(RepublicanJournal.org) – Dollar Tree, which bought Family Dollar in 2015, might be suffering negative effects from the rapid growth. It announced major losses this last quarter, but its executives still feel hopeful that they’re moving in the right direction. They’re closing roughly 1,000 locations in an effort to rein in the damage.
Dollar Tree shared a press release on March 13 detailing the company’s quarterly financial statement. It notes that roughly 600 locations will be closing during the first half of fiscal 2024, and another 370 will be going as their leases expire. The company is reportedly letting go of the stores as part of its “portfolio optimization review” — which apparently is a fancy way of saying they’re cutting away dead weight in hopes of recovering.
The company reported an overall stock value loss of $7.85 per share, with the Family Dollar brand suffering the bulk of the damage. “Unanticipated” shrinkage resulting from “general liability claims” added to Dollar Tree’s issues, as did the repercussions of what has so far proven to be an unprofitable purchase.
The company’s figures include a $1.07 billion goodwill impairment charge, which means it bought Family Dollar at a price that exceeded market value, believing the investment would turn a worthwhile profit, only to see the value of that new asset continue to drop. A large goodwill impairment reduces a company’s net worth, so continued Family Dollar losses could potentially have a snowball effect on the overall value of the Dollar Tree brand.
The sacrifice of nearly 1,000 stores might look serious, but the company still has over 16,000 stores across the continental US and parts of Canada. Dollar Tree has been in business for nearly 70 years, starting in Norfolk, Virginia, in 1953 as a Ben Franklin variety store.
The company underwent a rebrand as K&K 5&10 before finally becoming Dollar Tree. It continues to promise its customers “amazing values” alongside “quality merchandise.”
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