Dollar Tree reported a loss in the fourth quarter and plans to shutter nearly 1,000 stores following a decrease in the worth of a competitor it purchased almost a decade ago.
The company intends to close approximately 600 Family Dollar outlets within the first half of this year, along with 370 Family Dollar and 30 Dollar Tree stores over the coming years. The acquisition of Family Dollar for over $8 billion in 2015, amidst competition from Dollar General, has posed integration challenges for Dollar Tree.
Now, Dollar Tree is recording a $950 million impairment charge related to the Family Dollar brand, along with a $1.07 billion goodwill charge. This decision, alongside the allocation of more than $594 million for store closures and rebranding by Family Dollar, essentially nullifies profits from the recent holiday season.
Neil Saunders, managing director of GlobalData, described this move as the final blow in Dollar Tree’s troubled acquisition of Family Dollar, a deal that has continued to burden the company since its completion. He emphasized that nearly 12% of existing Family Dollar stores will close within the next three years.
Dollar Tree’s stock plummeted by 14% at the start of trading on Wednesday.
