Discount retailer Dollar Tree plans to close as many as 390 Family Dollar stores and rebrand another 200 locations as it continues to overhaul its combined operations at 15,000 stores, the company announced Wednesday. Dollar Tree will also take 200 existing Family Dollar stores and re-banner them as Dollar Tree locations.
Dollar Tree bought Family Dollar in 2015 for $8.5 billion, hoping to grow its customer base, reduce costs and fend off bigger retailers like Dollar General and Walmart.
"Sales for the quarter were strong", Dollar Tree President and CEO Gary Philbin said in a statement. Dollar Tree lists 23 stores within 25 miles of Harrisburg, on its website.
The company also slashed the value of its struggling Family Dollar chain, booking a $2.73 billion charge in its fiscal fourth quarter.
The total number of stores closed may change depending on the Company's ability to achieve material rent concessions from landlords.
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Hedge fund investor Starboard Value LP in January urged Dollar Tree to explore all alternatives for its Family Dollar business, including a sale, after years of weakness that has hurt the company's overall profitability. Since that time, sales have struggled and Dollar Tree's stock price has dropped.
The exterior of a Family Dollar in Mansfield, Texas. "Our results demonstrate the increasing strength of the Dollar Tree brand, and accelerated progress on the Family Dollar turnaround, as Family Dollar delivered its strongest quarterly same-store sales growth of the year".
As of March 6, Dollar Tree's shares were up about 3 percent, The Street noted.
Dollar Tree is aiming to "optimize Family Dollar's performance" by closing stores and renovating others while "significantly" improving merchandise offerings.
The company had 15,237 stores in 48 states and in five Canadian provinces as of February 2, 2019, according to a report from The Associated Press. The company hasn't announced which stores will close.