Dollar Tree to close around 1K Family Dollar stores.
600 of its Family Dollar stores to close in first half of 2024.
Dollar Tree announced on Wednesday that it plans to close nearly 1,000 U.S. stores in its portfolio after suffering a significant quarterly loss.
As part of its portfolio optimization, initially announced late last year, the company will close 600 of its Family Dollar stores in the first half of 2024. An additional 370 Family Dollar stores and 30 Dollar Tree stores will close over the next several years once their leases expire, the company said in its fourth-quarter earnings report.
The company incurred $594.4 million in charges in connection with the store portfolio review.
Dollar Tree CEO Rick Dreiling said during an earnings call in December that its Family Dollar stores had softer same-store sales due to unexpected costs from a recall of various over-the-counter drugs and medical devices in nearly two dozen states last fall.
"To this end, we have initiated a comprehensive review of our Family Dollar portfolio to address underperforming stores that are not aligned with our transformative vision for the company," Dreiling told analysts on the call.
This included identifying stores for potential closure, re-bannering or relocation as the company worked to ensure "that each asset under the Family Dollar banner is delivering its full value" for shareholders, Dreiling said.
The company incurred a net loss of $1.71 billion, or $7.85 per share, in the quarter ended Feb. 3. It was an about-face from a year ago when the company reported a profit of $452.2 million.
Dollar Tree reported $2.55 per share on an adjusted basis, below Wall Street's $2.65 a share consensus. Its net sales of $8.63 billion were slightly shy of analysts' estimate of $8.67 billion.
CFO Jeff Davis said in Wednesday's earnings release that the company is "making solid progress on our key growth initiatives" and that he is "encouraged by the early results of our business transformation efforts."
The company expects sales for the year to range between $31 billion and $32 billion.
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