Family Dollar closing 390 locations

In a disturbing trend of nationwide business closings that could have local effects, discount store Family Dollar announced it will be closing nearly 400 stores. In a list of upcoming changes announced in the company's fourth-quarter report, Dollar Tree Inc., which bought out the Family Dollar business in 2015, announced it will close 390 Family Dollar stores over the next year. Another 200 stores will be rebannered as Dollar Tree stores, while the remaining stores will adopt a new model, begin selling "adult beverages" and/or receive an upgraded and expanded freezer/refrigeration sections. Family Dollar sells a wide of items for less than $10 at rural and urban locations, including the one at 109 Whittlesey Ave. in Norwalk and one at 6339 Ohio 113 in Bellevue. There is also a Family Dollar location in Huron and two in Sandusky.Norwalk also has a Dollar Tree location at 101 Plank Road.The local Family Dollar store said it hadn't received official word from the company announcing the closings — employees received the news via the media — but said the company hadn't announced which of the stores would be closed yet. Management said employees weren't able to comment further. The Norwalk store currently employs four people.In the quarterly report, the company announced a "2019 store optimization program" where it listed four major changes comping to the industry:• After continued development, experimentation and testing, the company (will) roll out a new model for both new and renovated Family Dollar stores internally known as H2. This new H2 model has significantly improved merchandise offerings, including Dollar Tree's $1 merchandise, throughout the store. H2 has produced increased traffic and provided an average comparable store sales lift in excess of 10 percent over (stores that didn't house H2). H2 performs well in a variety of locations, and especially in locations where Family Dollar has in the past been the most challenged. The company plans to renovate at least 1,000 of these stores this year and will pursue an accelerated renovation schedule in future years.• The company closed 84 under-performing stores in the fourth quarter — closing 37 more than originally planned for the year. In fiscal year 2019, the company is seeking to obtain material rent concessions from landlords on under-performing stores. Without such concessions, the company expects to accelerate its pace of store closings to as many as 390 stores in fiscal 2019 (compared to the banner's normal annual closing cadence of about 75 stores).• The company plans to re-banner nearly 200 Family Dollar stores to the Dollar Tree name in 2019.• Additionally, the company plans to install adult beverages in nearly 1,000 stores and expand freezers and coolers in about 400 stores.The report said these changes in the store optimization program alone are expected to lift store sales by 1.5 percent once implemented, which is expected to happen by the end of fiscal year 2019.Over the next year, however, the company also expects to open 350 new Dollar Tree and 200 new Family Dollar stores.The report described the Dollar Tree banner as "one of the most unique, differentiated and defensible brand concepts in all of value retail.""The one-dollar fixed-price point has been a critical element of Dollar Tree's success, generating deep customer loyalty and strong historical performance," the report added. "While the company will not undermine this important value proposition for customers, testing new initiatives is an essential component of the company's ability to evolve and provide the best customer experience, including multi-price point testing, which has been done on prior occasions."The company announced this after shareholders recently increased pressure for the stores to increase its $1 prices throughout the store. Tariffs to blame?The changes don't come after a weak quarter for the company, according to president and chief executive officer Gary Philbin, who rather said that sales were "strong." "Our results demonstrate the increasing strength of the Dollar Tree brand and accelerated progress on the Family Dollar turnaround, as Family Dollar delivered its strongest quarterly same-store sales growth of the year," he said.Philbin noted the recently imposed tariff war has taken a toll on the industry."We are confident in our progress and we have good momentum. Our merchants at both banners have delivered a 2019 plan that we believe overcomes most of the effect of tariffs at the 25-percent level and provides opportunity for margin improvements if tariffs are not increased," he said."We moved aggressively in the fourth quarter to optimize Family Dollar's performance, including closing 84 stores and announcing plans to renovate at least 1,000 stores in 2019. The renovated stores will include new $1 Dollar Tree merchandise sections."Our Dollar Tree business has continued to perform extremely well. It's a concept our customers love, as validated by our streak of 44 consecutive quarters of comp sales growth. We are confident we are taking the appropriate steps to reposition our Family Dollar brand. ... We believe we are well-positioned to capture the significant opportunity ahead of us as we focus on creating and driving value for our shareholders."Family Dollar announced it will be closing nearly 400 stores this year. Another 200 will be turned into Dollar Tree stores.Family Dollar announced it will be closing nearly 400 stores this year. Another 200 will be turned into Dollar Tree stores.Family Dollar announced it will be closing nearly 400 stores this year. Another 200 will be turned into Dollar Tree stores.