Dollar Tree to close nearly 400 Family Dollar stores

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There are certain words that shoppers want to look for on packaging and if they have these words, they should avoid it, such as Triclosan. (Image courtesy of flickr.com)

Discount retailer Dollar Tree Inc. plans to close 390 Family Dollar locations after experiencing a disappointing year in 2018.

Four of the nearly four hundred Family Dollar locations closing their doors are in Montgomery County. Dollar Tree Inc. reported a net loss of $2.3 billion in the fourth quarter, with their stock taking a hit of $9.66/share. The fourth quarter was the worst in terms of economic loss but earnings for the whole year have taken a dive. During the most recent fiscal year, they reported a net loss $1.6 billion with stock prices dropping $6.66 per share.

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Dollar Tree Inc. purchased Family Dollar for $8.5 billion in 2015. Incorporating the Family Dollar stores into the Dollar Tree family did not go as well as expected. The normal closure rate for the brand is close to 75 stores annually, yet the company has opened hundreds of stores in recent years. “The Family Dollar acquisition has not been the success it was billed to be … Basically, Dollar Tree bought a business that was ill and is now having to pay to make it better,” GlobalData Retail Managing Director Neil Saunders told Retail Dive.

Executives at Dollar Tree disagree with the views of Director Neil Saunders. “Given the results we’re seeing from our store optimization initiative, we are confident that it will allow [us] to drive substantial improvement in the quality of performance of the Family Dollar portfolio,” CEO Gary Philbin said during a company conference call.

CEO Gary Philbin explained that the company will complete up to one thousand store renovations over the next fiscal year. Philbin expressed the store closures ahead are the result of under-performing stores along with a small list of other reasons. He explained how some stores are suffering from poor locations, unfavorable lease terms, poor business layouts, and some stores are simply too old.

Dollar Tree Inc. is also suffering for reasons beyond their control, new tariffs on Chinese goods. Dollar tree imports nearly half of its products, mostly from China. USA Today reported the new tariffs have affected roughly 10% of the stores inventory.

Dollar General, the company’s largest rival, is prospering and plans to open 1,000 new stores this year. Dollar General is taking advantage of the division of retail into upper and lower components as the income divide in the United States continues to grow wider.

To learn more about Dollar Tree Inc. click here.

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