Dollar Tree — parent company of Family Dollar — has announced plans to close almost 1,000 stores over the next several years. The first round of closures will take place in the first half of fiscal 2024, as the company will shutter 600 Family Dollar stores.
“During the fourth quarter of fiscal 2023, the company announced that it had initiated a comprehensive store portfolio optimization review which involved identifying stores for closure, relocation or re-bannering based on an evaluation of current market conditions and individual store performance, among other factors,” the company stated in a press release. “As a result of this review, we plan on closing approximately 600 Family Dollar stores in the first half of fiscal 2024. Additionally, approximately 370 Family Dollar and 30 Dollar Tree stores will close over the next several years at the end of each store’s current lease term.”
The announcement came as a part of Dollar Tree’s Q4 and fiscal 2023 results report, where the brand revealed a net loss of $1.71 billion for the fourth quarter, which ended Feb. 3.
Additionally, operating loss for the company in Q4 was $1.89 billion, and operating margin was -21.9%.
However, the company saw a 3% uptick for same-store sales throughout the two banners, including a return of 6.3% for Dollar Tree and decline of 1.2% at Family Dollar.
For the full year 2023, same store sales increased 4.6% overall, with Dollar Tree coming in at 5.8% and Family Dollar at 3.2%. While the Family Dollar brand continues to face setbacks, the Dollar Tree banner has seen promising results.
Other highlights include:
- The opening of 219 stores in the fourth quarter, bringing full-year new store openings to 641
- $3 and $5 center-store merchandise available at approximately 5,000 Dollar Tree stores
- $3, $4 and $5 frozen and refrigerated items available at more than 6,500 Dollar Tree stores
- Net cash provided by operating activities increased $1.07 billion in full year 2023
- Increased free cash flow by $217.2 million compared to full year 2022
“We finished the year strong, with fourth quarter results reflecting positive traffic trends, market share gains and adjusted margin improvement across both segments,” said Rick Dreiling, chairman and CEO. “While we are still in the early stages of our transformation journey, I am proud of what our team accomplished in 2023 and see a long runway of growth ahead of us. As we look forward in 2024, we are accelerating our multi-price rollout at Dollar Tree and taking decisive action to improve profitability and unlock value at Family Dollar.”
Consolidated net sales for full-year fiscal 2024 are expected to range from $31 billion to $32 billion. The company expects to deliver a low-to-mid-single digit comparable store net sales increase for the year, comprised of a mid-single-digit increase in the Dollar Tree segment and a low-single-digit increase in the Family Dollar segment.
“Our fiscal 2024 outlook reflects approximately $0.15 of EPS benefit from the anticipated Family Dollar store closures, mostly in the second half of the year as we close underperforming stores throughout the first half of fiscal 2024,” the press release continued.
The company expects that consolidated net sales for the first quarter will range from $7.6 billion to $7.9 billion, based on a low-to-mid-single digit increase in same-store sales for the enterprise and the Dollar Tree segment and approximately flat same-store sales growth for the Family Dollar segment.
“As an organization, we continue to execute at a high level. Our core operating performance was strong in the fourth quarter, despite some unanticipated developments related to general liability claims,” said chief financial officer Jeff Davis.
Dollar Tree/Family Dollar Merger
Dollar Tree completed the acquisition of Family Dollar in 2015. Through the acquisition, the company increased its operating footprint to 13,000 across 48 states and five Canadian provinces.
The $8.5 billion deal mandated that Family Dollar sell 330 of its stores to a private equity firm called Sycamore Partners within 150 days of closing the deal.
Cost-cutting measures implemented by Dollar Tree resulted in layoffs for some of the 1,300 workers at Family Dollar’s headquarters, with Dollar Tree attempting to cut annual expenses by $300 million in the three years following the deal.
Today, the company operates over 16,000 stores and employs more than 200,000 people, including employment at its 25 distribution centers.
