Dollar Tree COO warns of dark days ahead after 1,000 closures & reveals three reasons customers aren’t shopping at chain

DOLLAR Tree’s Chief Operating Officer has uncovered three reasons customers have stopped shopping at the chain after recent struggles.

The retailer’s shares plummeted to a 52-week low on Tuesday and declined more than 20% on Wednesday.

Getty

Linkedin

Dollar Tree predicted sales will decrease by $1 billion this coming year.

This year’s annual sales are projected to be between $30.6 billion and $30.9 billion, down from last year’s $31 billion to $32 billion.

Chief Operating Officer Mike Creedon revealed three reasons customers have failed to shop at the chain.

“Dollar Tree has a broader customer base that includes more middle and upper-income households,” Creedon told NewsNation .

“Beginning this quarter, we started to see inflation, interest rates, and other macro pressures have a more pronounced impact on the buying behavior of these customers.”

This comes after Dollar Tree, the parent company of Family Dollar , said in March that it planned to close 1000 stores over the next several years.

Dollar Tree planned to close about 600 Family Dollar stores in the first half of this year.

And another 370 Family Dollar and 30 Dollar Tree stores were set to close their doors for good.

Dollar Tree, which focuses more on middle-income shoppers in the suburbs, bought Family Dollar in 2015 for $8.5 billion.

Before announcing the closings, the company said it was looking at strategic options, including a possible sale regarding the Family Dollar stores.

A press release by the company’s chairman and CEO, Rick Dreiling, detailed the closures at the time of the announcement.

He described it as a “very challenging macro environment” in a March earnings call.

“To this end, we have initiated a comprehensive review of our Family Dollar portfolio to address underperforming stores that are not aligned with our transformative vision for the company,” Dreiling added.

Dollar Tree attempts to entice customers with its low prices but competitors like Target and Walmart are also slashing theirs due to inflation .

At least 1,000 dollar stores to close, CEO says

Dollar Tree, the parent company of Family Dollar, revealed it would close around 1,000 stores in the coming years.

The company announced in March that it will shutter the stores after the discount retailer it acquired nearly a decade ago plummeted in value.

Dollar Tree plans to close about 600 Family Dollar stores in the first half of this year.

This will be followed by the shuttering of 370 Family Dollar and 30 Dollar Tree stores over the next several years.

The chain of discount variety stores has also indicated that sales are being affected by the cost-of-living crisis and inflation.

But USA Today added that Dollar Tree has also been rocked by reduced government benefits for the Supplemental Nutrition Assistance Program.

This has left families struggling to juggle finances, with as much as $250 less per month.

Because of the price cuts on items including groceries at Target and Walmart, shoppers are likely to purchase other products while there instead of stopping at the dollar store afterward.

“Dollar stores have lost market share to larger retailers that have broadened their offerings and gained customer loyalty through everyday low prices,” said Jharonne Martis, director of consumer research, analytics, and AI at LSEG, told NewsNation.

Meanwhile, Dollar Tree has also been affected by reduced government benefits for the Supplemental Nutrition Assistance Program, according to USA Today .

This has led families to struggle and have as much as $250 less per month.

Last year, the Department of Labor announced a corporate-wide settlement agreement with Dollar Tree and Family Dollar to address hazards at thousands of US stores.

This required the retailer to conduct a comprehensive, nationwide assessment of the root causes of violations.

The order was related to blocked exits, access to fire extinguishers and electrical panels, and improper material storage at stores nationwide, the department said.