Dollar Tree is selling Family Dollar for $1 billion and ending its 10-year merger with the company. Pending approval, Dollar Tree will sell the discount brand to equity groups Brigade Capital Management and Macellum Capital Management.

“The Dollar Tree leadership team and Board of Directors determined that a sale of Family Dollar to Brigade and Macellum best unlocks value for Dollar Tree shareholders and positions Family Dollar for future success,” the company said in a statement, per CNN.

What went wrong in Dollar Tree’s merger with Family Dollar?

After Dollar Tree purchased Family Dollar for $9 billion in 2015, the discount brand store experienced struggles in the following years. Analysts said Family Dollar, which is built to serve families in low-income neighborhoods, struggled due to increasing prices and overexpansion. The company also gained a negative reputation because of its messy stores. As the struggles continued, Family Dollar closed 900 stores in 2924 and became available for sale.

Neil Saunders, an analyst at GlobalData Retail, told clients (per CNN) that this “closes the book on a sad and troubled chapter for Dollar Tree.”

“Dollar Tree bit off far more than it could chew,” Saunders said, per CNN.

Similar to other businesses that are struggling due to inflation, Family Dollar has been forced to increase operating costs, making shopping more difficult for its customers. The company is also facing additional challenges as Donald Trump imposes tariffs on imported goods.

Why are dollar stores struggling in the current economy?

Value stores such as Dollar Tree and Dollar General are facing significant challenges as low-income families are struggling to afford basic necessities.

“Our customers continue to report that their financial situation has worsened over the last year as they have been negatively impacted by ongoing inflation,” Dollar General CEO Todd Vasos said on an earnings call, according to CNN. “Many of our customers report they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities.”

Dollar Tree also announced last year that the company may have to make a series of adjustments, including store closures, as tariffs cause a major challenge. About 40% of Dollar Tree’s products rely on imported goods, per CNN. After selling items for $1 for decades, Dollar Store raised its base price to $1.25 in 2021.