Dollar Tree, Family Dollar to Close 1,000 Stores

Dollar Tree is planning to close 1,000 of its stores, primarily outlets operating under its Family Dollar brand, the company disclosed during an earnings call.

The company plans to close 600 of its Family Dollar stores during the first half of this year, Rick Dreiling, Dollar Tree’s CEO, said during the call. The firm also intends to close another 370 Family Dollar outlets and 30 Dollar Tree stores in coming years as leases expire.

The store closings are the result of a review of the Family Dollar portfolio that began in November aimed at identifying underperforming stores for closure, relocation or re-branding.

The Virginia-based discount chain has nearly 17,000 stores in North America, including more than 8,400 Family Dollar outlets.

Dollar Tree posted an overall net loss of $1.7B for Q4. The company took a $1B impairment charge; $950M in intangible asset impairment charges; and a $594M charge for the portfolio optimization review in its fourth quarter earnings report.

During the earnings call, Dreiling said persistent inflation and reduced government benefits are continuing to pressure low-income consumers that make up the lion’s share of the discount chain’s customer based.

At least one market has pushed back recently on the proliferation of discount stores. Last month, Chicago passed a law limiting how many dollar store outlets can operate in the same neighborhood.

The City Council in a 42-7 vote adopted a measure, known as the small-box retailer ordinance, which blocks dollar stores from opening with one mile of existing discount outlets.

Alderman Matt O’Shea, who sponsored the ordinance, said the law is designed to inhibit “over-saturation” of neighborhoods with the stores as well as force owners to take better care of these outlets, according to a report in the Chicago Tribune.

“When a dollar store comes into a neighborhood, they undercut other retailers, especially grocery stores,” O’Shea said, adding that in some neighborhoods dollar stores become the only option, “exacerbating our already very serious food desert problems.”

According to O’Shea, there are now 149 dollar stores operating in Chicago, including Dollar Tree, Dollar General and Family Dollar, with many of these discount stores concentrated in the same neighborhoods.

Dollar store operators argued against the new ordinance, telling the City Council that the one-mile limit is “essentially a moratorium.” Dollar Tree said the ordinance will make it impossible for its stores to relocate, the report said.

“It will bring more harm than help to the very communities it claims to support by limiting the flexibility to improve stores and provide new offerings to people in these communities,” the company said, in a statement.

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