Dollar Tree Inc. DLTR, an operator of discount variety stores in North America, completed its previously announced deal with Sycamore Partners by selling 330 Family Dollar stores to the latter’s portfolio company, Dollar Express LLC. The divested Family Dollar stores will now function under the Dollar Express banner.
The acquisition of these stores will be supplemental to Sycamore Partners’ portfolio of popular retailers and consumer brands. The private equity firm currently has brands and retailers like Aeropostale, Coldwater Creek, Dollar Express, EMP Merchandising, Hot Topic, the Kasper Group, Kurt Geiger, MGF Sourcing, Nine West Holdings, Pathlight Capital, Talbots, and Torrid, under its ambit.
Coming to Dollar Tree, the transaction is in accordance with the Federal Trade Commission’s (FTC) requirement related to the recently closed Dollar Tree-Family Dollar merger. The FTC required the combined company to shed stores, given the massive store count of these giants.
In July, Dollar Tree successfully concluded the acquisition of 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 Fred's Inc. FRED, Burlington Stores Inc. BURL and Gordmans Stores Inc. GMAN. All three stocks carry a Zacks Rank #2 (Buy).
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