Dollar Tree to convert Deals stores into Family Dollars, Dollar Trees

Customers enter a Family Dollar store on Plaza Boulevard, in Kinston, N.C.
Customers enter a Family Dollar store on Plaza Boulevard, in Kinston, N.C. AP

Dollar Tree, parent company of Matthews-based Family Dollar, will re-brand hundreds of its Deals stores into Dollar Trees or Family Dollars by next summer as it works to expand the combined company.

Virginia-based Dollar Tree also said Monday it is on track to convert at least 150 Family Dollars into Dollar Trees by the end of October, and has plans for more conversions in 2016. Dollar Tree completed its acquisition of the Matthews retail giant in July.

Dollar Tree bought 138 Deals stores in March 2006 and has grown the chain to 222 stores in 19 states. Dollar Tree said it will convert 217 Deals stores into Dollar Tree stores and five others into Family Dollar stores by the end of July 2016.

Deals stores sell a variety of discount items including toys, party supplies, seasonal items and home products at multi-price points. The chain doesn’t operate any stores in the Charlotte area.

Dollar Tree Chief Executive Officer Bob Sasser said now that the Family Dollar deal is complete, Deals stores would operate better under one of the combined company’s primary banners, Dollar Tree, which sells everything for $1 or less, or Family Dollar, which sells a variety of items and national brands for $10 and under.

“This initiative to re-brand our Deals stores enhances our ability to focus on our two primary banners, Dollar Tree and Family Dollar, while improving efficiencies throughout our business,” Sasser said in a statement.

Scot Ciccarelli, managing director at RBC Capital Markets, wrote in a research note Monday that while Deals was “an interesting add-on concept” for Dollar Tree’s pricing model, the brand became “far less relevant” with the addition of Family Dollar.

“Further, these conversions should enable the company to streamline back office and merchandising functions, as Deals was now far too small to justify standalone infrastructure costs,” Ciccarelli said.

Sasser also said Dollar Tree is “pleased with our progress on the Family Dollar integration” as it works to grow the business.

Dollar Tree has said re-bannering Family Dollar stores into Dollar Tree stores is a top priority in making the combined company more efficient. Sasser has called the two companies “complementary.” Dollar Tree tends to perform better in more suburban markets, while Family Dollar does better in rural and urban markets and with low-income shoppers.

Dollar Tree has also said it will keep the Family Dollar name on the stores that remain and also will keep Family Dollar’s headquarters in Matthews. Dollar Tree now operates more than 13,864 stores, making it the largest discount chain in the U.S. by store count.

Katherine Peralta: 704-358-5079, @katieperalta