Activist wants Dollar Tree to sell stuff for more than $1

A dollar doesn't buy as much as it did 30 years ago.That's why one activist investor thinks it's time...

Posted: Jan 7, 2019 2:33 PM
Updated: Jan 7, 2019 2:33 PM

A dollar doesn't buy as much as it did 30 years ago.

That's why one activist investor thinks it's time for Dollar Tree to raise its prices.

Activism

Banking, finance and investments

Business and industry sectors

Business, economy and trade

Companies

Dollar Tree

Financial markets and investing

Retail and wholesale trade

Securities trading

Society

Stock markets

Jeffrey Smith, CEO of Starboard Value, a hedge fund, wrote to Dollar Tree CEO Gary Philbin Monday to disclose that his fund had taken a 1.7% stake in the bargain retailer. Starboard said it wants Dollar Tree (DLTR) to make some big changes.

"Dollar Tree has kept its prices at $1.00 since its founding thirty years ago, despite the fact that $1.00 in 1986 is worth approximately $2.30 today, due to inflation," Smith wrote.

"However, the value that Dollar Tree has offered its customers has deteriorated because of the need to fit everything into a $1.00 price point. Products today are smaller or of lower quality than they were five, ten, and certainly thirty years ago," Smith added.

Starboard also wants Dollar Tree to consider selling Family Dollar, a struggling chain of stores that it bought in 2015.

But the activist firm, which earned fame after shaking things up at Olive Garden owner Darden Restaurants, thinks that the company's biggest chance for success will come from a change in its pricing strategy.

"Dollar Tree has a great customer base, and we believe its loyalty stems from the fantastic value customers find at Dollar Tree, not merely because everything in the store is the same price," he added.

Smith said Starboard planned to nominate seven directors for the company's board at Dollar Tree's next shareholder meeting and that it hopes to work with Dollar Tree's current management team in order to make some strategic changes.

Smith suggested that disgruntled investors would support its plans for Dollar Tree.

Dollar Tree's stock has fallen more than 15% in the past year, a drop that's about twice as large as the fall in the broader stock market and the overall retail sector. The stock has also lagged the S&P 500 and its peers since the Family Dollar deal closed more than three years ago.

Dollar Tree responded to Smith's letter Monday morning by saying it appreciated the investment and the suggestions.

"Dollar Tree is focused on ensuring our brands are the premier shopping destination for value and convenience, taking the right actions to solidify our leadership position in value retail," the company said.

But the company also seems prepared for a fight, noting that it has already added four new independent directors since May 2016.

West Lafayette
Partly Cloudy
75° wxIcon
Hi: 77° Lo: 54°
Feels Like: 75°
Kokomo
Partly Cloudy
75° wxIcon
Hi: 77° Lo: 51°
Feels Like: 75°
Rensselaer
Partly Cloudy
75° wxIcon
Hi: 78° Lo: 52°
Feels Like: 75°
Fowler
Partly Cloudy
75° wxIcon
Hi: 76° Lo: 54°
Feels Like: 75°
Williamsport
Partly Cloudy
75° wxIcon
Hi: 77° Lo: 54°
Feels Like: 75°
Crawfordsville
Partly Cloudy
73° wxIcon
Hi: 77° Lo: 52°
Feels Like: 73°
Frankfort
Partly Cloudy
73° wxIcon
Hi: 76° Lo: 51°
Feels Like: 73°
Delphi
Partly Cloudy
76° wxIcon
Hi: 77° Lo: 54°
Feels Like: 76°
Monticello
Partly Cloudy
76° wxIcon
Hi: 81° Lo: 56°
Feels Like: 76°
Logansport
Partly Cloudy
73° wxIcon
Hi: 77° Lo: 53°
Feels Like: 73°
A magnificent Monday with sunshine and mild temperatures
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 771299

Reported Deaths: 14005
CountyCasesDeaths
Marion1059471808
Lake570611031
Allen43193700
Hamilton37458426
St. Joseph37420568
Elkhart29819471
Tippecanoe23584231
Vanderburgh23431405
Porter19616327
Johnson18899394
Hendricks18168323
Clark13623199
Madison13604348
Vigo12908256
Monroe12626178
LaPorte12594225
Delaware11183198
Howard10747237
Kosciusko9810124
Hancock8799150
Bartholomew8296157
Warrick8150157
Floyd8072183
Grant7397181
Wayne7254201
Boone7236105
Morgan6948143
Marshall6358117
Dubois6301118
Cass6110112
Dearborn604078
Noble603590
Henry5971111
Jackson518677
Shelby512898
Lawrence4961127
Gibson467296
Montgomery461392
Clinton458455
DeKalb458485
Harrison456977
Huntington421382
Whitley418645
Steuben412861
Miami407273
Jasper402556
Knox393191
Putnam386862
Wabash371684
Adams355356
Ripley352771
Jefferson347187
White340954
Daviess3098100
Wells304881
Greene295985
Decatur293493
Fayette287464
Posey285435
Scott283458
LaGrange278472
Clay276049
Washington255637
Randolph248283
Jennings240449
Spencer239731
Fountain237250
Starke230859
Owen224759
Sullivan222943
Fulton209545
Jay203432
Carroll198822
Orange192756
Perry191939
Vermillion181944
Rush178627
Tipton173848
Franklin173035
Parke156816
Pike143434
Blackford138232
Pulaski124048
Newton123736
Benton110515
Brown106443
Crawford106316
Martin92715
Warren88015
Switzerland8488
Union73710
Ohio58411
Unassigned0429

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events