Quarterly report [Sections 13 or 15(d)]

Discontinued Operations

v3.26.1
Discontinued Operations
 3 Months Ended
May 02, 2026
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations Discontinued Operations
On July 5, 2025, we completed our sale of the Family Dollar business to 1959 Holdings, LLC. Total cash generated from the sale approximated $793 million, consisting of approximately $680 million of net proceeds, including from settlement of net working capital and net indebtedness, and approximately $113 million monetized primarily through a reduction of net working capital prior to the date of sale. The Company has continuing involvement with Family Dollar under a transition services agreement, through which the Company and Family Dollar continue to provide certain services to each other for a period of 18 months following the date of sale. For the 13 weeks ended May 2, 2026, we recorded $21.1 million of net income from transition services between the two companies. In addition, the Company is guaranteeing lease obligations for 114 Family Dollar stores amounting to approximately $83.0 million for the first year following the date of sale, which represents the full lease obligations on these stores. The amount guaranteed in the second and third year following the date of sale is $20.0 million and $10.0 million, respectively. The fair value of the lease guarantee is immaterial.
The results of Family Dollar are presented as discontinued operations in the accompanying unaudited Condensed Consolidated Income Statements for the prior year comparable period. The assets and liabilities of Family Dollar are reflected as assets and liabilities of discontinued operations in the accompanying unaudited Condensed Consolidated Balance Sheets for the prior year comparable period.
Financial Information of Discontinued Operations
“Income from discontinued operations, net of tax” in the accompanying unaudited Condensed Consolidated Income Statements for the prior year comparable period 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
Net sales $ 3,309.6 
Other revenue 2.4 
Total revenue 3,312.0 
Cost of sales 2,321.4 
Selling, general and administrative expenses 698.7 
Operating income 291.9 
Interest income 1.6 
Loss on held for sale and disposal of discontinued operations 258.4 
Income from discontinued operations before income taxes 35.1 
Provision for income taxes 5.2 
Income from discontinued operations, net of tax $ 29.9 
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
ASSETS  
Cash and cash equivalents $ 227.1 
Merchandise inventories 2,330.5 
Other current assets 188.0 
Property, plant and equipment, net 2,256.3 
Operating lease right-of-use assets 2,559.1 
Goodwill — 
Trade name intangible asset 750.0 
Other assets 10.5 
Valuation allowance to adjust assets to estimated fair value,
     less costs of disposal		 (3,616.0)
Total assets of discontinued operations $ 4,705.5 
LIABILITIES
Current portion of operating lease liabilities $ 584.4 
Accounts payable 880.5 
Other current liabilities 336.7 
Operating lease liabilities, long-term 1,966.3 
Other liabilities 135.8 
Total liabilities of discontinued operations $ 3,903.7 
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 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 were retained by Dollar Tree. The assets and liabilities included 57 combo stores that were 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 on held for sale and disposal of discontinued operations” 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 for the 13 weeks ended May 3, 2025.