Dollar Tree announced on Monday the return of retail veteran Michael MacNaughton as CEO and revealed plans to spin off its struggling Family Dollar brand into a separate company, marking a major strategic shift aimed at reviving growth and sharpening its focus in the highly competitive U.S. discount retail sector.
MacNaughton, who previously held senior roles at Walmart and was instrumental in Dollar Tree’s earlier expansion, returns at a pivotal moment for the company. He replaces Rick Dreiling, who is retiring after steering the business through a turbulent post-pandemic period marked by inflation, shrinking margins, and underperformance at Family Dollar.
“I’m honored to rejoin Dollar Tree at this critical time,” MacNaughton said in a company statement. “Our focus now is to strengthen our core business, improve operational efficiency, and unlock value by allowing Family Dollar to chart its own path.”
The decision to spin off Family Dollar into an independent company comes after years of inconsistent performance from the chain, which Dollar Tree acquired in 2015 for $8.5 billion. Despite attempts to revamp stores, update product lines, and integrate operations, Family Dollar has struggled with lagging sales, lower customer traffic, and stiffer competition from rivals like Dollar General and Walmart.
Dollar Tree’s board said the spinoff will create “two distinct and focused market leaders”—one centered on Dollar Tree’s single-price-point model, and another with Family Dollar pursuing broader flexibility in pricing and product range. The separation is expected to be completed by the first half of 2026, pending regulatory approvals.
Investors welcomed the move, with Dollar Tree shares rising over 6% in early trading on Monday. Analysts said the market responded positively to the clarity and renewed leadership.
“MacNaughton brings deep experience in discount retail and a strong track record of operational turnaround,” said Neil Saunders, managing director of GlobalData Retail. “Separating Family Dollar allows both brands to define their strategies without being weighed down by each other’s limitations.”
Dollar Tree said MacNaughton will prioritize store modernization, supply chain optimization, and improving merchandise mix to regain competitive momentum. The company also plans to accelerate digital integration and expand private-label offerings as part of its revitalization efforts.
For Family Dollar, the spinoff represents both a challenge and an opportunity. As a standalone company, it will need to rebuild customer trust and reestablish its value proposition amid stiff discount retail competition. The new company will retain its own management team, and more details on leadership and operational plans are expected in the coming months.
Consumer behavior in the discount retail space has shifted since the pandemic, with higher-income shoppers increasingly turning to value stores amid inflationary pressures. Yet operational execution and brand consistency remain key differentiators.
In a letter to employees, MacNaughton emphasized the importance of restoring employee morale and strengthening frontline operations. “Our team members are the heart of this company,” he wrote. “Together, we will deliver on our mission to provide quality and value for every customer, every day.”
Dollar Tree currently operates more than 8,000 stores under the Dollar Tree banner and around 7,500 Family Dollar locations. After the spinoff, both companies are expected to continue operating independently but will retain some shared services agreements during the transition.
With Wall Street backing the move and a seasoned CEO at the helm, Dollar Tree is betting that sharper focus and separation will allow both brands to better serve their customer bases and improve long-term profitability in an increasingly segmented retail environment.
Source: Reuters
