(RepublicanView.org) – Discount retail giant Dollar Tree has announced plans to close around 1,000 stores across the nation after unexpected losses during the fourth quarter.
The announcement includes both Family Dollar and Dollar Tree locations. Dollar Tree won the race to buy the Family Dollar brand against Dollar General in 2015. However, the merger has not met expectations over the years and has been plagued by unexpected problems. The brand plans to close around 30 Dollar Tree locations. It will also close 600 Family Dollars this year and 370 over the coming years. That accounts for around 12% of their locations and over $700 million in revenue.
Managing Director Neil Saunders with GlobalData said in a statement that the merger caused a hassle that executives are still struggling to work through nine years later. It was also reported that there was a massive $950 million impairment of the Family Dollar name. It includes nearly $600 million in rebranding stores and a $1.07 billion charge for goodwill.
Dollar Tree has also reportedly been struggling with a sharp increase in theft at its stores. That has resulted in lost revenue and the cost of moving items behind registers and locking other items behind protective barriers. Executives said that crime statistics will play a role when determining which stores will close.
Dollar Tree’s stock went into a spiral after it dropped 14% in a single day on March 13. It announced a $1.71 billion loss the previous month, accounting for about $7.85 for each of its stock shares.
The announcement comes in spite of Dollar Tree actually attracting more customers over the past year. In-store traffic has increased by 7.1% and sales increased by 6.3%. However, the average amount spent per customer dropped by about 0.7%. Most of those new customers came from higher-income families that earn over $125,000 per year. Much of its increase has been caused by record inflation that has left Americans struggling. It is still expected to earn just over $30 billion for the 2024 fiscal year.
The company hopes that the restructuring will allow it to offer assortments that are more relevant to its growing customer base. That could include the addition of 300 more products. However, it remains committed to maintaining its iconic $1.25 price for the bulk of its products.
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