Family Dollar Parent Plans to Shutter Nearly 1,000 Stores

Dollar Tree says it plans to close nearly of its 1,000 Family Dollar locations.

The discount retailer announced the closures with its earnings report Wednesday (March 13), saying that a review of its properties had identified 600 for closure in the first half of its fiscal year, and another 370 that will close once their leases expire. Another 30 Dollar Tree stores will close, too, once their leases are up.

The company had revealed in November that it was beginning a review of Family Dollar to address underperforming stores.

“This will involve, among other things, identifying stores as candidates for closure, re-bannering or relocation with the goal of assuring that each asset under the Family Dollar banner is delivering its full value for our shareholders on a sustainable basis,” Dollar Tree CEO Rick Dreiling said at the time.

The new earnings report showed Dollar Tree’s sales up 6.3% for the quarter, while sales at Family Dollar were down 1.2%. The company is also facing nearly $2 billion in impairment charges.

As PYMNTS wrote last month, Dollar Tree has been one of the beneficiaries of a shift in consumer spending toward lower-priced goods and retailers, with higher-income and lower-income shoppers heading to its aisles.

“In the past year, we have added nearly 5 million new customers across both segments, with 2.6 million of these customers having a household income over $125,000,” Dreiling told analysts on a call last August.

The trading down trend might be lessening in some ways. Research from the January edition of PYMNTS Intelligence’s Consumer Inflation Sentiment series of reports, “Consumers Shop Secondhand Stores as Often as Other Retail,” showed that throughout last year, many budgeting behaviors tied to inflation became slightly less common.

For example, the share of consumers who said that they had reduced the quality of the items they purchased fell from 36% in December 2022 to 32.5% in December 2023, while the share cutting down on nonessential spending dropped from 65.1% to 61.6% during the same period.

“Yet over the year, consumers began shifting away from higher-priced retailers to more budget-friendly competitors more often,” PYMNTS wrote. “The share of consumers reporting that they had switched to cheaper merchants for retail products rose from 53.9% in December 2022 to 57.6% in December 2023.”