Almost 200 previously closed 99 Cents Only stores will be reopened as Dollar Tree locations from Texas to California after leases were secured from bankruptcy proceedings.
The United States Bankruptcy Court for the District of Delaware approved the transfer of designation rights for 170 locations in several states along with some furniture, equipment, and fixtures included.
Chapter 11 Bankruptcy Filing
Back in April 99 Cents Only Stores had filed for Chapter 11 bankruptcy protection as it was selling off assets including inventory and store leases.
It announced last month that all 371 of its stores would be closing after 42 years of being in business as a bargain outlet.
Dollar Tree Benefit
Dollar Tree Inc. who are based out of Chesapeake Virginia posted a 2% increase in shares at the opening bell on Thursday.
This is a welcome boost for Dollar Tree after they posted an unexpected loss for Q4 of 2023 when they announced they would close almost 1,000 locations.
Hard Times for the Industry
The shift in consumer needs, inflation, and theft meant that 99 Cents Only had been finding staying afloat difficult for some time but they aren’t the only ones in the sector experiencing issues.
Most of the nearly 1,000 stores announced to be closing by Dollar Tree were ones they had acquired in an $8 billion bidding war a decade ago with competitor Dollar General.
Seizing an Opportunity
Michael Creedon, the CEO of Dollar Tree, explained the move in a release on Wednesday that the previous 99 Cents stores were in prime locations which are expected to experience growth in the future.
According to Creedon: “The portfolio complements our existing footprint and will provide us access to high-quality real estate assets in premium retail centers.”
Ambitions for the Future
Creedon’s goals for the future include wanting to “rapidly grow the Dollar Tree brand across the western United States, reaching even more customers and communities.”
It is expected that the newly acquired locations will open as early as this fall marking an ambitious move for expansion across the country.
Large Reach for Dollar Tree
Since February of 2024, Dollar Tree has already operated 16,774 locations all over North America in 48 states and Canada.
The Dollar Tree brand extends to Family Dollar and Dollar Tree Canada highlighting their reach across the market.
Cause for 99 Cents Only Closure
The then-interim CEO for 99 Cents Only Michael Simoncic stated back in April when the announcement was made to close its stores that this was “not the outcome we expected or hoped to achieve.”
In Simoncic’s statement, he assigned the cause of the closures to the “unprecedented impact of the COVID-19 pandemic, shifting consumer demand, and rising levels of shrink.”
History of 99 Cents Only
The brand opened its first stores in 1982 and was the employer of over 14,000 people at the time the closures were announced.
Simoncic was appreciative of “the dedicated employees, customers, partners, and communities who have collectively supported 99 Cents Only Stores for decades.”
Dollar Tree’s Shifting Prices
In March it was announced that Dollar Tree would see over 300 items across 3,000 stores have a price hike, increasing the price cap in the store to $7.
Last year in June 2023 a $5 price cap was reported and an increase from $1 to $1.25 back in 2021. The affected items in the latest price increase would mainly be food, pet, and personal care items.
Reasoning for Price Increases
Along with the expected reasons for the price hikes CEO of Dollar Tree Rick Dreiling explained that the new costs would factor in multi-price merchandise including $5 bags of dog food and $3 bags of candy.
These increases have been reported across 300 items in 3,000 stores as per a call in March which Dreiling was a part of.
Dollar Tree’s Expanding Demographics
Dreiling was able to report that the fastest-growing demographic for the company was those who earned a salary above $125,000.
An InMarket report posted a 4% average increase in visits to dollar stores by people who earned over $100,000 a year.
The expansion for Dollar Tree signals an ambitious plan to corner the market and seize the opportunity to find footholds in new locations across the country.
