Dollar Tree Plans To Close 1,000 Stores After Taking $1.7B Loss

Dollar Tree Store
Dollar Tree Store In Valdosta, Georgia

Dollar store operator Dollar Tree reported a net loss of about $1.7B for the three months ended Feb. 3 and said that it will close about 1,000 stores, including about 600 of its Family Dollar locations, in the first half of this year.

Another 370 Family Dollar locations, plus about 30 Dollar Tree stores, will be shuttered as their leases expire in the coming years.

Despite $8.6B in net sales for the fourth quarter, up 11.9% year-over-year, the company was hit with goodwill and intangible asset impairment charges as it conducted a previously announced review of its portfolio, along with the cost of the review itself, which was about $594M, Motley Fool reports.

“Basically, almost ten years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around,” GlobalData Managing Director Neil Saunders wrote Wednesday, as reported by Axios.

Dollar Tree acquired Family Dollar in 2015 and owns about 8,400 Family Dollar locations. The company operates more than 16,700 stores of both brands in the U.S. and Canada.

The company has also taken heavy impairment charges.

Bloomberg Intelligence analysts Jennifer Bartashus and Jibril Lawal said the store closures were “a prudent decision, but echoes the move to close 400 stores in 2019.”

“Nearly $2 billion in assorted impairment charges suggests widespread efforts to improve operations have had mixed results and that the right formula remains elusive,” they said in a note.

Dollar Tree shares fell more than 14% on Wednesday morning. Compared with a year ago, its stock is down 10%.

In February, Dollar Tree entered a guilty plea to a misdemeanor count relating to a rodent infestation at one of its distribution centers in Arkansas, which it has since closed. Also last month, a class-action lawsuit was filed against the company, alleging that it sold adulterated over-the-counter medicines and personal care products.

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