Dollar Tree, which is also the parent company of Family Dollar, said it plans to close 1,000 locations shortly.
Among the closures, Dollar Tree said it plans to close 600 underperforming Family Dollar locations between now and June. An additional 370 Family Dollar and 30 Dollar Tree stores will close at the end of each store's current lease term.
Dollar Tree owns 16,000 stores, including 8,000 Dollar Tree branded locations and 7,500 Family Dollar locations
The announcement comes as Dollar Tree said its expenses at the end of 2023 were higher than expected.
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Going over its 2023 results with investors, Dollar Tree said its Family Dollar brand struggled. Its same-store net sales at Family Dollar were down 1.2% compared to the same quarter in 2022. Meanwhile, same-store net sales at Dollar Tree locations increased 6.3%.
"We took a thoughtful and deliberate approach to address underperforming stores by considering each individual store's performance, local operating environment, and our broader need for scale in operating efficiencies across the portfolio," said Bob LaFleur, Dollar Tree senior vice president of investor relations. "We believe rationalizing these unprofitable locations will help to unlock meaningful value at the enterprise level."
Dollar Tree to stock stores with more expensive items
Dollar Tree said most products will be sold at a $1.50 price point, but the company expects to sell more items at higher prices. LaFleur said stores will carry products that will cost as much as $7.
"This expanded assortment will offer Dollar Tree shoppers a wider range of choices across various categories, including food and snacks, beverages, pet care, personal care, and more," LaFleur said. "But even as our multi-price assortment expands over time, the vast majority of the items sold in Dollar Tree stores will remain at our entry-level ($1.50) fixed price point. Over time, you will also see us fully integrate multi-price merchandise more into our stores."
LaFleur provided examples of the type items customers will see in Dollar Tree stores.
"Our shoppers will find $5 bags of dog food next to our traditional $1.25 pet treats and toys," he said. "And our $3 bags of candy will be found in the candy aisle. This is the next exciting chapter of the Dollar Tree value story. New items, more choices and more savings."
Dollar Tree said it introduced the variable pricing at 5,000 locations in 2023 with plans to add the pricing strategy at 2,000 additional locations this year.
Dollar Tree said in future years, products could cost as much as $10, but the company is unsure when that could happen, as the combination of higher shrink — the industry term for losses incurred by theft and missing items — and inflation could keep that from happening in the near future.
