Have recent controversies contributed to a permanent downturn in the discount retailer’s national business?
This article is based on corporate postings and accredited media reports. All linked information within this article is fully-attributed to the following outlets: BusinessInsider.com, Google.com, Digiday.com, GoBankingRates.com, Blog.Cheapism.com, BusinessWire.com, and DollarTreeInfo.com.
NewsBreak recently published two articles of mine related to the business of national discount retailer Family Dollar. The first, “Plans For Family Dollar Texas Closings in 2022,” elaborated upon recent company controversies and their impact on the state of Texas, which represents 13% of all Family Dollar locations in America at 1105 locations.
The issue, as explained in the article, regarded conflating Family Dollar closures from 2019 with temporary closures from earlier this year: In February, 2022, Business Insider was among many media outlets that reported the temporary closing of hundreds of Family Dollar Stores. See here for “Family Dollar is Temporarily Closing 404 Stores After More Than 1,000 Dead Rats Were Found in a Distribution Center,” which states: On February 18, the company issued a news release that listed the affected stores that may have sold products from the contaminated facility. The company said they were working with the US Food and Drug Administration (FDA) to begin a voluntary recall, as Insider previously reported.
84 stores had closed in 2019, with widely-publicized plans that year to renovate at least 1000 others. As also discussed in the article, the 2019 and 2022 plans were conflated online to the point where search engines such as Google.com represented widespread rumors that Family Dollar was going to permanently shutter.
My second NewsBreak article regarding Family Dollar business was entitled “Plans For Dollar Tree Closings in 2022.”
Dollar Tree purchased Family Dollar in 2015.
As excerpted from the article, via a link also attributed to Wikipedia: In June 2014, activist investor and major shareholder Carl Icahn demanded that Family Dollar be immediately put up for sale. On July 28, 2014, Dollar Tree announced that it would buy Family Dollar for $8.5 billion. The sale delivered a windfall to the company's biggest shareholder Carl Icahn, who acquired his 9.4 percent stake in June 2014. On January 22, 2015, Family Dollar shareholders approved the Dollar Tree bid.
Though I had addressed the umbrella company’s strong business, presently the Family Dollar brand appears to have become the more profitable entity.
Let us explore further.
A March, 2019 article from Digiday.com, titled “Why Dollar Tree Has Struggled to Grow Family Dollar,” addressed the crux of the issue: Family Dollar, the discount retail chain acquired by rival Dollar Tree four years ago, is struggling. The chain, which has more than 8,200 stores, delivered 1.4 percent growth in same-store sales during the fourth quarter compared to Dollar Tree’s 3.2 percent.
It should be noted this article was written prior to the advent of Covid-19, and the trend seems to have changed.
Dollar Tree addressed company performance for the end of fiscal 2020, reporting on the year’s final quarter via a BusinessWire.com press release: Consolidated net sales increased 7.2% to $6.77 billion from $6.32 billion in the prior year’s fourth quarter. Enterprise same-store sales increased 4.9% on a constant currency basis (or 5.0% when adjusted to include the impact of Canadian currency fluctuations). Same-store sales for Family Dollar increased 8.1%. Dollar Tree same-store sales increased 2.4%.
This trend has continued. See here for 2021 financials from DollarTreeInfo.com.
As to the quality and customer appeal of the two stores, GoBankingRates.com published “Which Is Better for Your Wallet: Dollar Tree or Family Dollar?” in February, 2022.
From the article: The blogger The Penny Hoarder did a price comparison in 2021 among Dollar Tree, Dollar General and Family Dollar, and found that Family Dollar came out on top for slightly lower prices for such categories as toilet paper, body wash, canned vegetables, pasta, laundry detergent, coffee and cereal. Brand-name items were slightly cheaper at Family Dollar as well.
In measures such as profitability and customer appeal, Family Dollar is engaged in healthy business.
For an overview of dollar stores in general, see here for Cheapism blog by Jason Notte, titled “26 Things You Didn’t Know About Dollar Stores.”
Family Dollar is not going out of business, either in Texas or nationally.
Family Tree, its owner, is not going out of business, either in Texas or nationally.
Once again, social media concerns have proven to be little more than rumor.
Thank you for reading.