Family Dollar will close nearly 1,000 stores after declining sales, economic challenges, and operational struggles.
Its parent, Dollar Tree, said it’ll close roughly 600 stores this year and phase out an additional 370 when their leases expire.
The company said persistent inflation, increased incidents of theft, and extra benefits from the Supplemental Nutrition Assistance Program (SNAP) during the pandemic were hurting its business.
Rick Dreiling, CEO of Dollar Tree, said: “Family Dollar is a victim of the macro environment out there.”
The retail sector is navigating through turbulent times, yet Family Dollar’s difficulties appear more pronounced than those of its counterparts.
Despite a six percent increase in sales for Dollar Tree last year and Dollar General reporting slight sales growth and expansion, Family Dollar has been underperforming.
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The acquisition of Family Dollar by Dollar Tree in 2015 for $8.5 billion was initially seen as a potential turnaround opportunity for the struggling chain.
However, ongoing operational challenges have plagued the company, ranging from maintaining store cleanliness to stocking shelves.
The situation was further complicated last month when the US Justice Department fined Family Dollar more than $40 million for distributing products from a warehouse infested with rats.
Analysts point to Family Dollar’s acquisition and subsequent management as fraught with difficulties.
