Family Dollar to close stores as shoppers pinched

Dollar stores are feeling the pinch from mounting financial pressures on low-income shoppers.
AP Wire
Apr 11, 2014

Family Dollar said Thursday that will cut jobs and close about 370 underperforming stores as it tries to reverse sagging sales and earnings. The discount store operator will also permanently lower prices on about 1,000 basic items.

Family Dollar Inc., which operates 8,100 stores, did not provide details on how many jobs it would cut.

The retail chain follows competitors in highlighting the split between shoppers who are enjoying an improving economy and those being left behind.

Dollar General, the nation's largest dollar-store chain with about 11,100 locations, offered a weak profit outlook last month after reporting weak fourth-quarter sales. And Dollar Tree, which operates nearly 5,000 locations, missed profit expectations for the holiday quarter in February.

Family Dollar has stumbled even more than its rivals because it has made mistakes in pricing, merchandising and the locations of its stores, analysts say. Still, the industry's problems are a big departure from a few years ago, when Family Dollar and other chains packed in customers and expanded rapidly by catering to cash-strapped people during the Great Recession.

But that expansion has spread shoppers thin. And retailing giant Wal-Mart is muscling in, too, by accelerating its growth in small stores and pushing its low prices. It's also increasing its offerings of small packages that are easy on the budget.

Dollar chains and other low-price stores are also seeing an increasing divide between low-income people who are facing more constraints on spending power and the higher-income households who are benefiting from improving housing values and stock market. Wal-Mart reported in February its fourth consecutive quarter of declines in revenue at stores open at least a year.

Overall, the still-tough economy and an unusually cool March resulted in many of the handful of merchants including Gap Inc. that still report monthly sales to announce declines in revenue at stores open at least a year on Thursday.

Among the most recent pressures: an unseasonably cold winter throughout the Northeast and Midwest pushed up utility bills. Food prices also crept higher in February.

And extended unemployment benefits expired at the end of last year for nearly 1.4 million Americans who have been out of work for six months or longer. Those recipients had gotten weekly checks of about $300, on average. In February, Congress approved legislation that made a small cut to food stamp benefits.

Meanwhile, wage growth has been sluggish since the recession ended nearly five years ago. And workers in some lower-paying industries have seen little, if any growth.

Family Dollar said the store closings and job cuts should reduce annual operating expenses by $40 million to $45 million, starting with the fiscal third quarter.

The Matthews, N.C., company also said it will slow new store openings beginning in fiscal 2015. It now anticipates opening 350 to 400 new stores. In fiscal 2014 it added about 525 stores.

Family Dollar Chairman and CEO Howard Levine told investors on a call that the poor weather led to numerous store closings, disruptions in merchandise deliveries and higher-than-expected utility and maintenance expenses. But, he said, shoppers' financial constraints and a discount-driven holiday season also played a role.

Family Dollar reported that net income dropped to $90.9 million, or 80 cents per share, from $140.1 million, or $1.21 per share, a year earlier. Revenue fell to $2.72 billion from $2.89 billion. Analysts surveyed by FactSet expected earnings of 90 cents per share on revenue of $2.77 billion.

Revenue at stores open at least a year dropped 3.8 percent, worse than the 2.8 percent drop it had in the fourth quarter.

Levine said the company is reviewing its business to increase operational efficiencies and boost its financial performance. Levine said the price cuts, store closings and job eliminations are part of actions it is taking immediately to lift its performance during the review.

Family Dollar had shifted away from its focus on $1 items and had offered too many temporary promotions, retail consultant Craig R. Johnson said. The company now says it wants to go back to focusing on everyday low prices and $1 items to restore confidence it offers a predictably good deal every time a shopper visits the store.

Shares of Family Dollar fell more than 3 percent, or $1.90, to close at $57.17 Thursday. Dollar General's stock slipped nearly 2 percent, or 91 cents to $55.45, while Dollar Tree's shares fell more than 2 percent, or $1.25, to $50.88.

