Image source: familydollar.com
It seems that there is no business that is safe from economic inflation as American dollar store, Family Dollar, announces that it will be closing around 1,000 stores across the country.
Family Dollar is a chain of discount stores owned by Dollar Tree that has a combined total of around 16,700 locations across the United States. It is one of the most recognizable retail establishments in the country, so the announcement that it will be closing as many as 1,000 stores in the coming years comes as somewhat of a surprise.
Despite being such a recognized and powerful retail outlet, Family Dollar has stated that inflation is one of the major factors contributing to this decision, alongside issues such as increased store theft, inventory loss, and merger integration.
On Wednesday, a statement released by McDonald’s (MCD) also confirmed that customers are drawing back on their spending habits in 2024. According to McDonald’s, lower-income families are tightening their savings more than ever and choosing to buy from grocery stores and dining from home instead of eating out.
Although Family Dollar and Dollar Tree seem more or less the same, there are several differences between the two. Family Dollar is mostly located in urban areas and sells groceries, home décor, toys, and many other items at a variety of different price points.
On the other hand, Dollar Tree stores are predominantly situated in suburban areas and provide shoppers with an assortment of items that are for the most part all the same price. Dollar Tree is famous for selling the majority of its goods for $1.25, although they have also added some $3 and $5 goods in recent years.
Dollar Tree Inc. has found it hard to integrate Family Dollar into its fold ever since it succeeded in its stringent endeavor to acquire the rival company back in 2015. From that point on, it has struggled to improve the company’s operations and after attempts to boost store performance, in 2019 Dollar Tree instead decided to close around 600 Family Dollar stores.
With things once again continuing on a downward trajectory, it has been revealed that roughly another 600 Family Dollar stores will close at some point in the first half of this year, with a further 370 or so Family Dollar stores and 30 accompanying Dollar Tree stores also closing in the subsequent months and years.
Overall, many of these stores are performing under expectations and taking up too much time of district managers that could be better spent elsewhere. As a result, the Dollar Tree empire is set to miss out on roughly $730 million in annual revenue after the closures take place. With that said, the company is still projected to come out with around $31 billion to $32 billion in full-year sales.
In spite of the closure of so many Family Dollar stores, Dollar Tree Inc. will continue to open more stores under its Dollar Tree branch. Recently, the Dollar Tree brand has seen a significant boost in its reputation and customer base and has been increasing its product line and prices as a result.
This decision can be seen as a business move to make the Dollar Tree brand even more convenient and accessible to customers, with the ultimate goal being to grow it to a scale where it could reasonably compete with the big players, like Walmart and Amazon.com.
This strategy can also be seen as a reaction related to the over $2 billion that was lost in charges from a review of the company’s portfolio of stores, as well as the reported loss of around $1.7 billion this past financial quarter, compared to the $452.2 million profit from the same period the year before.
For this financial quarter so far and the rest of the fiscal year, earnings forecasts are expected to be less than what was predicted, despite overall sales rising by nearly 12%. As a consequence, shares of Dollar Tree have dropped by over 14% on Wednesday. This is a significant drop compared to the 1% drop experienced by discount retail rivals Dollar General and Five Below.
With 2024 quickly shaping up to be another crazy year and the end to economic inflation nowhere in sight, it will be interesting to see how Dollar Tree – and by extension, Family Dollar – copes with the situation and if closing 1,000 stores proves to be a shrewd business strategy moving forward.
Image source: familydollar.com
It seems that there is no business that is safe from economic inflation as American dollar store, Family Dollar, announces that it will be closing around 1,000 stores across the country.
Family Dollar is a chain of discount stores owned by Dollar Tree that has a combined total of around 16,700 locations across the United States. It is one of the most recognizable retail establishments in the country, so the announcement that it will be closing as many as 1,000 stores in the coming years comes as somewhat of a surprise.
Despite being such a recognized and powerful retail outlet, Family Dollar has stated that inflation is one of the major factors contributing to this decision, alongside issues such as increased store theft, inventory loss, and merger integration.
On Wednesday, a statement released by McDonald’s (MCD) also confirmed that customers are drawing back on their spending habits in 2024. According to McDonald’s, lower-income families are tightening their savings more than ever and choosing to buy from grocery stores and dining from home instead of eating out.
Although Family Dollar and Dollar Tree seem more or less the same, there are several differences between the two. Family Dollar is mostly located in urban areas and sells groceries, home décor, toys, and many other items at a variety of different price points.
On the other hand, Dollar Tree stores are predominantly situated in suburban areas and provide shoppers with an assortment of items that are for the most part all the same price. Dollar Tree is famous for selling the majority of its goods for $1.25, although they have also added some $3 and $5 goods in recent years.
Dollar Tree Inc. has found it hard to integrate Family Dollar into its fold ever since it succeeded in its stringent endeavor to acquire the rival company back in 2015. From that point on, it has struggled to improve the company’s operations and after attempts to boost store performance, in 2019 Dollar Tree instead decided to close around 600 Family Dollar stores.
With things once again continuing on a downward trajectory, it has been revealed that roughly another 600 Family Dollar stores will close at some point in the first half of this year, with a further 370 or so Family Dollar stores and 30 accompanying Dollar Tree stores also closing in the subsequent months and years.
Overall, many of these stores are performing under expectations and taking up too much time of district managers that could be better spent elsewhere. As a result, the Dollar Tree empire is set to miss out on roughly $730 million in annual revenue after the closures take place. With that said, the company is still projected to come out with around $31 billion to $32 billion in full-year sales.
In spite of the closure of so many Family Dollar stores, Dollar Tree Inc. will continue to open more stores under its Dollar Tree branch. Recently, the Dollar Tree brand has seen a significant boost in its reputation and customer base and has been increasing its product line and prices as a result.
This decision can be seen as a business move to make the Dollar Tree brand even more convenient and accessible to customers, with the ultimate goal being to grow it to a scale where it could reasonably compete with the big players, like Walmart and Amazon.com.
This strategy can also be seen as a reaction related to the over $2 billion that was lost in charges from a review of the company’s portfolio of stores, as well as the reported loss of around $1.7 billion this past financial quarter, compared to the $452.2 million profit from the same period the year before.
For this financial quarter so far and the rest of the fiscal year, earnings forecasts are expected to be less than what was predicted, despite overall sales rising by nearly 12%. As a consequence, shares of Dollar Tree have dropped by over 14% on Wednesday. This is a significant drop compared to the 1% drop experienced by discount retail rivals Dollar General and Five Below.
With 2024 quickly shaping up to be another crazy year and the end to economic inflation nowhere in sight, it will be interesting to see how Dollar Tree – and by extension, Family Dollar – copes with the situation and if closing 1,000 stores proves to be a shrewd business strategy moving forward.
