Dollar Tree Announces Mass Closures

Following a surprising 4th-quarter loss, Dollar Tree announced that it was closing nearly a thousand locations over the next few years, the Associated Press reported.

Dollar Tree, which acquired rival Family Dollar in 2015 for over $8 billion, was forced to slash the value of Family Dollar after it revealed that it had difficulty absorbing the rival chain.

The retailer plans to close around 600 Family Dollar locations in the first half of 2024, with another 370 locations, along with 30 Dollar Tree locations, closing over the next few years.

Dollar Tree announced on March 13 that it was recording a $950 million impairment against the Family Dollar trade name on top of the goodwill charge of $1.07 billion. Family Dollar will invest over $594 million in closing and rebranding its stores.

GlobalData Managing Director Neil Saunders said of the news that Dollar Tree is still dealing with “the mess it inherited” nearly a decade ago in its “botched acquisition” of Family Dollar.

He told the Associated Press that the closings will affect nearly 12 percent of the current Family Dollar locations.

In the quarter ending on February 3, Dollar Tree lost $7.85 per share, or $1.71 billion, a significant about-face to the previous year when the company gained $2.04 per share, or $452.2 million.

For FY2024, the company anticipates earnings of between $31 billion and $32 billion, or between $6.70 and $7.30 per share.

According to a poll by FactSet, analysts predict Dollar Tree’s full-year earnings of $7.04 per share on $31.68 billion in revenue.

Dollar Tree has gained customers impacted by rising prices and persistent inflation. During the last quarter, sales at established Dollar Tree locations increased by 6.3 percent with customer traffic climbing by 7.1 percent. However, the average sale per customer fell by 0.7 percent.

Meanwhile, at Family Dollar, sales in the last quarter fell by 1.2 percent. While traffic ticked up by 0.7 percent, the average sale per customer fell by 2 percent.