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CHESAPEAKE, Va. — Dollar Tree Inc. today said it has acquired the designation rights to 170 leases of 99 Cents Only Stores in four states: Arizona, California, Nevada and Texas.
The deal also gives Dollar Tree select intellectual property rights, as well as equipment including on-site furniture and fixtures, the company said in announcing the deal.
The acquisitions come via two transactions completed this month and approved by the United States Bankruptcy Court for the District of Delaware.
99 Cents Only Stores LLC filed a bankruptcy petition with the court in April after the Tustin, Calif.-based retailer announced it would close all 371 of its locations and liquidate assets. That announcement came on the heels of Dollar Tree’s announcement that it would close nearly 1,000 of its stores, with most of the closures affecting its Family Dollar brand.
“As we continue to execute on our accelerated growth strategy for the Dollar Tree brand, this was an attractive opportunity to secure leases in priority markets where we see strong profitable growth potential,” said Michael Creedon, Dollar Tree’s chief operating officer. “The portfolio complements our existing footprint and will provide us access to high quality real estate assets in premium retail centers, enabling us to rapidly grow the Dollar Tree brand across the western United States, reaching even more customers and communities.”
Dollar Tree said it looked forward to reopening the newly acquired stores as early as the fall.
Dollar Tree began the current fiscal year, in February, with 16,774 stores across 48 states and five Canadian provinces. The stores operate under Dollar Tree, Family Dollar, and Dollar Tree Canada banners.
Although the dollar store format expanded rapidly in recent years via the addition of hundreds of stores, changing economic conditions have called that strategy into question.
Inflation, a reduction in government benefits for the Supplemental Nutrition Assistance Program (SNAP), and inventory losses combined to create a “very challenging macro environment,” CEO Rick Dreiling said in an earnings call after Dollar Tree swung to a net loss of $998 million for the fiscal year to February 3 compared to a $1.6 billion profit the previous year.
As part of an ongoing portfolio review, company executives have identified some 600 Family Dollar stores to close in the first half of fiscal 2024, Dreiling said. Another 370 or so Family Dollar locations and 30 Dollar Tree stores will be closed when their leases run out.
