Shoplifting is still a problem in Dollar Tree's Family Dollar stores, and it's set to be "worse than we had previously expected" in early 2024.
Thomson Reuters
Theft at some of Dollar Tree's stores is getting worse — even as other retailers appear to be making progress on the issue.
The problem is particularly pronounced at the chain's Family Dollar stores, executives said during an earnings call on Wednesday. CEO Richard Dreiling noted during the call that he had expected that the problem "would have moderated, if anything, by now, but it's continuing to accelerate."
Dollar Tree is closing about 1,000 Family Dollar stores, it also said Wednesday, a result of a review of the brand that has been months in the making. Theft was one of many factors that Dollar Tree considered when it decided which locations to close, the executives said.
"Rents, shrink, and a number of other exogenous factors have driven the stores to a point where, unfortunately, they're just operating at a very significant loss," CFO Jeffrey Davis said.
"Shrink" is a retail-industry term that refers to losses that stores take from theft, though it can also include other kinds of write-downs, from products that go bad on the shelf to missing inventory.
Theft was less of a problem at Dollar Tree-branded stores during the company's fourth quarter, which ended on February 4. But those stores are still "not immune to some of the issues we're having," Davis said during Wednesday's call.
Both chains are dollar stores, but the company positions each differently. Family Dollar stores focus more on food, cosmetics, and other consumable items, while shopping at Dollar Tree is meant to be a "treasure hunt" for durable goods, Dreiling said during an earnings call last year.
But across both chains, Dollar Tree expects shrink to be "meaningfully worse than we had previously expected" during the first half of its 2024 fiscal year, Davis said.
The increase in theft comes despite efforts to combat it. Last year, Dollar Tree locked some items up and put others behind checkouts to deter would-be shoplifters. The changes were part of what Dreiling called "a very defensive approach" to the problem during an earnings call last summer.
But other retailers appear to have gotten a better handle on theft. Target executives said earlier this month that they expect shrink losses to be flat this year compared with 2023, for instance. Meanwhile, mentions of the problem in other retailers' earnings calls have been scant in 2024 compared with last year.
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