Dollar Tree, Inc. Completes Transaction for 170 ‘99 Cents Only Stores’

Rhea-AI Summary

Dollar Tree (NASDAQ: DLTR) has completed acquiring lease rights for 170 99 Cents Only Stores in Arizona, California, Nevada, and Texas. This acquisition, finalized in May via two transactions approved by the U.S. Bankruptcy Court for the District of Delaware, includes the North American Intellectual Property and select on-site assets of the 99 Cents Only Stores. The deal follows the latter's Chapter 11 bankruptcy filing and asset disposal process initiated in April. According to COO Michael Creedon, Jr., this acquisition fits Dollar Tree's growth strategy by securing prime retail locations in key markets. The newly acquired stores are expected to start welcoming customers by fall 2024.

Positive

• Dollar Tree acquired 170 leases of 99 Cents Only Stores.
• The transaction was approved by the U.S. Bankruptcy Court for the District of Delaware.
• The acquisition includes North American Intellectual Property and on-site assets.
• The 99 Cents Only Stores are located in prime markets like Arizona, California, Nevada, and Texas.
• The acquisition aligns with Dollar Tree's accelerated growth strategy.
• The new stores are expected to open by fall 2024.
• This deal enhances Dollar Tree's footprint in the western U.S.
• Dollar Tree aims to convert these stores into profitable locations.

Negative

• 99 Cents Only Stores filed for Chapter 11 bankruptcy in April.
• No immediate revenue or profit gains are guaranteed from this acquisition.
• Transitioning and rebranding could incur substantial costs.

Insights

Financial Analyst

The acquisition of lease rights for 170 stores by Dollar Tree, Inc. from 99 Cents Only Stores is a strategic move that showcases their commitment to growth. Chapter 11 bankruptcy refers to a legal process that allows a company to reorganize and attempt to become profitable again. By acquiring these leases, Dollar Tree not only expands its footprint in key markets but also gains access to premium retail spaces at likely favorable terms due to the distressed nature of 99 Cents Only Stores. This can translate into reduced costs and increased margins, positively impacting the company's bottom line.

In the short term, investors should keep an eye on integration costs and any immediate capital expenditures needed to revamp these new locations under the Dollar Tree brand. In the long term, this acquisition is expected to drive revenue growth and potentially improve market share in the western United States. However, the success of this expansion will be determined by how well Dollar Tree can convert these locations into profitable ventures and attract a loyal customer base.

Overall, this move aligns with Dollar Tree’s growth strategy and could result in significant benefits for stakeholders if executed effectively.

Market Research Analyst

From a market perspective, acquiring the lease rights of 99 Cents Only Stores positions Dollar Tree strongly in the discount retail segment, particularly in competitive markets such as California, Arizona and Texas. The acquisition includes intellectual property, which could provide valuable customer insights and brand recognition opportunities.

Dollar Tree’s strategic focus on high-quality real estate assets suggests an intent to enhance their market penetration in premium retail centers, which could elevate their brand presence. This move could potentially attract higher foot traffic and increase customer loyalty by being more accessible.

Investors should consider the competitive landscape and how this acquisition might disrupt local market dynamics. Dollar Tree’s ability to effectively capitalize on this expansion will be key. The potential for increased market share and customer base is significant, but execution risk remains a factor to watch.

Retail Industry Expert

This transaction is a bold step for Dollar Tree as it seizes an opportunity arising from a competitor's financial distress. Acquiring intellectual property and physical assets such as store fixtures and equipment can streamline the transition process, reducing downtime and accelerating the rebranding efforts.

The strategy of converting these stores to Dollar Tree locations within a short timeframe could provide a seamless experience for customers, minimizing disruption and maintaining brand loyalty. The intellectual property acquisition may also offer insights into 99 Cents Only Stores’ customer base, allowing for tailored marketing strategies to better serve the local demographic.

While the long-term benefits are promising, integrating this large number of stores poses operational challenges. Effective management of these transitions will be important to ensure sustained growth and profitability. Stakeholders should be mindful of potential risks associated with rapid expansion, such as supply chain disruptions and operational inefficiencies.

CHESAPEAKE, Va.--(BUSINESS WIRE)-- Dollar Tree, Inc. (NASDAQ: DLTR) today announced that it acquired designation rights for 170 leases of 99 Cents Only Stores across Arizona, California, Nevada, and Texas. The deal was completed via two transactions in May that were approved by the United States Bankruptcy Court for the District of Delaware. As part of the transactions, Dollar Tree also acquired the North American Intellectual Property of 99 Cents Only Stores and select on-site furniture, fixtures, and equipment.

In April, California-based 99 Cents Only Stores filed for Chapter 11 bankruptcy and subsequently initiated a process to dispose of its assets, including its inventory, owned real estate and store leases.

"As we continue to execute on our accelerated growth strategy for the Dollar Tree brand, this was an attractive opportunity to secure leases in priority markets where we see strong profitable growth potential,” said Michael Creedon, Jr., Dollar Tree’s Chief Operating Officer. “The portfolio complements our existing footprint and will provide us access to high quality real estate assets in premium retail centers, enabling us to rapidly grow the Dollar Tree brand across the western United States, reaching even more customers and communities.”

Dollar Tree looks forward to welcoming customers from 99 Cents Only Stores as early as fall 2024.

About Dollar Tree, Inc.

Dollar Tree, a Fortune 200 Company, operated 16,774 stores across 48 states and five Canadian provinces as of February 3, 2024. Stores operate under the brands of Dollar Tree, Family Dollar, and Dollar Tree Canada. To learn more about the Company, visit www.DollarTree.com.

A WARNING ABOUT FORWARD-LOOKING STATEMENTS: This press release contains "forward-looking statements" as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments or results and do not relate strictly to historical facts. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by or including words such as: “believe”, “anticipate”, “expect”, “intend”, “plan”, “view”, “target” or “estimate”, “may”, “will”, “should”, “predict”, “possible”, “potential”, “continue”, “strategy”, and similar expressions. For example, our forward-looking statements include statements relating to our plans and expectations regarding our growth, our 99 Cents Only Stores transactions and other objectives and expectations. These statements are subject to risks and uncertainties. For a discussion of the risks, uncertainties and assumptions that could affect our future events, developments or results, you should carefully review the “Risk Factors,” “Business” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections in our Annual Report on Form 10-K filed March 20, 2024 and other filings we make from time to time with the Securities and Exchange Commission. We are not obligated to release publicly any revisions to any forward-looking statements contained in this press release to reflect events or circumstances occurring after the date of this report and you should not expect us to do so.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240528789378/en/

Media:

Kate Kirkpatrick

VP, Communications

mediainquiries@dollartree.com



Investors:

Robert A. LaFleur

SVP, Investor Relations

investorinfo@dollartree.com

Source: Dollar Tree, Inc.

FAQ

What did Dollar Tree acquire from 99 Cents Only Stores?

Dollar Tree acquired designation rights for 170 store leases, North American Intellectual Property, and select on-site assets of 99 Cents Only Stores.

When was the acquisition of 99 Cents Only Stores completed?

The acquisition was completed via two transactions in May, approved by the U.S. Bankruptcy Court for the District of Delaware.

Why did Dollar Tree acquire 99 Cents Only Stores?

Dollar Tree acquired the stores to secure leases in priority markets and support its accelerated growth strategy.

When will the newly acquired Dollar Tree stores open?

The newly acquired stores are expected to start welcoming customers as early as fall 2024.

What is the stock symbol for Dollar Tree?

The stock symbol for Dollar Tree is DLTR.