The Family Dollar across from Clayton County International Park on Ga. 138 is one of the retail chain’s newest stores. The company, which operates about 20 locations in the county, announced Thursday that it will close 370 stores across the nation because of poor financial performance. (Staff Photo: Curt Yeomans)
MATTHEWS, NC — The largest operator of “dollar stores” in Clayton County announced plans to close hundreds of locations because of poor performance across the nationwide chain, company officials announced Thursday, but it is unclear how it will impact local stores.
Family Dollar officials said the company’s second quarter performance was $200 million short of projections and 370 of its more than 8,100 stores across the country will be closed as a result. The under performance resulted in stock earnings that were down $0.40 from a year ago, according to Family Dollar.
The company did not announce which stores will be closed, but it did say they will be “under-performing” locations.
“Our second quarter results did not meet our expectations,” said Family Dollar CEO Howard R. Levine. “The 2013 holiday season was challenged by a more promotional competitive environment and a more financially constrained consumer.
“In addition, like many retailers, our second quarter results were significantly impacted by severe winter weather, which resulted in numerous store closings, disrupted merchandise deliveries and higher than expected utility and store maintenance expenses,” Levine added.
The three largest “dollar store” chains — Family Dollar, Dollar General and Dollar Tree — operate about 41 stores in Clayton County, according to their respective websites. About half of them are Family Dollars. While that makes it the largest purveyor of such stores in the county, Dollar General has more stores nationwide.
The store closures are expected to produce as much as $95 million in short term expenses, otherwise known as “restructuring charges,” stemming from the shutting down of operations and laying off of employees, company officials said. Long term, however, the company expects to see better profits as a result of the changes.
“Once complete, our workforce reduction efforts and store closures are expected to result in $40 million to $45 million of annualized operating profit benefit, beginning in the third quarter of fiscal 2014,” said Levine.
But while Family Dollar will close stores, it will also continue with plans to open new locations in fiscal year 2015 — albeit at a slower pace than what was seen in fiscal year 2014, officials said. As many as 400 new stores will open next year, compared to 525 new locations this year.
The company also announced plans to cut prices on nearly 1,000 “basic” items in its stores. Other announced cost-cutting efforts will include re-organizing key functions and reducing overhead at the corporate level.