Dollar Tree Inc. (NASDAQ: DLTR), the major discount retail chain, delivered disappointing financial results on Wednesday that missed market expectations for the crucial holiday quarter. The company also outlined plans to shutter nearly 1,000 Family Dollar stores as it aims to revitalize the struggling business segment.
Like other dollar store operators, Dollar Tree has grappled with challenges as consumer spending patterns shift toward lower-margin essentials instead of higher-margin discretionary items. Intensifying competition from retail giants like Walmart and the emerging threat of Chinese e-commerce platforms like Temu have added further pressure.
“Our biggest issue currently is getting enough merchandise into stores quickly enough to meet consumer demand,” explained CEO Rick Dreiling, who cited the lingering impacts of macroeconomic uncertainties on Family Dollar’s performance.
To address its woes, Dollar Tree revealed it will close approximately 600 Family Dollar locations during the first half of fiscal 2024, followed by 370 more over the next few years. An additional 30 Dollar Tree outlets are slated for closure as leases expire. These moves follow a previously announced review of the Family Dollar business aimed at returning it to growth.
The closures and associated charges resulted in a $594.4 million charge related to portfolio optimization, a $1.07 billion goodwill impairment charge, and $950 million in other asset impairment charges for the recently ended quarter.
For the three months ending February 3rd, Dollar Tree reported a staggering net loss of $1.71 billion compared to a $452.2 million profit in the prior year period.
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