Comments

skyking007

As the Republicans kill the working class, they are losing customers. We quit going out to eat and no longer spend $600.00 a month at local restaurants. This is a consumer driver economy, Republicans should remember that.

Grand Haven Happy

skyking007,

You really are ignorant and out of touch with reality, aren't you? Just who do you think has been destroying our nation's economy and the middle class for the last going on 6 years now and it just continues on year after year? Some JOKE of a recovery when already going into the 6th year, isn't it? Less people working in the workforce today with the highest number getting food stamps than ever in the history of the USA! Add in the highest number of partime workers ever in the USA! Also remember that at the very same time it's caused drastic increases in the cost of living and you wonder why the middle class/working class is being squeezed into elimination? Something to really be proud of isn't it?

Do yourself a favor and climb out from under that Democrat loser rock you've been stuffed under for God only knows how long before all hope is lost! You already got the promised "CHANGE" and you are NOT HAPPY yet??? Stay tuned as it's going to get a lot worse until the REAL CHANGE takes place and it WILL!

Wolverine49457

He forgot to mention the Koch bros. either president Bush’s by name and the T.E.A. party in one exasperated and desperate sentence as the other kids who broke the lamp. Perhaps is an overdose on Comrade Brand Kool-Aid.

Vladtheimp

That was just plain mean - you made Lanny delete each of those items from her response - next time if you include "the most severe economic crisis since the 1930's Great Depression" you will render her speechless (if only). Just kidding - taking away the right of free speech is a Progressive tactic.

Lanivan

Your lack of understanding of the events that led to the most severe economic crisis since the 1930's Great Depression - the Great Recession of 2007-'09, which catapulted not only the US economy, but the global economy, into a near financial collapse - is stunning. The ignorance, the inability to add 2+2, the total lack of interest in understanding anything of greater complexity other than what pablum is being spoon-fed, and promotion and dissemination of highly partisan, extreme, hypocritical, and nonsensical attitudes and disinformation represents the personification of living in an alternate universe.

Thank goodness this type of thinking does not represent the average citizen and is in the minority.

RenegadeX

Does this help our understanding?

http://www.nytimes.com/1999/09/3...

Please note the date.

Lanivan

Thank you for linking to another driver of the Great Recession:

"In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans."

The irrationality goes as follows: Complain bitterly ad nauseum that low-income people are a drain on society, living on gubmint freebies, don't want to advance their lives to be more like the complainer/haters.

So then when gubmint policies change to help those low-income people actually have a chance at home ownership, greedy financial entities see it as an opportunity to make even more money than previously.

And then, finally, when whose low teaser interest rates expire, the mortgage rate jumps by 3-4% points, the massive degree of foreclosure and bankruptcies begin, partly leading to the Great Recession and a major burst of the housing bubble.

And then the complainers/haters can point self-righteous fingers at low-income people who, for one brief shining moment, had 1/2 a chance at home ownership, and the government programs that gave them that moment.

Tri-cities realist

Yep, everyone is a victim. Why should we expect people to understand that when their rate increased, they wouldn't be able to afford the payments?

And as a business owner, I would think that you would understand risk. If these people couldn't qualify for a conventional loan, perhaps it was because they couldn't afford the mortgage, which makes them higher risk. What were the lenders supposed to do? I suppose just eat the losses when people stop paying. How does that work in your business (customers not paying)?

Tri-cities realist

Lanny, you missed my comment above!!! Haha

RenegadeX

Well, since you appreciate my links, perhaps you enjoy this one :-)

http://online.wsj.com/news/artic...

Lanivan

RenegadeX - You're battin' a thousand! Karl ("T*rd Blossom") Rove?? Besides being a pro at picking links, you've also got a wicked sense of humor.

Some people look at it a little differently. “We can put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home.” — President Bush, Oct. 15, 2002

--->"The president listened as Ben S. Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money.

Then his Treasury secretary, Henry M. Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history."

--->"There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk."

--->It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Mr. Bush’s chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided “a valuable service to people who could not otherwise get credit.” While he had some concerns about the industry’s practices, he said, “it did provide an opportunity for people, a lot of whom are still in their houses today.”

