Investors are responding positively to Dollar Tree's decision to sell the struggling Family Dollar business and the company's mixed fourth-quarter results, which highlighted challenges faced by consumers.

Dollar Tree's stock surged by up to 8% in early trading following the announcement of the sale of Family Dollar to private equity firms Brigade Capital Management and Macellum Capital Management for $1 billion. Dollar Tree had acquired the Family Dollar brand in 2015 for $9 billion, outbidding Dollar General.

CEO Michael Creedon expressed confidence in the sale of Family Dollar and emphasized the company's focus on Dollar Tree's core operations, stating that the transition will occur in 2025.

Although the sale is expected to impact earnings by approximately $0.30 to $0.35 per share, investors appeared relieved that Dollar Tree was divesting Family Dollar, which had been a drag on performance.

The move concludes Dollar Tree's struggle to integrate Family Dollar into its business over more than a decade, as Family Dollar faced difficulties in keeping up with competitors like Amazon and Walmart.

Analysts viewed the sale as a strategic decision that will enable Dollar Tree to concentrate on its more successful Dollar Tree brand, citing Family Dollar's ongoing underperformance and operational challenges.

The past year has seen Family Dollar store closures and changes in management, including the appointment of a new CEO and CFO.

In its fiscal fourth-quarter results, Dollar Tree reported a mixture of performance metrics compared to Wall Street estimates.