Dollar Tree on Wednesday announced it will close nearly 1,000 of its Family Dollar stores after it failed to hit expectations for holiday-quarter sales.
The closing of Family Dollar stores will be done over the next several years as each store's lease term ends. However, the company is expected to close about 600 Family Dollar stores in the first half of 2024, according to a press release. The locations of the stores were not specified.
"As a result of this review, we plan on closing approximately 600 Family Dollar stores in the first half of fiscal 2024. Additionally, approximately 370 Family Dollar and 30 Dollar Tree stores will close over the next several years at the end of each store's current lease term," the statement read.
In the press release, Dollar Tree reported a net loss of $1.71 billion, or $7.85 per share, in the quarter that ended Feb. 3. In comparison, the company had a profit of $452.2 million, or $2.04 per share, in the same period last year.
Dollar Tree's latest announcement comes after the company in November said it would be reviewing the performance of its Family Dollar business and hinted at plans to shut down underperforming stores.
The announcement also comes after the brand was hit with a $41.6 million fine for storing food, cosmetics, drugs, and medical devices in a rat-infested warehouse in Arkansas for years. A fumigation of the said warehouse resulted in the extermination of more than 1,200 rodents, per USA Today, citing court documents.
What Happened to Dollar Tree?
Dollar stores have struggled after consumers shifted from buying lower-margin essentials to higher-margin discretionary goods. In addition, Dollar Tree stores are also facing stiff competition from discount competitors such as Walmart and the Chinese e-commerce platform Temu.
Additionally, Family Dollar stores have lost ground to Dollar General, which sells products for 10% or 15% cheaper. Dollar General has also massively expanded its foothold in 2023, opening 1,000 stores a year. It now has 18,000 stores across the U.S.
Dollar Tree, which bought Family Dollar in 2015 for $8.5 billion, operates 16,774 stores nationwide.
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