You opened a can of worms, RX. And Tri-Cities Realist - read this and then let's talk victims. http://www.nytimes.com/2008/12/2...

Barry Soetoro

Love the arrows, L. Nice touch.

Lanivan

I was hoping you'd notice....<3

Vladtheimp

I guess this constitutes "bullying" but there seems to be no reference to the Community Reinvestment Act and the efforts of Clinton/Reno/Cuomo to force banks to make loans they would never have made, to people who most likely would never be able to afford the houses they were encouraged to buy - including threatening banks that didn't make the risky loans if they ever wanted to grow. Never a mention of Franklin Raines, and Barney Frank who assured everyone there was no risk in the subprime mortgage market.

I'm not going to spend the energy to re-litigate this issue, but anyone with an ounce of common sense has to ask why banks set standards to qualify borrowers for mortgage loans for a century (to protect themselves from bad loans they would lose money on); why after liberals passed the CRA as part of a social experiment to enforce their beliefs that (1) the banks' standards were discriminatory (even though they were lending the funds of their depositors) and (2) people who qualified for the new government mandated subprime loans would benefit from home ownership, the banks responded to protect the assets of their depositors by coming up with unprecedented financial arrangements.

This is not rocket science - there was no huge meltdown of the housing market, the credit market, and the economy until the liberals decided they needed to mandate that banks give loans to people who could never repay them (incidentally opening the field to a huge number of scam artists).

The Progressive response to this is to ensure that the economy is not producing jobs due to their policies, and that folks don't need jobs because the few taxpayers left are subsidizing their meager existence through food stamps, welfare, and other demeaning government programs that ensure they will never achieve their dreams and will always depend on their Uncle Sugar (their fellow citizens). Do you remember the CRA?

Lanivan

It constitutes "bullying" when you take a massively complex situation, that implicates both Republicans and Democrats, Wall Street, the entire banking industry, and several decades of Congressional maneuvering, and reduce it to yet another one of your riffs railing on liberals, and of course - the man you seem to be most fixated on above all others - poor Barney Frank.

For the love of all things Holy, you just had to open Pandora's Box, didn't you? (and simultaneously fluttering your eyelashes and saying you absolutely weren't going to spend energy re-litigating this issue!). The 1977 CRA was a factor in lowering lending standards, but it wasn't until the era of deregulation in the 1990's and 2000's, especially with the repeal of the Glass-Steagall Act, when CRA banking requirements were increasingly relaxed, which led to an increasing influence on home lending practices.

The biggest enthusiasts for laxer CRA lending standards became the most richly rewarded - I don't recall reading bankers being "forced" to make these loans (disapproving bankers were summarily dismissed, I'm sure, by the BOD) - and this enthusiasm spread to the rest of the mortgage markets.

George Bush (along with the SEC) was a major player with his 2004 initiative to deregulate the sub-prime mortgage markets, and his urging of the elimination of down payments. There was a Republican lock on Congress during that time, so please - don't give me any of your canned, repeatedly rehearsed liberal re-distribution rhetorical hyperbole.

If you want to blame someone, why stop at Barney Frank? Here are a few ideas: Jim Johnson, who oversaw tremendous Fannie Mae growth in the 1990's; the ratings agencies, who never met a risky CDO they didn't want to give a AAA Seal of Approval to; then there's Dick Fuld, the Lehman Bros "father of subprime mortgages"; one of my favorites, Republican weasel extraodinaire, Phil Gramm; Lew Ranieri, who created mortgage-backed bonds; and we can't leave out John Devaney, the hedge fund manager who bought up mortgage loans, making it profitable for lenders to make questionable loans and sell them off.

John Devaney even admitted, "In early 2007, talking about option ARM mortgages, he told Money, "The consumer has to be an idiot to take on one of those loans, but it has been one of our best-performing investments."

Oh - but let's blame Progressives and their government programs designed solely to demean, degrade, humiliate, and trap, so we keep people poor, without jobs, paying no taxes, so people with jobs can pay for them to continue to not contribute so they can live meager existences forever, and taxpayers can just keep funding.....Yes! It all makes sense to me now!

