Family Dollar in need of a makeover

Family Dollar (NYSE:FDO) will receive price cuts and a makeover once it is taken over by Dollar Tree (NASDAQ:DLTR), according to CEO Bob Sasser. At an annual shareholders meeting, Sasser said that low-income customers deserve to have a clean, bright and friendly store.

Dollar Tree's proposed purchase of Family Dollar for $8.5 billion has been cleared by the staff of the Federal Trade Commission, which was reviewing the deal for any antitrust issues, but still must get approval by the agency's commissioners, reported PilotOnline.

The potential deal was first announced last summer, and earlier this month Dollar Tree reached an agreement with private equity firm Sycamore Partners to divest 330 Family Dollar stores in order to meet antitrust regulations.

Once combined, the companies would be the largest discount retailer in North America, comprised of 13,000 stores, with an annual revenue of more than $19 billion, Sasser said.

Sasser said that Family Dollar has been underperforming, but can be fixed if it returns to its customer base. Family Dollar traditionally targets urban and rural consumers with lower incomes. Dollar Tree, on the other hand, aims for suburban middle-income shoppers. Sasser believes Family Dollar began charging too much for some items and opening in suburban areas, some of which may be transformed into Dollar Trees.

Sasser described the merger as an opportunity to serve more consumers and ensure the future of both banners.

For more:
-See this PilotOnline article

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