Dollar Tree posted quarter results that missed analysts’ expectations, and shares fell by up to 13 percent after a reported net loss. On Wednesday, Dollar Tree said it would close 1000 Family Dollar stores due to market conditions, of which 30 would be of the parent company. Dollar Tree reported a net loss of over $1.7 billion in its fourth-quarter report.
Dollar Tree has 16,774 stores under the Dollar Tree and Family Dollar brands. It will shutter 600 Family Dollar stores in the first half of 2024, 370 locations over the next several years, and 30 stores under the Dollar Tree brand in the same period.
Dollar stores have faced profitability issues after discretionary spending was cut down post-pandemic. Consumers are buying lower-margin goods, and spending has decreased. Consumers use their dollars for everyday essentials such as shaving blades, toothpaste, soaps, and groceries.
Dollar stores are also facing increased theft of every day and discretionary items. Dollar Tree said that “shrink” (the industrial term for theft and loss) is still “elevated” and will continue to lower the company’s profitability in the next few years.
Dollar Tree is not the only dollar store facing declines. Industrial rival Dollar General has also faced similar issues. According to Reuters and other outlets, Chinese e-commerce platform Temu also takes market share from dollar stores nationwide.
On Wednesday, Dollar Tree reported a net loss of $1.71 billion in its fourth quarter, compared with a $452.2 million profit a year ago. It also estimated sales in 2024 to be between $31 billion and $32 billion. This is less than the LSEG (formerly known as Refinitiv) estimate of $31.65 billion. Dollar Tree shares fell in Wednesday trading after the quarter results and the announcement of store closures.
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