Dive Brief:
- Dollar Tree is laying off people in its corporate office in Chesapeake, Virginia, the company confirmed to sister site Retail Dive by email. Layoffs will occur via both restructuring and reductions, a spokesperson said.
- The downsizing is the result of a recently announced “store portfolio optimization,” per the spokesperson. Earlier this year, the company said it would close 1,000 stores in the coming years, including 600 of its Family Dollar locations during the first six months of this year.
- About 50 employees are affected, according to outside news reports; the company didn’t immediately confirm how many are impacted. They “have been offered support including severance pay, access to COBRA medical coverage, career resources and our Emotional Wellbeing Solutions,” the spokesperson said.
Dive Insight:
Dollar Tree has been working to overhaul its company structure, with more than a dozen corporate officers arriving less than two years ago. About a year ago, some 90 people were also laid off at the corporate headquarters.
The discounter posted revenue and comp gains last year, but swung to a $998 million net loss from net income of $1.62 billion the year before. Much of the problem is due to Family Dollar, whose lower-income customer base has been especially hard hit by higher prices. In November, the company said it was scrutinizing its underperforming Family Dollar business and warned it could close, rebanner or relocate many of those stores. As of Feb. 3, the company operates nearly 17,000 stores across 48 states and five Canadian provinces — about half of them Family Dollar stores.
Several analysts have hailed the plan, with GlobalData Managing Director Neil Saunders criticizing the company’s $8.5 billion takeover of its rival as a “rather botched acquisition ... which has caused Dollar Tree nothing but hassle since it was completed back in 2015.”
The concept of a “dollar store,” originally indicating that most — if not all — merchandise was priced at $1 or so, has taken a beating in the era of inflation. Dollar Tree recently said it would add $7 items to its “multiprice assortment.” Other retailers are touting lower prices, however. Target last week announced it would slash prices on thousands of products, for example.
