- cross-posted to:
- [email protected]
- cross-posted to:
- [email protected]
Family Dollar, the struggling discount chain that caters to low-income customers predominantly in cities, will close about 1,000 stores as inflation takes a bite out of consumers’ wallets and low-cost-retailers’ profits.
Family Dollar will close 600 locations in the first half of 2024 and 370 stores over the next several years as store leases expire.
Dollar Tree, which owns Family Dollar, also said it will close 30 stores as leases expire.
Dollar Tree bought Family Dollar in 2015 for $8.5 billion. The combined company hoped that by joining forces, it could grow its customer base, reduce costs and fend off bigger retailers like Dollar General and Walmart. But Dollar Tree has struggled to integrate Family Dollar.
Family Dollar is entirely owned by Dollar Tree, they are one entity. It’s just Dollar Tree and Dollar General now. These corporations have leeched off of small under served towns for a while now. Hopefully real competitors like Aldi can help. Another event added to the list of recession indicators. Small towns in America are disappearing.
The reasons they gave for closing stores was bullshit. The purchase of family dollar was a leveraged buyout.
https://www.macrotrends.net/stocks/charts/DLTR/dollar-tree/debt-equity-ratio
It’s the same old story. A company is sold under a leverage buyout. In order to service the debt the new owners shit on everything that made the old company successful. A few years later sales tank and profitability falls below their ability to repay the debt.
So they start cutting costs and liquidation assets to pay of the debt load. Eventually it ends in insolvency. The lenders and executive team make off with huge gains while the company and common stock holders get fucked.
As is tradition in late-stage capitalism.