Dollar Tree Should It Divest Family Dollar
Problem Statement of the Case Study
Dollar Tree, the discount store chain, has a significant advantage over Family Dollar, one of its biggest rivals, in many areas such as store layout, product assortment, advertising, pricing, and customer service. Although Dollar Tree’s sales rose 9% over 2019, Family Dollar sales fell by 4%. The decline could be attributed to Family Dollar’s competitive strategy of having a smaller store footprint and a cheaper price point, which is a tough market for Dollar Tree. As a result
Financial Analysis
In January 2019, Dollar Tree (NASDAQ:DLTR) was planning to announce a sale of Family Dollar (NYSE:FDO) for $2.1 billion. The proposal was part of Dollar Tree’s plan to improve its financial health, which has been affected by the decline in customer traffic in its stores. Moreover, it was expected that a sale of Family Dollar would improve Dollar Tree’s EBITDA margins, which has been impacted due to higher interest rates, acquisition costs, and
Alternatives
“Family Dollar is the perfect acquisition for Dollar Tree in 2021.” (2021-05-28) It’s a good strategy for Dollar Tree, as the new company would benefit from a low price point, low marketing cost, and huge exposure to shoppers in the Midwest, including the Rust Belt, which had historically been challenging for Dollar Tree to grow. navigate to this site The acquisition also brings a wealth of brands to Dollar Tree. This includes 15,000
Porters Five Forces Analysis
The Dollar Tree store chain, headquartered in Springfield, Virginia, has been in business for over 35 years, and its founder, Ron Johnson, has transformed the company from a single family-owned business into a $4 billion company with over 1,600 stores. The company has gone public, attracting investors, but the company’s stock has been under pressure for the past few years, with share prices currently trading at 36 times trailing earnings and around 25 times forward earnings. The company’s net income
Marketing Plan
I was really upset to see that Dollar Tree should Divest Family Dollar. Whenever, I go to Walgreens, I see their prices are very much higher. For example, Dollar General is selling the same item for $1.99. Walgreens also selling the same item for $2.99. Family Dollar is selling the same item for $1.80. Walmart too is selling the same item for $2.99. It is not good for the consumers. The company is losing more than
BCG Matrix Analysis
For most of us in America, Family Dollar Store is the last stop before we find our way to a big box retailer or even a discount supercenter. So, it’s no surprise that the company’s shareholders are increasingly looking at whether they should also consider divesting. The idea may seem straightforward: In a world where most Americans are increasingly opting to buy groceries, personal care products, and electronics online or at discounted prices, a family owned and managed store would make the most sense. linked here While Family D