Family Dollar to Cut Jobs, Prices, and Close 370 Stores
Family Dollar (NYSE:FDO) is struggling. According to Fierce Retail and Reuters, the retailer announced on Thursday that, in order to offset declining sales and profit, it will start cutting jobs and closing 370 underperforming stores, hoping that those cuts will lower Family Dollar’s annual operating expenses by between $40 million and $45 million, beginning with its fiscal third quarter.
It is still unclear how many jobs will be cut, but it is evident that the retailer’s workforce will be shaven, as it reported a 35 percent decline in profit in the quarter that ended March 1, and a drop of same-store sales of 3.8 percent, so now it needs to cut its operating expenses. Family Dollar expects same-store sales to decline this quarter, too.
Family Dollar has been on retail analysts’ radar as of late because many recognize that smaller-format stores like Family Dollar and its rivals are performing better than their brick-and-mortar counterparts including Wal-Mart (NYSE:WMT) and Target (NYSE:TGT). That’s why some analysts believe bigger big box retailers should consider acquiring available small-format stores. In February, Credit Suisse analyst Michael Exstein advised Wal-Mart before its latest earnings release to consider buying Family Dollar so the company could further grow its better-performing small-format business, but so far, Wal-Mart CEO Doug McMillion has made no moves.