Dollar Tree, Inc. (NASDAQ:DLTR) is down around 15% after it said it would be closing around 1,000 US stores as it suffered a surprise quarterly loss.
600 of its Family Dollar stores are expected to close in the first half of the year before a further 370 close in the latter six months, the group revealed on Wednesday.
This is expected to result in a reduction of around 12% of Family Dollar stores within the next three years.
Around 30 Dollar Tree stores are also scheduled to close in the medium term.
Dollar Tree purchased Family Dollar close to a decade ago for over US$8 billion after entering into a bidding war with rival Dollar General.
“This dramatic cull is the coup de grace 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 the three months to February, the budget retailer suffered a loss of US$1.7 billion, representing a loss per share of US$7.85, compared to 2023’s profit of US$2.04 per share.
Stripping out certain items including a US$1.07 billion goodwill impairment charge, earnings per share improved to US$2.55, however this remained short of Wall Street estimates of US$2.67.
Sales reached US$8.4 billion in the period, below the market consensus of US$8.6 billion, but ahead of 2023’s US$7.7 billion.