Dollar Tree, Inc. (NASDAQ:DLTR) shares are trading lower on Tuesday.
The U.S. FDA has issued a warning letter to the retail chain for its stores continuing to have adulterated WanaBana apple cinnamon fruit puree pouches on shelves.
After completing initial response activities to investigate contamination sources and prevent further illnesses, the FDA said that it is monitoring the company's ongoing efforts in prevention, compliance, and surveillance.
Following the manufacturer's voluntary recall of apple cinnamon fruit puree pouches, public health officials in multiple states reported ongoing sightings of recalled WanaBana pouches at Dollar Tree stores.
The FDA noted that the warning letter is a continuation of its response efforts post-incident. It is crucial that retailers actively participate in recalls by ensuring that recalled products are promptly removed from their shelves to prevent consumer access, the regulatory watchdog said in a statement.
"The Agency is concerned with Dollar Tree's capability to quickly remove unsafe products from its store shelves as necessary and as required during a public health threat, such as a recall," the FDA said.
This month, Dollar Tree announced its consideration of selling or spinning off Family Dollar. Dollar Tree outlets are predominantly situated in suburban areas, targeting middle-income households, while Family Dollar serves primarily low-income urban clientele—a challenging market segment currently experiencing reduced consumer spending. When spending occurs, many opt for Walmart Inc. (NYSE:WMT)
for their essential shopping needs, The Financial Times reported.
The sale will help the firm to concentrate on expanding its more successful Dollar Tree chain. The company has also recorded $5 billion in impairments on Family Dollar over the past five years.
Despite the reduced store count, finding a buyer for a business with over 7,000 stores remains challenging, The Financial Times added. A spin-off or a private equity buyout, potentially breaking up the business, appears more plausible.
Price Action: DLTR shares are trading lower by 1.70% to $106.80 at last check Tuesday.
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