It has been three years since Dollar Tree bought Family Dollar, and analysts say that so far, it's been a disappointing run.
The discount chain, which has more than 8,000 stores in the United States, has pulled down its parent company's earnings over the past few years. In its most recentresults, same-store sales at Dollar Tree only were up 3.2%. Family Dollar saw a more modest increase of 1.4%.
Family Dollar "remains the weaker part of the business," Neil Saunders, managing director at GlobalData Retail, said in a note to clients in November.
He continued: "From our data, a high proportion of Family Dollar's shopper base goes there out of necessity rather than because they particularly want to. There is nothing wrong with this position, but it does mean that as financial conditions improve, or people feel they can afford something better, they are more likely to migrate away."
Dollar Tree acquired Family Dollar in 2015, after undergoing a bidding war with Dollar General, its main US rival. Dollar Tree and Dollar General are almost neck-and-neck in terms of store count and annual sales.
The bidding war may have distracted Dollar Tree and led them to "gloss over some of the glaring problems at [Family Dollar]," Credit Suisse analysts wrote in June.
"Family Dollar clearly preferred Dollar Tree as the acquirer (since the Family Dollar name was more likely to survive), and Dollar Tree likely wanted to prevent Dollar General from nearly doubling its size overnight," the analysts wrote
SEE ALSO: We shopped at Dollar Tree and Dollar General to see which offered a better experience, and the winner was obvious
