Who owns Family Dollar? Start Here
Family Dollar has sold goods on the cheap since its first store opened in 1959 in Charlotte, North Carolina. It currently has over 8,000 locations in all but four states in the US. Like its founder, the store targets middle-class citizens who can’t afford regular trips to giant retail stores.
The company has faced its fair share of challenges, including a massive sales dip in the 1970s. In February 2022, it announced the temporary closure of 404 stores supplied by a distribution store in Arkansas after the FDA found more than 1000 rodents in the facility.
Family Dollar was a family-owned company until Dollar Tree Inc. acquired it in 2015
In 2003, Family Dollar’s founder Leon Levine handed the company to his son Howard R. Levine, keeping the multibillion-dollar retail store chain in the Levine family.
However, in 2014, a group of activist investors led by Carl Icahn demanded the sale of Family Dollar. Icahn wrote a letter to Howard informing him that most shareholders backed the sale. The letter read:
“It is clear that now is a perfect time to sell, given the advantageous stock market and interest rate environment. We also believe, based on the makeup of Family Dollar’s shareholder base as well as the precipitous rise in the market value of the company’s shares after we announced our position, that an overwhelming majority of the company’s shareholders would be in favor of a sale.”
Carl described Family Dollar as being in ‘limbo for far too long.’ Icahn held a 9.4% stake in Family Dollar, which he’d acquired in June 2014. His push for a sale seemed more for selfish reasons than for the company’s benefit.
Nevertheless, Icahn had the backing of other activist investors. Furthermore, Family Dollar lagged behind competitors, including Dollar General and Dollar Tree. It had tried closing underperforming stores, laying off workers, adding products, and reshuffling executives but had failed to close the gap.
Family Dollar executives believed it would rebound, but Icahn proved relentless in pushing for a sale. Before approving an $8.5 billion cash and stock sale to Dollar Tree, shareholders considered a $9.1 all-cash sale to Dollar General.
Dollar Tree threatened to withdraw its offer after Family Dollar shareholders twice postponed voting to approve the sale. In January 2015, shareholders rubberstamped the deal, making Family Dollar a wholly-owned subsidiary of Dollar Tree.
“This is a transformational opportunity for our business to offer broader, more compelling merchandise assortments, with greater values, to a wider array of customers,” company executive Bob Sasser said. “This acquisition will extend our reach to low-income customers, while strengthening and diversifying our footprint.”
After the acquisition, Dollar Tree moved Family Dollar headquarters from Matthews, North Carolina, to Chesapeake, Virginia. Despite offering 700 employees opportunities to relocate, the sale angered North Carolina natives who viewed Family Dollar as part of the State’s history.
Dollar General accused former CEO Howard R. Levine of rejecting their offer for selfish interests
Dollar General presented a larger bid to Family Dollar, which analysts expected company shareholders to approve. However, Family Dollar approved Dollar Tree’s smaller bid.
CEO Howard R. Levine cited antitrust concerns as the reason behind the rejected bid. Dollar General responded by saying it would close 700 stores to avoid antitrust issues, facilitating approval from regulators.
“Our Board reviewed, with our advisors, all aspects of Dollar General’s proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed,” Howard Levine said. Family Dollar executives feared siding with a deal that regulators would reject.
“Given the significant antitrust issues involved with Dollar General’s proposal, we will not jeopardize the Dollar Tree deal for a transaction with Dollar General that has a high likelihood of not closing due to antitrust considerations,” an accompanying statement from Trian Fund Management LP read.
Dollar General, however, saw the rejection as a selfish move from Howard Levine. Under Dollar Tree’s terms, Howard would join the company’s board of directors after acquisition.
Dollar General contended that Howard declined their offer to save his job and retain a semblance of control over his father’s company.
Current CEO Mike Witynski is overseeing a major rebranding of Family Dollar
Dollar Tree’s acquisition of Family Dollar established it as a major force in the industry. However, it acquired a company in need of revitalization. By 2019, company investors were getting jittery following failed attempts to reinvigorate Family Dollar.
Some considered pressuring the company into selling. However, then-CEO Gary Philbin expressed confidence that Family Dollar’s acquisition would prove to be a success. “We are confident we are taking the appropriate steps to reposition our Family Dollar brand,” he told WCPO Cincinnati.
He planned to close some stores, rebrand others into Dollar Tree, and merge Dollar Tree into some Family Dollar locations. Before he could see through his plans, however, his time as CEO ended in retirement. Mike Witynski took over, saying:
“We have great momentum; our sales and margins are encouraging; our work to improve the customer experience is driving traffic; and we are now capturing more of the benefits inherent in bringing the Dollar Tree and Family Dollar management teams together under one roof.”
Dollar Tree quietly introduced ‘Combination Stores’ in 2019: one location featured both Family Dollar and Dollar Tree. People trolled the idea online, but it proved quite successful for the brand. CEO Michael Witynski said:
“We are extremely pleased with our customers’ response to the new Combination Store concept. As I have said in the past, we will continue to refine our strategic store formats so that we are able to better serve customers while improving store productivity, margins and returns.”
Founder Leon Levine launched his first discount store in the basement of his family business
Leon Levine’s father, Harry, ran a department store dubbed The Hub. Harry passed away when Leon was 12, leaving the store to Leon’s mother.
Levine and his brother Sherman helped their mom run the store. Sherman was a master salesman, a skill Leon greatly admired. Leon took over the shop after Sherman left to fight the Korean war.
Leon had dreams of opening a store, so he talked to the store’s suppliers, learning how to buy. For his first shop, he drew inspiration from a New York store named Filene’s, which dedicated its basement to its lowest-priced stuff.
Leon convinced his mom to let him open such a store in the basement. It featured stuff people refused to buy but at a drastically lowered price. After purchasing a stake in the Union Craft Company, Leon learned that factories sold goods at discounted prices during slow periods.
At 22, Leon opened his first store using $6,000. He wanted to help families maximize their dollars, hence the name Family Dollar. Some things were above a dollar, but the prices were lower than most other stores.
In 10 years, Family Dollar had 100 locations; a year later, it had 200. Eventually, a $6,000 investment turned into a billion-dollar company.
