Up to 390 Family Dollar stores to close

NEW YORK — Dollar Tree Inc. is closing up to 390 Family Dollar stores this year and rebranding about 200 others under the Dollar Tree name.

The company also slashed the value of its Family Dollar chain, booking a $2.73 billion charge in its fiscal fourth quarter. That led to a massive loss in the latest fiscal fourth quarter. The company closed 84 Family Dollar stores in the fourth quarter, 37 more than originally planned. The company has said that it will renovate at least 1,000 stores this year. It also said it’s open to testing again new prices at Dollar Tree, where most items are priced at $1. Family Dollar sells most items for under $10.

Dollar Tree Inc., based in Chesapeake, Va., acquired Family Dollar in 2015 for almost $9 billion. The move was expected to bolster its business and better compete with chains like Walmart and rival Dollar General Corp. But Family Dollar, hurt by unkempt stores and uninspiring assortments, has struggled and pulled down the parent company’s earnings. And the company is under a lot of pressure from activist shareholder Starboard Value Hedge Fund to sell Family Dollar or expand prices at its Dollar Tree stores.

In the latest fourth quarter, Family Dollar reported a 1.4 percent increase in sales at stores opened at least a year. Meanwhile, Dollar Tree had a 3.2 percent increase for that figure.

While prices are lower at Dollar Tree, Neil Saunders, managing director of GlobalData Retail, noted that Family Dollar has a more urban customer who has a lower income than the average Dollar Tree shopper. “Dollar Tree has a much broader customer base, which includes more affluent shoppers,” he wrote.

ROGELIO V. SOLIS/AP 2014 Dollar Tree is closing hundreds of Family Dollar stores and rebranding about 200 others under the Dollar Tree name.