09:26 AM EDT, 03/26/2025 (MT Newswires) -- Dollar Tree ( DLTR ) on Wednesday agreed to sell its Family Dollar business to investment management firms Brigade Capital Management and Macellum Capital Management in a deal worth roughly $1.01 billion, while the discount retailer reported fiscal fourth-quarter results.

The company, which launched a strategic review of its Family Dollar segment in the second quarter, anticipates generating net proceeds of about $804 million from the sale. It also estimates the economic impact of tax benefits from losses on the divestment to be around $350 million. The business will remain headquartered in Chesapeake, Virginia.

The transaction, which requires approval from regulators, is expected to complete in the second quarter of 2025. "This is a major milestone in our multi-year transformation journey to help us fully achieve our potential," Dollar Tree ( DLTR ) Chief Executive Mike Creedon said in a statement.

The sale is a "significant win" for the company and its shareholders with substantial long-term advantages, Truist Securities said in a client note. The Dollar Tree brand already generated the "vast majority" of the company-wide profit, and the retailer can now focus on growing and optimizing the business, according to the brokerage.

For the three-month period ended Feb. 1, the retailer classified results from Family Dollar as discontinued operations. Adjusted earnings came in at $2.29 a share, including $2.11 from continuing operations and $0.18 from discontinued operations, versus $2.49 from continuing operations the year before. The consensus on FactSet was for non-GAAP EPS of $2.20.

Sales from continuing operations nudged 0.7% higher to almost $5 billion, compared with FactSet's expectations for Dollar Tree ( DLTR )-brand-only sales of $4.93 billion. Same-store sales inclined 2%, surpassing the 1.5% growth modeled by the Street at the enterprise level, buoyed by gains in traffic and average ticket. "We finished 2024 on a high note with strong execution at Dollar Tree ( DLTR ) as growing customer acceptance of our expanded assortment drove sales momentum," Creedon said in the earnings statement.

For fiscal 2025, Dollar Tree ( DLTR ) projects adjusted EPS from continuing operations to be in a range of $5 to $5.50, while the Street is looking for $5.94. The outlook includes a roughly $0.30 to $0.35 per-share hit due to a transition services agreement in which the retailer will bear the costs to support Family Dollar while receiving only offsetting reimbursement income in the second half.

Sales are pegged at $18.5 billion to $19.1 billion for fiscal 2025, while the Factset consensus for the Dollar Tree brand is $18.64 billion. Comparable store sales are anticipated to grow between 3% and 5%.

Dollar Tree ( DLTR ) sees adjusted EPS at $1.10 to $1.25 for the ongoing quarter, which includes the full burden of the Family Dollar transition services agreement with no benefits. Sales are estimated to be in a range of $4.5 billion to $4.6 billion, while comparable store sales are expected to rise by 3% to 5%.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.