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Family Dollar plans to pilot a new extra small box store format intended for dense urban areas in 2026, the company said in a Tuesday press release.

The discount retailer generated about $13 billion in revenue and comparable sales growth of 2.5% in fiscal year 2025, per the release. In 2026, Family Dollar expects positive comparable store sales growth.

Family Dollar also closed underperforming stores during the past fiscal year in an effort to optimize its store fleet, though it did not specify how many locations shuttered. The retailer reported a $300 million improvement in net debt since its separation from the Dollar Tree business last year.

Family Dollar’s business update comes after it became a private entity last year. The discount chain was sold from Dollar Tree to Brigade Capital Management and Macellum Capital Management for about $1 billion.

"Over the past year, we've taken disciplined actions to strengthen the foundation of Family Dollar, and the progress we're seeing reflects the focus and commitment of our teams across the organization," Duncan MacNaughton, Family Dollar chairman and CEO, said in a statement. "We are focused on simplifying the business, improving execution in our stores, and ensuring we are positioned to serve our customers and communities for the long term."

The selloff marked a loss for Dollar Tree after it bought Family Dollar for around $8.5 billion more than a decade ago. Family Dollar had weighed on Dollar Tree’s earnings results since and Dollar Tree publicly announced it was considering selling the banner in 2024.

In its broader business update Tuesday, Family Dollar revealed it launched a “Value Creation” program involving about 70 initiatives across merchandising, store operations, supply chain and technology to support its transformation efforts. The initiatives began following the separation from Dollar Tree.

Dollar Tree fourth quarter net sales and same-store sales grew, per an earnings release Monday. However, the chain saw another decline in traffic during the period, which leadership attributed to a restickering effort in stores that it says is largely complete.