Dollar Tree is doing some pre-spring spring cleaning as a means of pruning one of its ailing branches. Last week, the discount chain announced its financial results for the fourth quarter and fiscal year 2018, in which it disclosed plans to close upwards of 390 Family Dollar stores and convert an additional 200 into conventional Dollar Tree stores.
“We moved aggressively in the fourth quarter to optimize Family Dollar’s performance, including closing 84 stores and announcing plans to renovate at least 1,000 stores in 2019,” President and CEO Gary Philbin said in a press release. “Approximately 200 Family Dollar stores will be re-bannered to Dollar Tree, and we plan to close as many as 390 Family Dollar stores this year.”
Dollar Tree first acquired Family Dollar three years ago in an attempt to gain a leg up over competitors like Dollar General and Walmart. But, according to The Wall Street Journal, Family Dollar never hit its stride. Instead, the chain was held back by “neglected stores, poor product selection, and unhappy workers,” leading activist investor Starboard Value LP to suggest Dollar Tree consider putting the underperforming chain on the market. The investor also advised Dollar Tree to raise its products’ price points to over $1.
“I know it’s worth more to us than we are getting credit for and quite frankly it’s not worth that much to anyone else,” Philbin said in an interview with WSJ following Dollar Tree's announcement last week. “We are the ones committed to fixing and growing it.”
In addition to its Family Dollar announcement, Dollar Tree also appointed Carrie A. Wheeler Independent Director of its board. According to a press release, Wheeler is a respected Wall Street leader with over 21 years of investment experience under her belt.
After pruning Family Dollar, will Dollar Tree blossom into a top competitor once more in the discount grocery space? Deli Market News will continue to keep you posted.