Dollar Tree to close nearly 1K Family Dollar stores, increase prices

Dollar Tree announced on March 13 that 600 Family Dollar stores will close in the first half of 2024, while 370 Family Dollar and 30 Dollar Tree stores will close over the next several years at the end of each store’s current lease term. The closures comes after a “comprehensive store portfolio optimization review” conducted at the end of 2023 to evaluate current market conditions and individual store performance. 

Dollar Tree CEO Rick Dreiling said the company is putting “greater emphasis on Dollar Tree openings,” and that a “vast majority” of new store openings in 2024 will be Dollar Trees. 

The company’s consolidated net sales across all locations, subsidiaries included, was $30.6 billion, according to the statement. Dollar Tree also opened 641 new locations in 2023, while also introducing $3 and $5 dollar merchandise to about 5,000 stores, along with $3 to $5 refrigerated and frozen items to more than 6,500 Dollar Tree locations.

“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,” Dreiling said in the statement. 

In an earnings call the same day the closures were announced, Dollar Tree stated that hundreds of pieces of merchandise priced up to $7 will be sold at 3,000 stores nationwide. Dreiling noted in the call that “the vast majority of the items sold in Dollar Tree stores will remain at our entry-level fixed price point.” 

The CEO stated that “persistent inflation and reduced government benefits” have put pressure on lower-income consumers, which comprises “a sizeable portion” of Family Dollar’s customer base, causing them to “be very deliberate about their spending.” 

It is not immediately clear which, if any, San Antonio or other area stores will close. There are at least five Family Dollar stores in San Antonio, and more than 50 Dollar Tree locations across the city. 

The move follows a trend of raising Dollar Tree’s merchandise prices starting over the last few years. In 2021, the company raised its base price of items to $1.25. The company made a larger leap in June 2023 when Dollar Tree raised the price ceilings on its merchandise to $5.

On the March 13 earnings call, Dreiling stated that Dollar Tree is aiming to include merchandise priced up to $10, but that the company needs to observe the results of the recent price changes through 2025 first. 

Family Dollar was acquired by Dollar Tree in July 2015. 

When the companies merged in 2015, former Dollar Tree CEO Bob Sasser stated the move would ” extend [Dollar Tree’s] reach to low-income customers, while strengthening and diversifying our footprint. We plan to leverage best practices across both organizations to deliver significant cost synergies.”

This acquisition was expected to increase store productivity and to open more stores across multiple banners, Sasser said. The merger meant that there would be more than 13,600 stores, at the time of the acquisition, and would ideally target a broader range of customers. 

At the time of the merger, Dollar Tree was “the nation’s leading operator of fixed-price point stores,” while Family Dollar was considered “the nation’s leading operator of fixed-price point stores

Sasser retired from Dollar Tree after more than 20 years in 2022.