Dollar Tree is planning to close 1,000 stores in the next few years, a sharp contrast to the expansion of many dollar stores during the lean years of the pandemic.
The company is planning to close a swath of its 16,700 locations soon, the Wall Street Journal reported. Inflation and store theft are among the factors being blamed for the closures, according to CEO Rick Dreiling.
Most of the locations Dollar Tree plans to close are Family Dollar locations, a brand the company acquired in 2015. Years after that acquisition — before the pandemic — Dollar Tree closed nearly 600 Family Dollar stores as operations struggled.
This time around, Family Dollar is again being gutted by the parent company. Dollar Tree plans to close 600 Family Dollar locations in the first half of the year and another 370 locations in the near future. Dollar Tree will also close roughly 30 Dollar Tree locations.
Despite the similar names, there are critical differences between Family Dollar and Dollar Tree, mainly in terms of location. The former are largely found in urban centers, while the latter is typically seen in suburban areas. Dollar Tree is also pushing prices of some products to 3 and even 5 dollars while expanding its product offerings.
Just a few years ago, discount stores were one of the most resilient retail offerings during the height of the pandemic. While many retailers were closing stores left and right, dollar stores were having a brick-and-mortar renaissance. Their low-cost operations and service to rural locations were boons to the business.
But in the most recent quarter, Dollar Tree recorded a $1.7 billion loss, due in large part to a $2 billion charge connected to a review of the company’s store portfolio. Sales still rose 12 percent year-over-year, but the company’s net stood in stark contrast to a $452 million profit from a year ago.
Dollar Tree shares fell more than 9 percent on Wednesday.
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