OAN’s James Meyers
11:48 AM -Wednesday, March 13, 2024
The retail store Dollar Tree has announced that they are closing almost 1,000 stores across the United States between its namesake general discount stores and subsidiary chain, Family Dollar.
The company said on Wednesday that Family Dollar will close 600 locations in the first half of 2024 and 370 stores over the next few years as store leases expire.
Dollar Tree bought Family Dollar for $8.5 billion in 2015.
“Our biggest problem right now is getting enough merchandise into the stores fast enough so the consumer can respond,” said CEO Rick Dreiling, adding that Family Dollar was continuing to be hurt by macroeconomic uncertainties.
The company said that it would record a $950 million impairment against the trade name Family Dollar, on top of a $1.07 billion goodwill charge. Family Dollar will reportedly spend more than $594 million closing or rebranding stores, which will erase profits from the holiday season.
“This dramatic cull is the coup de grâce 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,” wrote Neil Saunders, managing director of GlobalData. “Basically, almost ten years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around,” Saunders said.
With the latest announcement, shares of Dollar Tree fell 14% in the stock market.
Dollar Tree claims that the retail giant has not been able to lure new customers due to “high costs and surging prices.”
The company also expects 2024 sales to rake in between $31 billion and $32 billion, which could fall below the estimate of $31.65 billion, according to LSEG data.
Family Dollar has also had safety issues, which included when the Food and Drug Administration revealed that the company was selling cinnamon that was contaminated with high levels of lead and other carcinogenic heavy metals.
Weeks prior, Family Dollar also pleaded guilty to selling products across 400 stores that came from a “rodent-infested warehouse,” which resulted in a record 41.7 million in fines.
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