(NEW YORK) — Doors are closing for 1,000 Dollar Tree and Family Dollar locations after the discount variety store chain announced an unexpected surprise fourth-quarter loss in its earnings report Wednesday.
Dollar Tree plans to shutter 600 Family Dollar stores in the first half of fiscal 2024. Over the next several years, the company intends to close 370 more Family Dollar locations, as well as 30 Dollar Tree stores.
At the opening bell Wednesday on Wall Street, Dollar Tree shares fell 14% in value on the news.
Dollar Tree acquired Family Dollar in 2015 for over $8 billion after a bidding war with Dollar General, but Wednesday’s earnings report signals difficulty in maintaining the value of both brands.
“As we look forward in 2024, we are accelerating our multi-price rollout at Dollar Tree and taking decisive action to improve profitability and unlock value at Family Dollar,” Rick Dreiling, Dollar Tree chairman and CEO, said in a press release Wednesday.
Dollar Tree announced it will record a $950 million impairment against Family Dollar’s trade name, in addition to a $1.07 billion goodwill charge.
Within the three-month review that ended Feb. 3, Dollar Tree lost $1.71 billion, or $7.85 per share. Last year, Dollar Tree earned $452.2 million, or $2.04 per share.
Dollar Tree revenue rose to $8.64 billion from $7.72 billion, which fell below the Wall Street estimate of $8.67 billion.
Also within the three-month review that ended Feb. 3, Dollar Tree opened 219 new stores, bringing full-year new store openings to 641.
“We finished the year strong, with fourth-quarter results reflecting positive traffic trends, market share gains, and adjusted margin improvement across both segments,” Dreiling said in the press release. “While we are still in the early stages of our transformation journey, I am proud of what our team accomplished in 2023 and see a long runway of growth ahead of us.”
Headquartered in Chesapeake, Virginia, Dollar Tree operates 16,774 stores throughout the 48 contiguous U.S. states and Canada, as of Feb. 3.
Popular for selling budget-friendly items, Dollar Tree has $3 and $5 center-store merchandise available at approximately 5,000 Dollar Tree stores and $3, $4, and $5 frozen and refrigerated items available at more than 6,500 Dollar Tree stores, according to the press release.
“As an organization, we continue to execute at a high level,” Jeff Davis, Dollar Tree Chief Financial Officer, added in the release, “Our core operating performance was strong in the fourth quarter, despite some unanticipated developments related to general liability claims.”
Copyright © 2024, ABC Audio. All rights reserved.
