The hedge fund believes that the retailer’s $1-price point, which has not changed in 30 years, is not sustainable in today’s economic environment, and wants the company to start selling products at prices higher than $1.
Apart from these changes, Starboard also wants Dollar Tree to sell the Family Dollar business, which has failed to pick up meaningfully since its acquisition four years ago. According to the report, Starboard does not mind Family Dollar being sold off at a lower price than its acquisition value of $9 billion.
Dollar Tree third-quarter earnings beat estimates despite tariff concerns
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However, Dollar Tree appears to have faith in its own strategies while remaining open to shareholder inputs. In its third quarter results announcement, the company said it had plans to renovate at least 1,000 Family Dollar stores and open 350 new Dollar Tree and 200 new Family Dollar stores in 2019. About 200 Family Dollar stores are expected to be re-bannered as well.
Dollar Tree’s shares have dropped more than 12% over the past one year while its peers have done relatively well in comparison. Last quarter the company reduced its outlook for 2018 and now expects sales to come in the range of $22.7 billion to $22.8 billion. As of 2:50 pm ET, the stock was up 4.6%.