Dollar Tree Plans 1000 Store Closures

Family Dollar Stores continue to struggle and chain owner, Dollar Tree DLTR , plans to shutter 1000 of its Family Dollar stores in the first half of 2024. In addition, another 370 units will close in coming years as leases expire. At the same time, a review of the Dollar Tree stores identified 400 locations to also close.

The merger of the two companies, Dollar Tree and Family Dollar, occurred in 2015. As the fiscal year ended on February 3, the company operated over 16,774 units under the two brand names across the U.S. and Canada.

For the fiscal year that ended on February 3, Dollar Tree reported a net loss of $998.4 million. In the 4^th quarter, it reported a net loss of $1.71 billion. Nonrecurring items are responsible for much of these losses. The company said it incurred a $594.4 million charge in connection with a store portfolio optimization review. In addition, there was a goodwill impairment charge of $1.07 billion and a trade name intangible asset impairment charge of $950 million.

Revenues for the 4^th quarter totaled $8.64 billion, an increase of +11.9% over the prior year’s fourth quarter. Revenues for the year were up +8%, to $30.6 billion. The company reminded everyone that the 4^th quarter and year included an extra selling week that positively impacted year-end results.

According to Richard Dreiling, chairman and CEO of Dollar Tree (a position he has held since January 2023), the struggles at Family Dollar have been due at least in part to cutbacks in the Supplemental Nutrition Assistance Program (SNAP) benefits. He also said that: “The Dollar Tree multi-price point strategy is doing significantly better than we thought it would do. The customer acceptance has been off the charts, to be frank. Our biggest problem right now is getting enough merchandise into the stores fast enough, so the consumer can respond”.

Supermarket News reports that the initiative called “More Choices” includes the rollout of frozen and refrigerated items at $3, $4, and $5 price points. These products have been added to 6,500 stores, and the program will expand, according to Dreiling. The company will offer multiple price points in eight out of ten doors, up from three out of ten today.

Unfortunately, Dreiling also said that “categories like apparel, home décor, electronics, and general merchandise remain weak as lower income consumers continue to be very deliberate about their spending”.

Dreiling also added that 17,000 cooler doors have been added to Family Dollar units in 2023; that was 1000 more than planned. Today, Family Dollar stores average about 26 refrigerated doors, which is approaching its goal of 30 per store.

POSTSCRIPT: Enough! Having been in some Family Dollar stores myself, I can only say that the company should change management, clean the stores, remerchandise their assortments and then start shouting that a new team is trying to get customers to come back. I am saddened by the many associates that are losing their jobs because of the incompetence of management. They should know what is needed, and they should give it to the surviving stores now. The merchandise is lacking customer appeal and badly needs more of a refresh than is currently planned. Then, there needs to be a strong, new marketing push. It is a disaster.