Dollar Tree had a fourth quarter loss

DENVERPOST

NEGATIVE
Dollar Tree plans to close about 600 Family Dollar stores in the first half of this year and 370 Family Dollar and 30 Dollar Tree stores over the next several years.
Dollar Tree acquired Family Dollar for more than $8 billion in 2015 after a bidding war with rival Dollar General, but it has had difficulty absorbing the chain.
On Wednesday, Dollar Tree said that it would record a $950 million impairment against the trade name Family Dollar, on top of a $1.07 billion goodwill charge.
Family Dollar will spend more than $594 million closing or rebranding stores, essentially erasing profits from the holiday season.
“Basically, almost ten years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around,” Saunders said.
Saunders said in an emailed statement that nearly 12% of current Family Dollar stores will be closing over the next three years.
Shares of Dollar Tree tumbled more than 14% Wednesday.
Dollar Tree has been attracting consumers that have been stung by inflation as they seek to cut spending.
During the quarter, sales at Dollar Tree stores open at least a year climbed 6.3%, with traffic up 7.1%.
Dollar Tree expects first-quarter earnings of $1.33 to $1.48 per share on revenue in a range of $7.6 billion to $7.9 billion.

AP Business Writer Michelle Chapman wrote this.

After slashing the value of a rival chain it acquired nearly ten years ago, Dollar Tree unexpectedly posted a fourth-quarter loss and announced plans to close nearly 1,000 stores.

About 600 Family Dollar locations will close in the first half of this year, and over the following few years, Dollar Tree intends to close 30 Family Dollar locations in addition to 370 Family Dollar locations.

After a bidding war with rival Dollar General, Dollar Tree purchased Family Dollar for more than $8 billion in 2015, but it has struggled to absorb the chain.

Dollar Tree announced on Wednesday that, in addition to a $1.07 billion goodwill charge, it would record an impairment of $950 million against the trade name Family Dollar. Family Dollar plans to close or rebrand more than $594 million worth of locations, effectively wiping out its holiday season profits.

Managing director of GlobalData Neil Saunders stated, “This dramatic cull is the coup de grâce 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.”. According to Saunders, “basically, nearly ten years later, Dollar Tree is still sorting through the mess it inherited and hasn’t been able to completely turn around.”.

In a statement sent via email, Saunders stated that during the course of the next three years, about 12% of the Family Dollar locations will close.

Dollar Tree’s stock fell more than 14% on Wednesday.

For the three months that concluded in February. 3. Dollar Tree experienced a $1.71 billion loss, or $7.85 per share. In the previous year, the Chesapeake, Virginia-based company made $452,02 million, or $2,00 per share.

After deducting specific expenses, earnings came in at $2.55 per share, falling short of the $2.67 per share Wall Street was expecting, per a Zacks Investment Research survey.

Revenue increased to $8.64 billion from $7.72 billion, slightly less than Wall Street’s projected $8.67 billion.

Those who are trying to reduce their spending and have been hurt by inflation have been drawn to Dollar Tree. Sales at Dollar Tree locations open for at least a year increased by 6.3 percent during the quarter, while traffic increased by 7.1 percent. Even though more customers were visiting the stores, they were spending less money overall, as evidenced by the 0.7 percent decrease in average ticket.

Stores open for at least a year at Family Dollar saw a 1.2 percent decline in sales. Despite a 0.7 percent increase in traffic, the average ticket decreased.

Dollar Tree projects earnings per share for the 2024 fiscal year to range from $6.70 to $7.30. An estimated $31 billion to $32 billion in revenue is anticipated.

FactSet surveyed analysts, who projected $31.68 billion in revenue and $7.04 in earnings for the full year.

Based on revenue in the range of $7.6 billion to $7.9 billion, Dollar Tree projects first-quarter earnings per share of $1.33 to $1.48.

On $7.68 billion in revenue, Wall Street is expecting first-quarter earnings of $1.70.

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