June 5 (Reuters) - Dollar Tree ( DLTR ) said on

Wednesday it was exploring options, including a potential sale

or spinoff of its Family Dollar banner, as the retailer looks to

restructure its business amid stiff competition and strained

consumer spending.

The Chesapeake, Virginia-based retailer, like its peer

Dollar General, has been grappling with weak demand as

rivals Walmart, Target and Chinese e-commerce

platform Temu are also offering products at lower price points

to attract inflation-hit customers.

Family Dollar, which Dollar Tree ( DLTR ) bought for $8.5 billion in

2015, has been the main underperformer for the company.

Dollar Tree ( DLTR ) had said in November last year it was going to

review the business, and outlined plans to shutter 970 of its

Family Dollar stores earlier in 2024.

The Family Dollar banner operates 8,359 stores and 10

distribution centers, as of Feb. 3. Overall, Dollar Tree ( DLTR )

operates more than 16,000 stores.

CEO Richard Dreiling had noted in March that the Family

Dollar business was continuing to be hurt by macroeconomic

uncertainties. The banner has particularly seen its core

lower-income customers come under pressure due to reduced

government benefits and higher borrowing costs in the last few

months.

The retailer has also seen sales take a hit from reduced

customer spending on more profitable products like electronics

and furnishings since 2022. In an attempt to revive demand, it

has also introduced products at price points such as $3 and $5.

Dollar Tree ( DLTR ) currently has a market capitalization of $26.2

billion, according to LSEG data. It has raked in about $31

billion in revenue for fiscal 2023, of which Family Dollar

accounted for 45%.

The Wall Street Journal first reported the news on

Wednesday.

Shares of Dollar Tree ( DLTR ) were up 4.7% in premarket trading. The

stock has fallen more than 15% so far this year.