Dollar Tree, who purchased Family Dollar in 2015, has decided to sell alcohol at approximately 1,000 of their Family Dollar stores. The goal of this addition is to ease the financial struggles that the chain has been facing for in recent years.
They have additionally announced plans to close around 400 Family Dollar stores later this year. In a normal year, they close about 75 stores.
Dollar Tree acquired Family Dollar back in 2015, but this acquisition has slowly proven to be a financial mistake. With the disappointing numbers, the retailer is plans to renovate around 1,000 Family Dollar stores. They are even re-branding some of the Family Dollar stores to Dollar Tree brand.
“In our view, Family Dollar remains a drag on performance and its transformation will continue to absorb both management time and company capital for the remainder of this year and beyond,” GlobalData Retail managing director Neil Saunders wrote Thursday, “Fortunately, the steps being taken to improve performance at Family Dollar appear to be working.”
Dollar Tree will also be trying to test adding items that are over their customary $1 price as a hope to increase revenue. They will still have many $1 items available. “Our Family Dollar turnaround is gaining traction,” Dollar Tree CEO Gary Philbin said in a statement. “Our efforts to accelerate initiatives to optimize the real estate portfolio are making a difference as demonstrated by our improving same-store sales results.”
It will be interesting to see how the sale of alcohol changes the financial situation for Family Dollar and Dollar Tree. It seems like a good idea to bring in more diverse customers who will be willing to spend the money on alcoholic beverages.
We are curious to see how this relationship will progress in the future.
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