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The recent economic cycle has seen Family Dollar and Dollar Tree Inc. (NASDAQ:DLTR) move forward with plans to close approximately 1,000 stores across the United States, resulting in a notable decline in Dollar Tree’s stock price.
On March 13, CNN reported that years of operational struggles and a new $40 million fine after a rat-infested warehouse caused a mass shutdown led to this dramatic action. It was reported that. Rampant inflation problems, combined with a decline in consumer spending, are seriously hurting the discount store chain’s profits and competitiveness with rivals such as Dollar General and Walmart. Following this announcement, Dollar Tree’s stock price fell further than ever. 13%.
Family Dollar’s services primarily target low-income people in urban areas. The company closed 600 facilities this year, laying the groundwork for closing 370 facilities as leases come to an end over the next few years. Dollar Tree is following suit, with plans to close 30 stores.
The closures are expected to boost the company’s profits, but the closures have left wide disparities in regions that rely on low-cost shopping havens.
The retail discount sector has been historically successful, with companies like Walmart and TJ Maxx catering to the needs of frugal buyers. However, despite merging with Dollar Tree in 2015, Family Dollar experienced setbacks in this competitive market.
Have the unfolding events spooked investors and led them to look at other potential investment avenues, such as startup crowdfunding?
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This article, Family Dollar And Dollar Tree Prepare To Shut Down Roughtly 1,000 Stores: Evaluating The Market Impact and Potential Investment Alternatives, originally appeared on Benzinga.com
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