Popular discount retailer Dollar Tree, who also owns Family Dollar, plans to close 1,000 stores this year.
The news comes after Dollar Tree experienced a surprising fourth-quarter loss.
Dollar Tree Acquire Family Dollar
Dollar Tree bought its long-term rival, Family Dollar, for over $8 billion nearly a decade ago.
However, since the 2015 acquisition, the discount retailer has found it challenging to fully absorb the chain.
Budget Retailer Plans to Close Over 1,000 Stores
In the wake of the quarterly losses, Dollar Tree announced its plans to close over 600 Family Dollar stores this year.
They will close a further 370 stores alongside 30 Dollar Tree stores over the next few years.
Dollar Tree Spokesperson Explains the Situation
A spokesperson for Dollar Tree explained the decision to close the stores in a statement to CBC News.
According to the spokesperson, the decision comes after a review “to identify and address underperforming stores and invest in improved store standards and growth.”
Dollar Tree’s Plans Going Forward
In a statement, Dollar Tree announced it will implement a $950 million impairment against the Family Dollar brand and a $1.07 billion goodwill charge.
It was also announced that Family Dollar would spend nearly $600 million on rebranding or closing stores.
Botched Takeover of Family Dollar
Neil Saunders, the managing director of GlobalData, shared his thoughts on the recent news.
“This dramatic cull is the coup de grâce in the rather botched acquisition of the Family Dollar chain, which has caused Dollar Tree nothing but hassle since it was completed back in 2015,” wrote Saunders.
Dollar Tree Continues to Sift Through the Mess
Saunders explained that Dollar Tree has struggled with the mess left behind in the wake of its aquistation of Family Dollar nearly ten years ago.
“Basically, almost ten years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around,” he said.
Over 10% of Family Dollar Stores Set to Close
With around 8,000 stores in the States, Family Dollar is set to close to 1,000 locations in the coming years.
According to an emailed statement from Saunders, the budget retailer will lose around 12% of its stores over the next few years.
Dollar Tree Shares Drop
The share price of Dollar Tree dropped by nearly 15% after the news of the forthcoming store closures.
During the quarterly period that ended at the beginning of February, the company lost an estimated $1.71 billion, per CBC.
Tulsa City Councilor Happy With the News
While frequent visitors of Family Dollar stores may be upset with the news, Tulsa city councilor Vanessa Hall-Harper is happy with it.
“For communities that have been negatively impacted by the proliferation of dollar stores, it’s a great thing,” she told CNN. “I’ve been waiting on this announcement for a long time.”
Dollar Stores Force Small Grocers to Close
According to Hall-Harper, the expansion of budget retailers, including Family Dollar, has forced many locally-owned groceries to close.
“When dollar stores proliferate, it causes grocers to go out of business,” she said.
Dollar Tree Determined to Bounce Back
Dollar Tree experienced an increase in both store openings and customer traffic last year, which portrays a promising future for the budget retailer.
The closures of the acquired Family Dollar may only further increase their profitability in the coming years as they attempt to clean up the mess they inherited over a decade ago.
