In February 1999, Advent led a minority recapitalization of Dollar Express, then the third-largest single-price retailer in the U.S.
At the time, the company operated 84 stores in five states, selling everyday branded merchandise for the fixed price of $1.00. We were attracted to Dollar Express because it had a strong position in a rapidly growing market niche, favorable store-level economics (ROI in excess of 100%) and counter-cyclical business. The founders were seeking a knowledgeable financial partner to lead a recapitalization of the business and help expand aggressively.
Post investment, we worked with the management team to develop the infrastructure needed to support a nationwide expansion plan, reviewing all areas of the business from management information systems to planning and budgeting disciplines. New merchandise categories were added, more extensive inventory and logistics systems implemented and store-level incentive programs introduced.
The changes were effective – in the 12 months after our investment, EBITDA increased more than 50%, and the Dollar Express network expanded broadly throughout the mid-Atlantic region. By spring 2000, the company operated 107 Dollar Express stores in six states and 25 Spain's Cards and Gifts stores in the Philadelphia metropolitan area. In March of that year, on the eve of a planned IPO, Dollar Express was acquired by Dollar Tree Stores (Nasdaq: DLTR) for $375 million, creating America's largest $1.00 discount variety store chain.