Dollar Tree Inc. (NASDAQ: DLTR) saw its stock price surge 5.07% in Thursday's pre-market trading following the announcement of a major strategic move and better-than-expected fourth-quarter results.

The discount retailer revealed plans to sell its Family Dollar business for over $1 billion to Brigade-Macellum, a move that will allow the company to focus solely on its core Dollar Tree brand. This strategic divestiture comes after years of challenges in integrating and improving the Family Dollar operations.

Alongside this significant announcement, Dollar Tree reported strong fourth-quarter performance for 2024. The company achieved a 2% increase in comparable store sales, driven by the success of its expanded multi-price offerings. This growth was particularly evident in the company's discretionary and seasonal categories, which saw robust holiday sales.

Looking ahead, Dollar Tree provided an optimistic outlook for fiscal year 2025, projecting comparable store sales growth of 3% to 5%. This positive forecast is supported by the company's plans to expand its successful 3.0 store format, which has demonstrated a 220 basis point comp lift compared to other formats.

Investors were also encouraged by Dollar Tree's effective management of recent tariff challenges. The company reported successfully mitigating 90% of the cost impact from the first round of tariffs through strategic sourcing and pricing adjustments, showcasing its adaptability in a complex trade environment.

"With the sale of Family Dollar, we can fully focus on unlocking value at Dollar Tree," stated Mike Creedon, CEO of Dollar Tree. "We had a solid 2024, and we feel good about many parts of our business heading into 2025."

As Dollar Tree transitions to a standalone entity, the market appears optimistic about the company's potential for streamlined operations and improved profitability. However, challenges remain, including the need to navigate ongoing tariff pressures and manage the transition costs associated with the Family Dollar sale.