The influx of new dollar stores across the nation showed signs of slowing down Thursday as Family Dollar announced plans to close 370 stores.
But even with the store closings, Family Dollar expects to increase its overall number of locations in 2014 as the company sheds older, less profitable stores and builds more stand-alone stores in strategic locations.
Family Dollar, Dollar Tree and Dollar General grew by more than 2,700 stores from the 2011 fiscal year through 2013, according to annual reports from the companies, so more and more people are seeing a new discount offering in their neighborhoods. Plans are for the companies to add even more stores.
Family Dollar CEO Howard Levine said in an investors conference call Thursday the company will slow down its expansion plans after a difficult quarter. But slowing down still means 525 new store openings in the 2014 fiscal year and another 350-400 in 2015, he said.
Closing stores is not unusual within the industry as the companies seek to get more profitable stores while decreasing the least profitable places. But the size of Family Dollar’s closings is much larger than most years and is the most for Family Dollar since the company closed 96 stores in 2009, according to the company’s annual report filed in October.
The harsh winter led to sluggish sales and raised utility bills, according to the company, and the company earnings dropped 5 cents per share as a result.
Commercial landlords tend to like dollar stores as part of shopping centers, said Dorothy Hudson, the commercial manager for Alex MacWilliam Real Estate in Vero Beach, Fla.
In the annual report, Family Dollar expects to spend $550-$600 million in capital expenses, which can help increase property values and property taxes for communities.
“They’re a good neighbor and a traffic draw,” she said.
Though some shopping centers might lose Family Dollar stores, Levine said he is confident upcoming stores will succeed.
“We feel very good about the remaining stores in the pipeline,” he said.
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Sandhya Kambhampati, Scripps National Desk, contributed to this report.