MATTHEWS, N.C. -- Family Dollar Stores Inc. will close 370 underperforming stores and slow the rate at which it opens new stores, according to media reports. The company also plans to lower prices on 1,000 basic items and add 400 food items to its offering.
"Our second-quarter results did not meet our expectations," stated Family Dollar Chairman and CEO Howard Levine. He noted that a more promotional competitive environment and a more financially constrained quarter "challenged" the 2013 holiday season. He also said severe winter weather during the second quarter of fiscal 2014 caused store closings, disrupted merchandise deliveries, and increased utility and store maintenance expenses.
"We are taking a number of important steps through our immediate strategic actions to improve our operational efficiency and better deliver financial returns," Levine added. This includes opening between 350 and 400 stores during the next fiscal year, instead of the previously planned 500 stores.
The Family Dollar stores marked for permanent closing make up around 5 percent of the company's 8,100 locations.
Family Dollar also announced last week that it would lay off 135 employees, or approximately 6 percent of its workforce, at its headquarters in Matthews, N.C.
Once the store closings and cutbacks are in effect, the company expects to see $40 million to $45 million in reduced annual operating costs, starting the third quarter of fiscal 2014.
These changes were announced alongside news that Family Dollar saw a 35-percent drop in profit for the quarter that ended March 1, with same-store sales at locations open for at least a year falling 3.8 percent. The dollar store chain also expects same-store sales to decrease during the current quarter.
Overall sales during the second quarter decreased 6.1 percent to $2.72 billion, beneath analysts' expectations, according to Reuters. However, frozen food and tobacco products saw strong sales.