Discount store shoppers will have 970 fewer options

ConsumerAffairs

A major chain is closing stores in the wake of disappointing earnings

Even with inflation, dollar stores are having trouble attracting shoppers. Dollar Tree, which owns the Family Dollar chain, has announced it will close 970 Family Dollar stores after a disappointing fourth quarter.

Budget-conscious shoppers will still have plenty of options. Walmart has gotten more aggressive on prices and even Target has made a play for discount shoppers, launching its dealworthy discount brand.

In an earnings call with analysts, Family Dollar CEO Rick Dreiling said dollar stores, in general, are facing changing shopping habits, and Family Dollar is hampered by the macroeconomic environment.

“Our biggest problem right now is getting enough merchandise into the stores fast enough so the consumer can respond,” Dreiling said. 

Because of inflation, the company said consumers are focusing their spending on necessities and not discretionary items, which make up a significant portion of dollar store inventories.

The announcement follows a record fine

Less than a month ago Family Dollar and its parent company agreed to pay $41.675 million in connection with a rodant-infested product warehouse in West Memphis, Ark. Food, drugs and cosmetics were among the products held in unsanitary conditions.

The companies entered a guilty plea to criminal charges and as a result, received the largest fine in a food safety case.

The plea deal also requires Family Dollar and Dollar Tree to meet robust corporate compliance and reporting requirements for the next three years.

In February 2022 Family Dollar temporarily closed 404 stores served by the warehouse after the U.S. Food and Drug Administration (FDA) discovered the rodent infestation. It’s not clear whether those stores will be among those that will be closed. The company did not release a list of stores targeted for closing.

Company officials say they plan to shutter 600 Family Dollar stores in the first half of the fiscal year and close another 370 at a later time. They said they also plan to close 30 Dollar Tree locations when leases expire. There are currently 16,774 Family Dollar stores in the U.S.

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