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Dollar Tree To Open 600 New Stores This Year; Beats Earnings Estimates But Misses on Revenue

During a time when many retail chains are shuttering locations, Dollar Tree is moving in the opposite direction.

Video source: YouTube, Dollar Tree Corporate

During a time when many retail chains are shuttering locations, Dollar Tree said it plans to open 600 new stores this year in response to continued demand for discount shopping amid the COVID-19 pandemic.

On Wednesday, the company said 400 of the new stores will be Dollar Tree stores, and 200 of the locations will be Family Dollar stores.

Several of the new Family Dollar stores, as well as 1,250 outlets the company plans to renovate, will follow a new format designed to cater to consumers who want to do all their shopping in one place.

To limit trips outside of their homes during the pandemic, many consumers have consolidated their shopping trips to a handful of stores, a trend that has benefited big box stores that sell a wide variety of products. 

Over the past year, discount stores have remained popular as cash-strapped shoppers seek out bargains on food, household essentials and other items, CNN reported.

Since 2019, Dollar Tree has opened 50 “combination stores,” which blend “Family Dollar’s great value and assortment with Dollar Tree’s ‘thrill of the hunt’ and fixed price point.” 

Dollar Tree president and chief executive officer Michael Witysnki said locations using the new format are delivering higher profit margins and the company is “thrilled” to expand it further.

Dollar Tree, which sells seasonal goods, home décor, party items, toys and kitchenware for $1, is geared towards suburban, middle-class shoppers. Family Dollar caters to lower-income customers in rural and urban areas and carries more food and household basics, selling most of its merchandise at various prices under $10.

The two chains combined have 15,700 locations in the US with 400 of these stores launched just in 2020. The company said it has identified over 3,000 locations to introduce its combination store format.

Witynski said, “We will continue to refine our strategic store formats so that we are able to better serve customers, while improving store productivity, margins and returns. We want formats that leverage the best of the Dollar Tree and Family Dollar brands to serve customers in all types of geographic markets. We believe we can continue to change, evolve and improve.”

Wednesday’s announcement came as Dollar Tree reported its results for the fourth quarter and fiscal year 2020. 

In the quarter ending Jan. 30, 2021, net sales rose 7.2% to $6.77 billion but missed analysts’ estimates of $6.79 billion. The company earned $503 million, or $2.13 per share, above the forecasted $2.11.

The company said it expected fiscal 2021 earnings to improve at both of its chains and boosted its stock repurchase plan by $2 billion.


Source: Equities News

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