Shoppers may have to try a little harder to find bargains at Dollar Tree — because there will be fewer Dollar Tree stores to find. The discount retailer said Wednesday that it plans to close almost 1,000 of its locations, after it lost $1.7 billion in its fourth quarter.
Dollar Tree stock fell sharply on the news, with shares down more than 14% in Wednesday morning trading. Along with the big quarterly loss, the company said it took on a $594 million charge in connection with its store portfolio review.
The Chesapeake, Virginia-based Dollar Tree said it will close 600 of its Family Dollar stores during the first half of the 2024 fiscal year. It plans to close roughly 370 more Family Dollar locations as their leases expire. And it plans to close 30 Dollar Tree stores over the next few years.
“Family Dollar is the victim of the macroenvironment,” Dollar Tree CEO Rick Dreiling said Wednesday during the company’s earnings call.
Dollar Tree said late last year that it would evaluate whether Family Dollar stores should be closed as the company looks to maximize growth. Executives said Wednesday that the store closures won’t be concentrated in particular regions. Once the closures begin, the company will “run a series of discounts to help move through the inventory,” said Jeff Davis, Dollar Tree’s chief financial officer.
The biggest problem the company now faces is getting inventory to its stores, Dreiling said, but lower freight costs will reduce the time it takes to transport products.
The company missed Wall Street’s expectations. Dollar Tree generated revenue of $8.6 billion, or earnings of about $2.55 per share during the fourth quarter. But it posted a net loss of $1.71 billion, about $7.85 per share.
For fiscal 2024, Dollar Tree said it is taking a cautious outlook as the retailer expects softer demand from low-income shoppers. Davis said that’s partly due to a reduction in government SNAP benefits. The government sponsored program is designed to aid food budgets for low-income families.
Dollar Tree expects low- to mid-single-digit growth between $7.6 billion to $7.9 billion, led primarily by sales from its Dollar Tree stores. It expects sales from Family Dollar to be flat, the company said during its earnings call.
Dollar Tree said last July that it would implement a “multi-price” strategy across 4,300 of its stores. The strategy, which the retailer said would hit shelves by the end of that year, looked to put higher prices on some new products.
Dreiling said Wednesday that the multi-price strategy has proven successful, given the variety of products shoppers can choose from.
The discount retailer’s efforts to meet consumers where they are is ongoing.
Earlier this month, Family Dollar said it would join the Ibotta Performance Network (IPN) in a bid to advance its digital engagement with customers. In February, Dollar Tree said it would expand the role of its chief operating officer to improve in-store experiences for shoppers. And in January, Dollar Tree and Family Dollar signed a multi-year partnership agreement with Legacy Motor Club to make the brands visible during the 2024 NASCAR season.