The chain courts low-income shoppers with an array of items sold for under $10 at its more than 8,000 stores. It is owned by the Dollar Tree, which operates an eponymous chain of 7,000 other stores in suburban areas. Dollar Tree stores cater to customers who make more than Family Dollar customers do, but all of their products sell for only $1.
“The underperformance at Family Dollar since the acquisition has persisted long enough,” Smith said.
Dollar Tree outlined an aggressive plan for Family Dollar on Wednesday after Family Dollar posted another quarter of sluggish growth during the holidays. Sales at Family Dollar stores open at least a year grew 1.4% during the holiday period compared a year earlier, trailing Dollar Tree’s 3.2% growth.
Family Dollar will close nearly 400 stores this year on top of the more than 120 it closed in 2018. It will also re-brand around 200 stores as Dollar Tree this year.
Other Family Dollars will keep the name, but will be stacked with $1 Dollar Tree merchandise and alcohol sections. Family Dollar says the new store model will lift traffic and sales, especially in areas where they have slumped.
“We are confident we are taking the appropriate steps to reposition our Family Dollar brand,” Dollar Tree CEO Gary Philbin said in a news release Wednesday. In the wake of Starboard’s criticism, Dollar Tree also will begin testing higher-priced products at its stores.
“The dollar store sector will remain one of the bright spots in retail,” said Mickey Chadha, analyst at Moody’s.
Discount competitor Dollar General has more than 15,000 stores across the country, and the company wants to expand even more in rural areas. Dollar General also has started to sell more groceries at its rural locations.
Source : CNN