Ross Taylor/Associated Press
Years of mismanagement and poor store conditions have tarnished Family Dollar's brand.
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CNN
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Family Dollar, an ailing discount chain that primarily caters to low-income customers in urban areas, will close about 1,000 stores.
Family Dollar will close 600 stores this year and 370 over the next few years as store leases expire. Family Dollar has approximately 8,000 stores in the United States.
Dollar Tree, which owns Family Dollar, also announced that it would close 30 stores when their leases expire.
Years of mismanagement and poor store conditions have tarnished Family Dollar's brand. The company has struggled as discount competitors such as Dollar General and Walmart have grown. More recently, inflation has hurt Family Dollar's customers and the chain's profits.
“Continuing inflation and reductions in government benefits have resulted in low-income consumers, who make up a significant portion of Family Dollar's customer base,” CEO Rick Dreyling said Wednesday on a conference call with analysts. continues to be under pressure.”
The closure will improve the company's profitability. But it will likely leave a void for Americans who already have limited shopping options. Family Dollar stores are often located in areas with few supermarkets, big box stores, or other retail stores.
Dollar Tree stock fell more than 13% in early trading Wednesday, its lowest level this year.
Stores that are understaffed and dangerous
Dollar Tree, which focuses on middle-income suburban shoppers, acquired Family Dollar in 2015 for $8.5 billion.
The combined company had hoped that the partnership would allow it to expand its customer base, cut costs and fend off large retailers like Dollar General, which have stores primarily in rural areas.
But Dollar Tree has struggled to integrate with Family Dollar, closing hundreds of Family Dollar stores in recent years.
Analysts said conditions at Family Dollar stores were worse than Dollar Tree expected when it acquired the business. Although Family Dollar has renovated thousands of stores in recent years, many remain poorly maintained. Stores are often understaffed and boxes are blocking aisles.
Discount stores like Family Dollar, Dollar Tree, and Dollar General have long had a theft problem, operate their stores with only a few employees, and are sometimes the victims of violent robberies and other crimes. Sometimes.
Dollar Tree employees have complained about unsafe working conditions, and OSHA last year accused the company of “continuing disregard for human safety” and “shows that the company believes profits are more important than people.” “It suggests that.”
Family Dollar violated product safety standards earlier this year after selling products that had been stored in a rat-infested West Memphis warehouse filled with live, dead and rotting rodents. He was hit with record fines.
The Justice Department said the $41.6 million fine was “the largest criminal penalty in history in a food safety case.”
Last year, Dollar Tree announced it would review its entire portfolio of Family Dollar stores to identify underperforming stores.
While Family Dollar struggled, rival Dollar General grew rapidly. Dollar General opens approximately 1,000 stores a year, making it the fastest-growing retailer in the United States. The company has approximately 18,000 stores.
