Family Dollar might close stores as Dollar Tree, its parent company, reviews the brand

• Some Family Dollar stores could close, move, or rebrand under the Dollar Tree name.
• Dollar Tree, which owns Family Dollar, is planning to review stores that aren't meeting its expectations.
• Together, the two brands run about 16,600 stores.

There may soon be fewer Family Dollar stores around after the retailer's parent company takes a closer look at some of its locations.

Dollar Tree, which owns Family Dollar, is starting a review of stores that are not meeting its expectations, CEO Richard Dreiling said on an earnings call on Wednesday.

"This will involve, among other things, identifying stores as candidates for closure," Dreiling said, adding that other stores might be relocated or rebranded with the Dollar Tree name. Dollar Tree doesn't yet have a list of stores that it might close, rebrand, or move, he added later in the call.

"I am a strong believer in the Family Dollar brand and what it means to our customers and associates in thousands of communities across the country," Dreiling said. "Going forward, we need to ensure that the Family Dollar portfolio is well-positioned for success and meets the financial and operating objectives of our organization and the expectations of our valued customers and associates."

Dollar Tree acquired Family Dollar in 2015. The company operates a total of about 16,600 stores, which are divided about evenly between the two brands, the company said in its latest quarterly filing with the SEC.

Same-store sales at Dollar General rose 5.4% during the quarter. At Family Dollar, they rose 2%. Inflation, reduced government benefits compared to early in the pandemic, and consumers' depleted savings all weighed on the company's shoppers during the quarter, Dreiling said.

"Although our low prices enable us to operate from a position of strength in consumables, our lower-income customers at Family Dollar have been especially pressured by reductions in government SNAP benefits," he said.

Dreiling said that Dollar Tree and Family Dollar have "totally different" strategies for doing business.

Dollar Tree relies on "the thrill of the treasure hunt," with a great variety of non-food products, he said on the earnings call. Family Dollar, by contrast, focuses more on consumable products, such as groceries and health and beauty items. "There's an expectation of what has to be in that store, and it's got to be there every time I come in to get it," Dreiling said.

Both Dollar Tree and rival Dollar General have struggled with messy stores that employees say create hazardous environments for themselves and shoppers.

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