Dollar Tree acquires Family Dollar and the new combined family lives happily ever after
The Family Dollar store in Guernsey has seen a type of rebranding as it has been purchased by Dollar Tree, Inc. The Guernsey store now has separate deliveries, and once in the store you will see Family Dollar items to the left and Dollar Tree items to the right. FD2 Family Dollar/Dollar Tree store employee Ryan Collar who works at the newly refurbished store said that after Dollar Tree bought out Family Dollar, the entire store had to be reconfigured and renovated.
GUERNSEY – Guernsey Family Dollar was acquired by Dollar Tree back in 2015 and the merger thus far has been a workable situation for both corporations as they rebrand their buildings and keep their different inventories separate under one roof.
The merger has finally come to fruition and has become a reality in Guernsey.
The deadline for the opening of the Guernsey Family Dollar Store in Guernsey was pushed back due to COVID and supply issues, but was officially opened Jan. 8, 2021.
According to preferred developer Dave Murdock from Salt Lake City, who builds Family Dollar stores all over Wyoming, Utah, Nevada, Colorado, and in Idaho is with a group of investors who buys the land, builds the shell of a building and then leases those buildings to the Family Dollar Corporation. The lease is generally 10 to 15 years.
As for the choice of the Guernsey site, Murdock said that it was also a Family Dollar initiative.
“Their system of locating sites is pretty sophisticated,” Murdock said. “They for some reason locked on to Guernsey and liked what they saw in the numbers and decided they wanted to be here.”
The building itself is 9180 sq. ft. and the shell itself cost approximately half a million dollars according to Murdock.
“Then they come in and do a lot of improvements,” Murdock said. “And of course, all of their equipment and the land costs.”
Enter Dollar Tree Inc.
According to a Dollar Tree, Inc. press release that announced Dollar Tree completing the acquisition of Family Dollar July 6, 2015, the merger would create combined organization with sales exceeding $19 billion annually with more than 13,600 stores across 48 states and five Canadian provinces. In addition, Gary Philbin was at that time named president and chief operating officer of Family Dollar Stores.
“We are pleased to announce we have completed our acquisition of Family Dollar and we formally welcome the Family Dollar team to the Dollar Tree organization,” stated Bob Sasser, chief executive officer. “This is a transformational opportunity for our business to offer broader, more compelling merchandise assortments, with greater values, to a wider array of customers. This acquisition will extend our reach to low-income customers, while strengthening and diversifying our footprint. We plan to leverage best practices across both organizations to deliver significant cost synergies. Combined, our growth potential is enhanced with improved opportunities to increase store productivity and to open more stores across multiple banners.”
In the press release, Randy Guiler, vice president of investor relations went on to say, “Under the terms of the merger agreement first announced and unanimously approved by each company’s board of directors in July 2014, Family Dollar shareholders are entitled to receive $59.60 in cash and 0.2484 of a share of Dollar Tree common stock for each share of Family Dollar common stock.
“We appreciate the efforts, dedication and teamwork displayed by both Dollar Tree and Family Dollar associates throughout our integration planning processes. We are well-prepared to integrate our two companies,” Sasser said.
Strategic rationale listed in the press release was listed as:
“Creates a leading discount retailer in North America. The combined organization will operate more than 13,000 stores in 48 states and five Canadian provinces, with sales exceeding $19 billion annually and over 145,000 associates.
“Complementary business model across fixed- and multi-price point. Dollar Tree is the nation’s leading operator of fixed-price point stores, selling everything for $1 or less, and Family Dollar is a leading national operator of multi-price point stores providing value-conscious consumers with a selection of competitively priced merchandise in convenient neighborhood stores. The Company intends to retain and to grow both banners going forward and will optimize the combined real estate portfolio.
“Targets broader range of customers and geographies. Dollar Tree targets customers within a broad range of Middle America with stores located primarily in suburban areas and Family Dollar targets low- and lower-middle income households through its urban and rural locations. The transaction enables Dollar Tree to serve a broader range of customers and deliver even greater value to them.
“Leverages complementary merchandise expertise. Dollar Tree’s merchandise mix consists of a balance between consumable merchandise and variety/seasonal merchandise. Family Dollar’s assortment consists primarily of consumable merchandise and home products. The complementary offerings enable the Dollar Tree and Family Dollar brands to expand categories and to deliver a broader, more compelling assortment to all customers.
“Generates significant synergy opportunities. Dollar Tree expects to generate significant efficiencies through sourcing and procurement, format optimization, SG&A leverage, and its distribution network. The Company anticipates that the transaction will result in an estimated $300 million of annual run-rate synergies to be fully realized by the end of the third-year post-closing.
Enhanced financial performance and improved growth prospects. Dollar Tree will be better positioned to invest in existing and new markets and channels and to grow its store base across multiple brands. The combined company expects to generate significant free cash flow, enabling it to pay down debt rapidly.”
“From what I understand, Douglas is going to a half-and-half store, we’re a partial Dollar Tree,” Ryan Collar Guernsey store employee said. “I think that the plan initially is that everybody is going to eventually switch over to at least a partial Dollar Tree. We shut down for a week and essentially we pulled everything off the shelves, added a whole other aisle and now, none of our aisles are the same as they were last year. The Dollar Tree section of the store is all brand-new.”
The Guernsey store has two different sets of inventories with the two stores under one roof, and the stores are very different in their pricing and their inventory.
“Tuesday is like my Family Dollar truck,” Collar said. “And that takes care of the majority of the store. And then once a month or so we see a Dollar Tree truck and they bring in everything for that side of the store. System-wise it’s all under one system. It’s two different stores as far as inventory. We can’t put Dollar Tree stuff in the Family Dollar side. Everything they have is $1.25 and that’s just how it is.”
Collar said that the transition was fairly seamless and praised his manager, Devin Daughtery.
“We do OK,” Collar said. “Especially since Devin came in and really cleaned the place up. She’s our ‘manager-manager’ and she’s from Lingle. After she’s come in, we get a lot of compliments now.”