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CHESAPEAKE, Va.— The Family Dollar discount chain said Wednesday that it will close around 1,000 stores. The announcement came as the chain’s parent company, Dollar Tree, announced its fourth-quarter fiscal results for 2023.
The chain said it will close 600 locations this year and 370 stores over the next several years as store leases expire. Family Dollar has around 8,000 U.S. stores. Dollar Tree also said it will close 30 stores as leases expire.
“Persistent inflation and reduced government benefits continue to pressure the lower-income consumers that comprise a sizable portion of Family Dollar’s” customer base, chairman and CEO Rick Dreiling said Wednesday on the earnings call with analysts.
Decades-high inflation has hit shoppers hard, and a general consumer pullback has impacted Family Dollar customers and the chain’s profits, impairing its battle with discount competitors such as Dollar General, Walmart and others.
“We finished the year strong, with fourth-quarter results reflecting positive traffic trends, market share gains, and adjusted margin improvement across both segments,” said Dreiling. “While we are still in the early stages of our transformation journey, I am proud of what our team accomplished in 2023 and see a long runway of growth ahead of us. As we look forward in 2024, we are accelerating our multi-price rollout at Dollar Tree and taking decisive action to improve profitability and unlock value at Family Dollar.”
Chief financial officer Jeff Davis added, “As an organization, we continue to execute at a high level. Our core operating performance was strong in the fourth quarter, despite some unanticipated developments related to general liability claims.”
Dollar Tree reported that its consolidated net sales increased 11.9% to $8.63 billion for the 14 weeks ended February 3. (Last year’s fourth quarter had 13 weeks. Enterprise same-store net sales increased 3.0%, driven by a 4.6% increase in traffic, partially offset by a 1.5% decline in average ticket. Dollar Tree same-store net sales increased 6.3%, driven by a 7.1% increase in traffic, partially offset by a 0.7% decline in average ticket. Family Dollar’s same-store net sales decreased 1.2%, driven by a 0.7% increase in traffic, partially offset by a 2.0% decline in the average ticket.
Dollar Tree reported a net loss of $1.71 billion for the quarter, and diluted loss per share was $7.85. On a non-GAAP basis, adjusted net income was $555.7 million and adjusted diluted EPS was $2.55. Adjusted diluted EPS reflects approximately $0.17 of net negative impact, primarily related to unfavorable development of general liability insurance claims.
For the full fiscal year, Dollar Tree reported that consolidated net sales increased 8.0% to $30.6 billion. Enterprise same-store net sales increased 4.6%. Dollar Tree same-store net sales increased 5.8%, driven by a 7.4% increase in traffic, partially offset by a 1.5% decline in average ticket. Family Dollar’s 3.2% same-store net sales increase was comprised of a 2.5% increase in traffic along with a 0.7% increase in average ticket. The company posted a net loss of $998.4 million and diluted loss per share was $4.55. On a non-GAAP basis, adjusted net income was $1.29 billion and adjusted diluted EPS was $5.89. Adjusted diluted EPS reflects approximately $0.24 of net negative impact, primarily related to unfavorable development of general liability claims.
Additional Business Highlights
- Opened 219 new stores in the fourth quarter, bringing full-year new store openings to 641
- $3 and $5 center-store merchandise was available at approximately 5,000 Dollar Tree stores
- $3, $4, and $5 frozen and refrigerated items were available at more than 6,500 Dollar Tree stores
- Net cash provided by operating activities increased $1.07 billion in fiscal year 2023
- Increased free cash flow by $217.2 million compared to FY 2022
