Discount chain Family Dollar, which is owned by Dollar Tree, announced that it will be closing over 1,000 stores over the next several years. The chain’s more successful parent company also announced that it will be closing several locations by the end of the year.
“Persistent inflation and reduced government benefits continue to pressure the lower-income consumers that comprise a sizable portion of Family Dollar’s customer base,” CEO Rick Dreiling said Wednesday on a call with analysts.
In total, Family Dollar will be closing 600 locations in 2024 and 370 stores over the next several years as store leases expire. Family Dollar, which mainly caters to low income families in cities, has more than 8,000 U.S. stores. Dollar Tree also said it will be closing 30 locations as leases expire.
The chain has been hit particularly hard by a general consumer pullback caused by decades-high inflation. This has cut into Dollar General’s profits and made it more difficult to keep pace with competitors like Walmart, Dollar General, and others.
In addition, the chain has been affected by a reduction in benefits for the Supplemental Nutrition Assistance Program (SNAP). Executives have conceded that this has cut into their business.
In addition to overall economic downturn, Dollar General has suffered from mismanagement in recent years. The company was recently slapped with a $40 million fine due to a rat infestation at a warehouse that caused dozens of locations to temporarily close.
While discount retail had been doing reasonably well over the last decade, mainly after consumers hunkered down after the 2008 financial crisis, Dollar General missed out. It was purchased by the more successful Dollar Tree — which caters primarily to suburban markets — in 2015.
Shares of Dollar Tree sank more than 13 percent on Wednesday after news of the closures broke, plunging the stock to its lowest level this year.