By BRIAN PORTER | The Rocky Mountain Voice
Dollar Tree, Inc., [DLTR] dropped 15% in early trading Wednesday following news it would close nearly 1,000 stores, mostly within the lowest-performing Family Dollar franchise.
The company’s fourth quarter earnings report, released Wednesday, indicates that while Dollar Tree had net sales of plus-6.3% the Family Dollar brand had losses of minus-1.2%.
“We finished the year strong, with fourth quarter results reflecting positive traffic trends, market share gains and adjusted margin improvement across both segments,” said Chairman and CEO Rick Dreiling in a statement. “While we are still in the early stages of our transformation[al] journey, I am proud of what our team accomplished in 2023 and see a long runway of growth ahead of us.”
Still, about 600 Family Dollar stores are scheduled for closure in the first half of the 2024 fiscal year, and about 370 more as their leases expire. It remains unclear which store locations might be shuttered.
“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,” Dreiling said.
Those multi-price rollouts include $3 and $5 bins in 5,000 Dollar Tree stores, in addition to $3-$5 frozen and refrigerated items at more than 6,500 locations, the report reads.
“As an organization, we continue to execute at a high level.” said CFO Jeff Davis in a statement. “Our core operating performance was strong in the fourth quarter, despite some unanticipated developments related to general liability claims.”
The report indicates consolidated net sales improved by 8% to $30.6 billion in Fiscal Year 2023, but the adjusted operating income was a loss of 20% to $1.79 billion in the fiscal year.
As Family Dollar struggles, its primary competition Dollar General has boomed. It ranks as the fastest-growing retailer in the U.S. with a present inventory of about 18,000 stores. Dollar General’s prices on essentially the same goods are lower, and some customers have been lost to chains such as Walmart and Target.