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If you’re having a bad day, at least you’re not Dollar Tree in human form, because then you’d really be having a rough time.
The company, which operates more than 16,700 stores and owns the Family Dollar chain, said it would close nearly 1,000 Family Dollar stores in the coming years. It plans to close 600 locations in 2024, and then 370 additional stores over the next few years as leases expire.
Dollar Tree acquired Family Dollar for $8.5 billion in 2015, and, despite fighting a bidding war to win the company, it has largely struggled to incorporate the latter brand successfully.
Both stores target lower-income consumers, but slight discrepancies between the two brands have proved challenging to merge: Family Dollar outposts tend to be located in urban areas, with a focus on groceries and other household basics, while the more suburban Dollar Tree also caters to middle-income consumers.
More broadly, dollar stores have faced challenges amid consumer spending shifts, CNBC reported, and have struggled to compete with larger national retailers that can respond to consumer demand more swiftly.
According to CEO Rick Dreiling, in a Q4 earnings call with analysts on March 13, “persistent inflation and reduced government benefits” have remained a pressure on Family Dollar’s sizable contingent of lower-income consumers. “Family Dollar is a victim of the macro environment out there,” he explained.
And in that case, it’s a rough macro environment out there. Dollar Tree said it would incur $950 million in asset impairment charges against the trade name Family Dollar, plus a goodwill impairment charge of $1.07 billion.
“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,” Neil Saunders, managing director of GlobalData, wrote in a statement. “Basically, almost ten years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around.”