Executives at fast-growing, Burnaby-based Dollar Tree Canada expect to get increased buying power and to be more competitive thanks to a July 2 ruling from the U.S. Federal Trade Commission (FTC).
The FTC approved Virginia-based Dollar Tree’s (Nasdaq: DLTR) proposal to buy North Carolina’s Family Dollar (NYSE:FDO) for US$9.2 billion on the condition that it sell 330 Family Dollar stores.
Dollar Tree said that it expects the deal to close on Monday, thus ending an 11-month merger saga that was complicated when the sector’s largest player, Dollar General, made a superior offer to buy Family Dollar.
Family Dollar rejected that offer, citing anti-trust concerns.
Dollar Tree plans to sell the 330 stores to private equity firm Sycamore Partners and has to complete that transaction within 150 days of when its pact with Family Dollar closes.
The merger will boost Dollar Tree’s store count to more than 13,000 stores across the continent, including 226 in Canada. That will push it past Dollar General to be North America’s largest dollar-store-sector retailer with more than US$18 billion in annual sales.
“As the company continues to grow, there will be more opportunities for us to get better value [when buying] products,” Dollar Tree Canada president Joseph Calvano told Business in Vancouver.
Dollar Tree Canada added 26 stores in the past year.
“Most new stores that are opening in Canada are in Alberta and Ontario for the balance of the year but next year we’re looking at a couple new locations in B.C.,” Calvano said.
Dollar Tree expanded to Canada in 2010, when it bought Vancouver-based Dollar Giant for $62 million . Calvano had founded Dollar Giant nine years earlier and was the operating principal who had built the chain to 86 stores at the time.
Dollar Tree Canada is the second largest dollar-store chain in Canada after Montreal-based Dollarama Inc. (TSX:DOL), which has 972 stores across the country.
“We’re still the only single-price-point dollar store in the country,” Calvano said of Dollar Tree Canada.
“Dollarama’s concept is totally different. Their products are sold for between $1 and $3 and potentially even higher. For us, all our products are $1.25 or less. What we try to do is give extreme value for $1.25.”
