Some Family Dollar stores closing
Others will be rebranded as Dollar Tree.
Dollar Tree is shaking things up. The discount retailer says that it will shutter as many as 390 Family Dollar stores this year, change the name of roughly 200 more, and will start testing charging more than a dollar in some of its namesake stores.
The string of announcements came as Dollar Tree reported its fourthquarter earnings.
The Chesapeake, Virginia-based Dollar Tree bought its rival Family Dollar for $9.2 billion in 2015. but the brand has been ailing. The final number of Family Dollar stores that will close depends on its parent company’s ability to get rent concessions from landlords, Dollar Tree said.
It already closed 84 underperforming Family Dollar stores in the fourth quarter, which was 37 more than it had planned to shutter last year.
It will also stamp its name on roughly 200 Family Dollar stores.
But Family Dollar is not the only company brand going through changes.
Dollar Tree CEO Gary Philbin also mentioned plans to test selling items that cost more than a buck at its namesake chain, a shift that’s reportedly been pushed by an activist investor.
Dollar Tree has tested the pricing change before, but Philbin shared no details about the locations where the test will be done, what the new prices specifically will be, or how many items or categories would be included.
Dollar Tree has traditionally used $1 as its cut-off price point, while Family Dollar sold not only $1 items but products that cost more.
John Zolidis, president of Quo Vadis Capital, said that because of its Family Dollar acquisition, Dollar Tree believes it now has the expertise to try to boost prices at its namesake stores.
But it’s a risky proposition. “The $1-only proposition is what makes people love Dollar Tree so much,” Zolidis said.