dollar Tree stores. The company expects to complete the transition of 150 such stores by the end of this month with more changes planned for 2016.
We believe that Dollar Tree has hit the bull’s eye by acquiring Family Dollar. The retail behemoth formed from the combination of these two companies will be strong enough to single-handedly counter competition from other retail giants. The combined chain is also likely to be in a better position to reach out to more value-seeking consumers through a network spanning across vast geographies. Also, the combined company will be able to offer broader and multiple assortments at more compelling prices. Moreover, the transaction will help in achieving operational and distributional efficiencies as well as cost synergies.
Zacks Rank
Dollar Tree currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Big Lots Inc. BIG, Burlington Stores, Inc. BURL and Target Corp. TGT. All three stocks carry a Zacks Rank #2 (Buy).
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