Dollar Tree Shutters 600 Family Dollar Stores

Dollar Tree has announced that it will close 600 of its Family Dollar stores this year. In addition, 370 Family Dollar stores and 30 Dollar Trees will close over the next few years when their leases expire.

The entire reduction by the corporation will account for 15% of its shops. According to CBS News, despite the retailer’s low prices, inflation has reduced the purchasing power of its customer base, driving shoppers to seek the best value for their money.

In addition to inflationary pressures, an increase in stealing has harmed the company’s bottom line.

Dollar Tree has not provided a complete list of stores that will be shutting.

Meanwhile, Dollar Tree’s CEO announced that the company will raise its price cap to $7 due to an increase in shoppers earning more than $125,000 per year.

“This year, across 3,000 stores, we expect to expand our multi-price assortment by over 300 items at price points ranging from $1.50 to $7,” Dollar Tree CEO Rick Dreiling stated on the company’s fourth-quarter results call earlier this month.

The change comes three years after the company upped the base price of its items to $1.25, and only months after Dollar Tree announced a $5 limit in June, according to the New York Post.

Food and snacks, as well as pet and personal care products, will fall under the $7 price point.

Dollar Tree Raising Prices

Dollar Tree upped its price cap after noticing that more high-income customers were visiting its 16,700-plus stores across the United States while inflation raged.

“Dollar Tree added 3.4 million new customers in 2023, mostly from households earning over $125,000 per year,” Dreiling stated on the earnings call.

“The fastest-growing demographic is north of $125,000 a year in income,” he said. “It’s not like the Northeast is powerful and the West is weak. “That boat is lifting fairly evenly all the way up.”

Dollar Tree reported a net loss of $1.71 billion, or $7.85 per share, in the quarter ended February 3, compared to a profit of $452.2 million, or $2.04 per share, the previous year.

According to LSEG data, it forecasts 2024 sales of $31 billion to $32 billion, with the midpoint falling short of the estimated $31.65 billion.

“Dollar Tree added 3.4 million new customers in 2023, mostly from households earning over $125,000 per year,” stated Dollar Tree CEO Rick Dreiling during the company’s earnings call earlier this month. Dollar Tree Inc.

Following the losses, Dollar Tree announced plans to liquidate roughly 1,000 shops, including its eponymous general discount stores and sibling chain Family Dollar.

Family Dollar will eliminate 600 locations in the first half of 2024 and another 370 stores over the next few years as store leases expire, the business announced Friday.