By Josh Beckerman 

Carl Icahn reported a 9.4% stake in Family Dollar Stores Inc. and announced plans to seek discussions with the retailer to discuss "strategies to enhance shareholder value," potentially including the exploration of strategic alternatives.

Family Dollar shares, down nearly 7% in 2014, jumped more than 10% in after-hours trading following the news.

Mr. Icahn said in a filing with the Securities and Exchange Commission that he and his affiliates "may also determine to seek shareholder board representation if appropriate." The filing called Family Dollar's stock "undervalued."

Family Dollar has struggled amid growing competition from Wal-Mart Stores Inc., which is opening smaller locations, and rival dollar-store chains.

In April, Family Dollar--which caters to low-income shoppers and has more than 8,100 locations--said it planned to slow down store growth next fiscal year. In contrast, rivals Dollar General Corp. and Dollar Tree Inc. are charging ahead with their expansion plans.

Icahn joins other notable asset managers in owning Family Dollar. Nelson Peltz's Trian Fund Management LP possesses a 7.4% stake, according to FactSet, while John Paulson's Paulson & Co. has a 5.7% stake.

Write to Josh Beckerman at josh.beckerman@wsj.com

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