In the latest business cycle, Family Dollar and Dollar Tree Inc. (NASDAQ:DLTR) are setting plans in motion to close approximately 1,000 stores across the United States, resulting in a notable downward shift for Dollar Tree’s stock price.
On March 13, CNN reported that a slew of operational struggles over the years and a fresh $40 million penalty resulting from a rat-contaminated warehouse triggering extensive closures provoked the dramatic action. The prevailing issue of inflation, coupled with a decline in consumer spending, has dealt a severe blow to the discount store chain’s profits and capability to vie against competitors such as Dollar General and Walmart Inc. Following the announcement, shares of Dollar Tree tumbled more than 13%.
Family Dollar’s services are mainly directed toward low-income consumers in cities. It’s laying the groundwork to shut down 600 establishments this year and 370 locations in the years ahead as leases end. Dollar Tree is following suit, planning to close down 30 stores.
While the shutdowns are expected to increase the company’s profits, the closures have left a substantial gap in areas that depend on the low-cost shopping havens.
The retail discount sector has historically seen success, with corporations like Walmart and T.J. Maxx serving the needs of thrifty buyers. However, Family Dollar experienced setbacks in this competitive market, despite merging with Dollar Tree in 2015.
Have the unfolding events left investors unsettled, turning them toward other potential investment avenues, such as startup crowdfunding?
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This article Family Dollar And Dollar Tree Prepare To Shut Down Roughly 1,000 Stores: Evaluating The Market Impact And Potential Investment Alternatives originally appeared on Benzinga.com
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