Quarterly report [Sections 13 or 15(d)]

Discontinued Operations

v3.25.1
Discontinued Operations
 3 Months Ended
May 03, 2025
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations Discontinued Operations
As previously reported, in fiscal 2024 the Company initiated a formal review of strategic alternatives for the Family Dollar business. This strategic alternatives review concluded in the fourth quarter of fiscal 2024 and resulted in the decision to sell the Family Dollar business. On March 25, 2025, the Company entered into a definitive agreement to sell the Family Dollar business to Brigade Capital Management, LP and Macellum Capital Management, LLC, for a purchase consideration of $1,007.0 million, subject to a number of adjustments, including with respect to working capital and net indebtedness. The closing of the transaction is subject to satisfaction of customary closing conditions. Net proceeds are estimated to total approximately $800 million. The transaction is expected to close in the second quarter of fiscal 2025. The results of Family Dollar are presented as discontinued operations in the accompanying unaudited Condensed Consolidated Income Statements for all periods presented. The assets and liabilities of Family Dollar have been reflected as assets and liabilities of discontinued operations in the accompanying unaudited Condensed Consolidated Balance Sheets for all periods presented.
Financial Information of Discontinued Operations
“Income from discontinued operations, net of tax” in the accompanying unaudited Condensed Consolidated Income Statements reflects the after-tax results of the Family Dollar business and does not include any allocation of general corporate overhead expense or interest expense of the Company.
The following table summarizes the results of operations of the Family Dollar business that are being reported as discontinued operations:
  13 Weeks Ended
(in millions) May 3, 2025 May 4, 2024
Net sales $ 3,309.6  $ 3,460.8 
Other revenue 2.4  3.1 
Total revenue 3,312.0  3,463.9 
Cost of sales 2,321.4  2,589.6 
Selling, general and administrative expenses 698.7  835.6 
Operating income 291.9  38.7 
Interest income 1.6  2.3 
Loss from classification to held for sale 258.4  — 
Income from discontinued operations before income taxes 35.1  41.0 
Provision for income taxes 5.2  8.6 
Income from discontinued operations, net of tax $ 29.9  $ 32.4 
Depreciation expense related to discontinued operations was $111.2 million for the 13 weeks ended May 4, 2024. The Company has ceased depreciating and amortizing its long-lived assets for Family Dollar which primarily includes right-of-use assets and property and equipment.
The following table summarizes the Family Dollar business assets and liabilities classified as discontinued operations in the accompanying unaudited Condensed Consolidated Balance Sheets:
(in millions)
 May 3, 2025 February 1, 2025 May 4, 2024
ASSETS    
Cash and cash equivalents $ 227.1  $ 179.0  $ 227.9 
Merchandise inventories 2,330.5  2,456.4  2,552.1 
Other current assets 188.0  200.9  189.5 
Property, plant and equipment, net 2,256.3  2,268.0  2,354.7 
Operating lease right-of-use assets 2,559.1  2,580.6  2,769.4 
Goodwill —  —  490.5 
Trade name intangible asset 750.0  750.0  2,150.0 
Other assets 10.5  12.8  13.0 
Valuation allowance to adjust assets to estimated fair value,
     less costs of disposal		 (3,616.0) (3,438.8) — 
Total assets of discontinued operations $ 4,705.5  $ 5,008.9  $ 10,747.1 
LIABILITIES
Current portion of operating lease liabilities $ 584.4  $ 598.5  $ 608.2 
Accounts payable 880.5  977.5  961.5 
Other current liabilities 336.7  378.6  384.5 
Operating lease liabilities, long-term 1,966.3  2,134.5  2,350.1 
Other liabilities 135.8  135.8  136.1 
Total liabilities of discontinued operations $ 3,903.7  $ 4,224.9  $ 4,440.4 
Assets and liabilities classified as held for sale are required to be recorded at the lower of carrying value or fair value less costs to sell. As of February 1, 2025, we determined that the fair value of the Family Dollar business, including costs to sell was lower than its carrying value and we recorded a $3,438.8 million valuation allowance against the assets held for sale. As of May 3, 2025, we remeasured the fair value of the Family Dollar business, including costs to sell and recorded an additional valuation allowance of $258.4 million. In addition, during the first quarter of fiscal 2025, certain assets and liabilities of the Family Dollar business were moved out of held for sale as they will be retained by Dollar Tree. The assets and liabilities included 57 combo stores that will be converted to Dollar Tree stores, and were reclassified as held and used at their fair value, which resulted in a $71.4 million reduction to the valuation allowance. The fair value of the Family Dollar business was estimated using the expected sale price as negotiated with the third party buyer. The valuation allowance was recorded within “Loss from classification to held for sale” in the summarized results of operations of discontinued operations for the 13 weeks ended May 3, 2025.
Capital expenditures related to discontinued operations were $44.1 million and $155.7 million for the 13 weeks ended May 3, 2025 and May 4, 2024, respectively.