Dollar Tree Faces Financial Strain, Closing 1,000 Stores Nationwide

Discount variety chain Dollar Tree will be closing nearly 1000 stores in the next few years.

1000 Stores Closing

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Dollar Tree has announced that it will be closing close to 1000 Family Dollar and Dollar Tree stores, after a review of its performance in the 2023 fiscal year.

Dollar Tree Press Release

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In a press release announced on Wednesday, the company pointed to a “comprehensive store portfolio optimization review” which pinpointed necessary closures after significant underperformance last year.

Portfolio Optimization Review

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The review involved “identifying stores for closure, relocation, or re-bannering based on an evaluation of current market conditions and individual store performance, among other factors.”

Failure to Meet Targets

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It also acknowledged the chain’s underperformance, including the failure to meet sales targets in 2023. Since announcing the news, Dollar Tree shares dropped by 14.2%.

“A Thoughtful and Deliberate Approach”

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“We took a thoughtful and deliberate approach to address underperforming stores by considering each individual store’s performance, local operating environment, and our broader need for scale and operating efficiencies across the portfolio,” the statement continued.

Family Dollar and Dollar Tree Stores

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The company plans to close approximately 600 Family Dollar Stores across the first half of 2024, followed by the closure of 370 Family Dollar and 30 Dollar Tree stores over the next few years.

Locations Yet to Be Confirmed

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These closures will account for nearly 12% of all Family Dollar stores. So far, location details of store closures have not been released.

17000 Stores, 2 Countries

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Up until February 2024, Dollar Tree has operated close to 17,000 stores across the U.S. and Canada.

A Discount Giant

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Dollar Tree, which has been one of the leading discount variety stores in the U.S. for more than 30 years, purchased the Family Dollar brand almost a decade ago.

Long-Fought Bidding War

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Since winning its bidding war against major competitor Dollar General in 2015, it has struggled to successfully bring the chain under its wing.

Won the War, Lost the Battle?

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Many experts, including Neil Saunders, who is the managing director of data analytics company GlobalData, have viewed the acquisition by Dollar Tree as a massive decade-long failure.

A “Botched Acquisition”

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“This dramatic cull is the coup de grace in the rather botched acquisition of the Family Dollar chain, which has caused Dollar Tree nothing but hassle since it was completed back in 2015,” Saunders wrote in a public statement.

The Inherited Mess

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“Basically, almost 10 years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around,” he continued.

Infestation Problem

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Their failed acquisition of Family Dollar was just one of a number of significant problems that the U.S. chain has faced in recent years. The best known was a major rat infestation that cost them tens of millions.

Arkansas Distribution Center

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Up until January 2022, the company had been shipping products to its outlet stores out of a rat-infested distribution center in Arkansas.

Charged With Misdemeanor

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The company was charged with one misdemeanor count and made to pay $41.6 million in court. They later revealed that Dollar Tree also lost up to $34 million in recalled products due to the infestation.

OSHA Slams Dollar Tree

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The Occupational Safety and Health Administration (OSHA) also issued a damning statement on the situation, accusing the company of ‘continued disregard for human safety’ which suggested an “attitude that profits matter more than people.”

Dollar General Shoots Ahead

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What’s more, their biggest competitor Dollar General is seeing significant growth, adding over 4,000 new stores in the last five years, and introducing fresh produce to their product list.

Discount Stores on the Rise

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Due to the increasing cost of living and household debt, discount variety stores are becoming more popular with lower and middle-income earners.

According to a January study published in the American Journal of Public Health, dollar stores are the fastest-growing food retailers in the country.

“Research is Lacking”

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“Dollar stores play an increasingly important role in household food purchases, yet research on them is lacking,” said Wenhui Feng, a professor of healthcare policy at Tufts University who co-authored the paper.

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The post Dollar Tree Faces Financial Strain, Closing 1,000 Stores Nationwide first appeared on Thrift My Life.

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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.