• by Tanya Gazdik , March 13, 2024

Consumers trying to save a buck are about to take another hit. 

“Family Dollar, the struggling discount chain that caters to low-income customers predominantly in cities, said Wednesday it will close nearly 1,000 stores,” according to CNN. “Years of mismanagement and poor conditions in stores have hurt Family Dollar’s brand. Family Dollar, which is owned by Dollar Tree, was recently fined more than $40 million for a rat infestation at a warehouse that forced hundreds of stores to temporarily close.”

The company shuttered a Family Dollar distribution facility in Arkansas that had become infested with rats, triggering a massive recall in 2022. 

“The infestation led to the facility's closure and steep losses, though the company recently said it was cleaning up the site and reopening it,” according to Axios.

Dollar Tree acquired Family Dollar for more than $8 billion almost a decade ago after a bidding war with rival Dollar General.

”This dramatic cull is the coup de grâce in the rather botched acquisition of the Family Dollar chain, which has caused Dollar Tree nothing but hassle since it was completed back in 2015," Neil Saunders, managing director of GlobalData, said in a note according to CBS News. 

A list of locations that are closing has not been released. There are currently 8,415 Dollar Tree and 8,359 Family Dollar stores, according to company documents filed with the SEC.

“Dollar Tree has been attracting consumers that have been stung by inflation as they seek to cut spending,” according toThe Guardian. “During the quarter, sales at Dollar Tree stores open at least a year climbed 6.3%, with traffic up 7.1%. While more shoppers were heading to stores, they were closely watching how much they spent, with average ticket down 0.7%. At Family Dollar, sales at stores open at least a year slipped 1.2%. Traffic edged up 0.7%, but average ticket fell 2%.”

The reduction in benefits for the Supplemental Nutrition Assistance Program (SNAP) has left struggling families with as much as $250 less per month. 

“Discount stores and consumer goods companies say they have felt the impact of that loss,” according to CNN.