Both Family Dollar and 99 Cents Only have been facing troubles due to inflation and shoplifting, but retail analysts believe that years of strategic mistakes and underinvestment have also contributed to their difficulties. Acquired by other companies, both brands have faltered under their new owners, causing Dollar Tree, which acquired Family Dollar, significant hassle.
Both companies said inflation and shoplifting have contributed to their troubles. While inflation has pressured the companies’ low-income customer base and shoplifting has squeezed their profits, those factors alone can’t explain their difficulties.
“They never had the right business model. They were never going to get there,” said David D’Arezzo, a former top executive at Dollar General and other retailers.Family Dollar will close 600 locations this year, and 370 stores over the next several years as store leases expire. These locations are unprofitable for the company, Dollar Tree CEO Rick Dreiling said on a call with analysts last month.But Family Dollar’s woes date back more than a decade.
But analysts say the match between the two different chains was a poor fit, and Dollar Tree has struggled to manage the larger Family Dollar store base. “Family Dollar’s sales have been sputtering, hurt by neglected stores, poor product selection and unhappy workers,” The Wall Street JournalA year later, an activist investor pushed for a sale of the “underperforming” Family Dollar business, and Family Dollar announced it would
The company has more than 370 stores in California, Nevada, Arizona and Texas — 265 of which are in California. It was taken private in 2011 in a $1.6 billion leveraged buyout, and the company took on even more debt in the following years to stay afloat.
Family Dollar 99 Cents Only Inflation Shoplifting Strategic Mistakes Underinvestment Dollar Tree Acquisition Retail
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