Dollar Tree Closes Nearly 1,000 Stores And Posts Surprise Loss

(CTN News) – Following the discount retailer’s decision to slash the value of its century-old rival chain, Dollar Tree found itself in a fourth-quarter loss and closing nearly 1,000 stores.

During the first half of this year, Dollar Tree plans to close approximately 600 Family Dollar stores, and over the next few years, 370 Family Dollar sites and 30 Dollar Tree sites will be closed.

A bidding war between Dollar General and Tree resulted in Dollar acquiring Family Dollar for more than $8 billion, but it has had trouble absorbing the chain.

In addition to a $1.07 billion goodwill charge, Tree said it would record a $950 million impairment against the trade name Family Dollar. During the holiday season, Family Dollar spent more than $594 million closing or rebranding stores.

Neil Saunders, managing director of GlobalData, wrote that this dramatic cull has been nothing but trouble since Dollar Tree acquired the Family Dollar chain in 2015. Essentially, almost ten years later, Tree is still sorting through the mess it inherited and hasn’t fully recovered,” Saunders said.

In an emailed statement, Saunders said nearly 12% of Family Dollar stores would close.

Wednesday morning, Dollar Tree shares fell 14%.

Dollar Tree’s shares lost $7.85 per share for the quarter ended Feb. 3. Dollar Tree lost $1.71 billion for the quarter ended Feb. 3. The Chesapeake, Virginia, company earned $452.2 million, or $2.04 per share, a year earlier.

Based on a Zacks Investment Research survey, earnings were $2.55 per share after removing certain items, but this is still below Wall Street expectations of $2.67 per share.

The company’s revenue rose to $8.64 billion from $7.72 billion, a bit below Wall Street’s estimate of $8.67 billion.

The Dollar Tree has been appealing to consumers as they seek to cut their spending as a result of inflation. It was reported in the third quarter of 2017 that Tree stores that had been open at least one year experienced an increase of 6.3% in sales while traffic increased by 7.1%. Despite this, shoppers were cautious with their spending as the average ticket decreased by 0.7%.

In Family Dollar stores open at least a year, sales dropped 1.2%. In spite of an increase in traffic of 0.7%, the average ticket dropped by 2%.

Dollar expects to earn between $6.70 and $7.30 per share during fiscal 2024. A range of $31 billion to $32 billion is expected in revenue.

According to FactSet, analysts expect earnings to be $7.04 on revenues of $31.68 billion for the full year.

Dollar Tree anticipates first-quarter earnings between $1.33 and $1.48 per share on revenues between $7.6 billion and $7.9 billion.

According to Wall Street analysts, the company is expected to earn $1.70 on $7.68 billion in revenue in the first quarter.

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