Dollar Tree, a discount retailer based in Chesapeake, VA, reported lower-than-expected sales and profit for the holiday quarter. The company also announced plans to close 970 Family Dollar stores as part of its efforts to improve the struggling business. According to Reuters, Dollar Tree recorded a loss of $1.71 billion for the quarter ending Feb. 3 compared to a profit of $452.2 million in the same period last year.
The stock price of Dollar Tree dropped by approximately 14% during early trading after it projected lower sales and profit for fiscal-year 2024 than anticipated.
As consumer spending shifts towards essential items with lower margins instead of discretionary goods with higher margins, dollar stores have faced challenges in recent years (Reuters). In addition, competition from major retailers like Walmart and online platforms such as Chinese e-commerce giant Temu has added further pressure on these discount retailers.
According to CEO Rick Dreiling’s statement quoted by Reuters,”Our main challenge currently is ensuring that we can stock our stores quickly enough so that consumers can respond.” He also mentioned that macroeconomic uncertainties continue to negatively impact Family Dollar’s performance.
With around 16,774 locations nationwide,Dollar Tree plans on closing approximately600Family Dollarestores withinthe first half offiscal-year2024and an additional370overa spanof severalyears.Additionally,the company will shut down30Dollar Treelocationsas their leases expire.This move is partof their strategyto revampthebusinessandimproveperformanceinthesecompetitive times.
