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‘Change’ is the buzzword in the dollar-store realm.
Dollar Tree is expanding its footprint in the Western United States by acquiring designation rights for 170 leases of bankrupt 99 Cents Only Stores across Arizona, California, Nevada, and Texas. This acquisition includes the North American intellectual property of the retailer and select on-site furniture, fixtures, and equipment. The former 99 Cents Only locations will be reopened as Dollar Tree stores as early as this fall.
The deal was completed via two transactions in May, approved by the United States Bankruptcy Court for the District of Delaware.
In April, California-based 99 Cents Only Stores filed for Chapter 11 bankruptcy and initiated a process to dispose of its assets, including 371 stores in California, Texas, Arizona, and Nevada.This closure came a week after Bloomberg reported that the retailer was considering a bankruptcy filing amid a liquidity shortfall.
In addition to acquiring the 170 leases from 99 Cents Only, the company has acquired leases for other former 99 Cents Only Stores across Arizona, California, Nevada, and Texas.
Ollie’s Bargain Outlet is also expanding through a bankruptcy auction, acquiring 11 former 99 Cents Only Stores locations. The $14.6 million cash deal was finalized nearly two months after 99 Cents Only filed for bankruptcy. The acquisition includes three owned properties and eight leased properties located in key markets across Texas.
Ollie’s aims to maintain its target of 50 new stores, minus two planned closures, for fiscal 2024, and is evaluating the impact on its new store opening cadence this year. Ollie’s currently operates 516 stores in 30 states, selling closeout merchandise and excess inventory across various departments.
Dollar Tree recently announced significant corporate restructuring and consolidation efforts, including the layoff of 54 corporate employees and the planned closure of 1,000 stores. The closures will predominantly affect Family Dollar locations, with 600 stores set to close in the first half of 2024, followed by an additional 370 Family Dollar stores and 30 Dollar Tree stores over the next few years as leases expire. The closures are part of a broader strategy to streamline operations and improve profitability.
Meanwhile, Dollar General continues to grow aggressively. The retailer reported better-than-expected profit, sales, and same-store sales for its first quarter as more customers shopped for groceries and other essentials. These results were driven by strong customer traffic growth and market share gains.
Dollar General opened 197 stores during the quarter and revised its new stores and remodels forecast to better optimize planned capital expenditures for fiscal year 2024. The retailer now plans to open 730 new stores, down from its previous expectation of 800, and expects to remodel 1,620 stores. In total, Dollar General expects to execute 2,435 real estate projects this year.
Net income fell to $363.3 million, or $1.65 a share, for the quarter ended May 3, from $514.4 million, or $2.34 a share, in the year-ago period. Analysts had expected earnings per share of $1.58. Net sales rose 6.1% to $9.91 billion, topping estimates of $9.89 billion. Same-store sales increased 2.4%, driven by an increase in customer traffic.
For fiscal 2024, Dollar General expects earnings per share to range from $6.80 to $7.55, with net sales growth of 6% to 6.7%. Same-store sales growth is expected to be in the range of 2.0% to 2.7%. As of May 3, 2024, the company operated 20,149 Dollar General, DG Market, DGX, and PopShelf stores across the United States and Mi Súper Dollar General stores in Mexico.
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