Vladtheimp

You sure have a purty way of trying to explain how the Democrats forcing banks to give loans to people who could never pay them back had nothing, not a scintilla, to do with the collapse of the housing and credit markets, but that dog don't hunt.

Bawney Fwank? http://youtu.be/LPSDnGMzIdo

Lanivan

Link = Your Fox News link doesn't quite jibe with the facts. Who should I believe? Fox News, or highly-credentialed, internationally known political historians, economists, and budget analysts? Hmmmmm....such a dilemma....

But I graciously accept your White Flag of Defeat, and will respect your "lack of energy to re-litigate".

Vladtheimp

Did the Community Reinvestment Act (CRA) Lead to Risky Lending? http://www.nber.org/papers/w18609# ; http://en.wikipedia.org/wiki/Nat...

Hey, Barney Frank: The Government Did Cause the Housing Crisis http://www.theatlantic.com/busin...

Free fall: How government policies brought down the housing market http://www.aei.org/outlook/econo...

I'm sure you can find sources that reach different conclusions - these simply show: (1) highly-credentialed, internationally known political historians, economists, and budget analysts ascribe to the views expressed in my link; and (2) it takes a "willing suspension of non-belief" to conclude, along with the timeline, that the Government forcing banks to make bad loans, loans they had never made in the past, was not a major contributor to the defaults that crippled the housing and credit markets.

Lanivan

Perhaps it's simply a matter of semantics. "Forced" is a pretty strong word. But I accept your more reasoned tone, and direct this back to my original premise: The entire financial and housing collapse was the result, almost equally, of mismanagement, deregulation, an absence of sufficient oversight, both political parties, Wall Street greed and creativity, unsophisticated under-qualified homeowners, and, yes, the CRA, that was, over the years, manipulated into something very different from the original intent.

To suggest anything otherwise is mendacious.

skyking007

Grand Haven Happy you are the ignorant one. Republicans have been blocking jobs and cutting aid to everyone. They could not win a election unless they buy it or use gerrymandering. Talk about losers! All your candidates are losers and have proved it in the last two Presidential elections. Yes real change will happen once we unload the republican deadwood from the house.

owell

They had both houses for two years. Stunk, stank, stink.

Grand Haven Happy

Isn't it simply amazing that the majority of non-union West Side of Michigan which is Republican side minus the few loser lowlife Democrat/union holding pen areas for conscripts is doing great and it includes the working/middle class?

However, at the same time, the East Side of Michigan which is the led-by-the-ring-in-their-noses Democrats/union zombie losers minus the few areas who have or now are seeing the light and the real best way of governing are wanting a lot more of it because it presents such a vivid contrast?

West side WINS and the east side GETS the dry baby bottle. Enjoy your way backward zombies in your quest for more losing while the west side gobbles up the wholesome nutrients and just grows and grows and gets healthier for all it's citizen classes day by day! Rich and poor, old and young, and lots of real jobs!

But what would Democrats know about good things like that anyway? They'd rather be all lumped together in a band of losers as their thinking and leading has shown time and time again and it's impossible for them not to have seen the error of their ways and now the rest of the civilization on the Planet Earth is forcing your demise!

Lanivan

"It ain't right, Atticus, said Jem. "No, son, it ain't right".

skyking007

You are entitled to your opinion but not your own facts. Fact: The Day president Obama was elected the Republican party set out to make Him a one term President. They blocked every thing He tried to do. Fact: they recession was in effect under Bush. Fact: Unpaid wars and tax cuts for the rich put us under. Fact: The Affordable care Act has saved many lives and let People with Pre-conditions get Insurance. Fact: The republican party (Once a great, much needed Party) has changed. They have been bought by big money and no longer serve all the people of this Nation. Every day this country becomes more diverse and the party of NO cannot endure. They are against to many types of People. Against equal pay for Women, How stupid. Cut aid to Vets, How stupid. Cut the Social security and Medicare for Seniors really dumb. Who in their right mind would vote for that? Very selfish people who don't care for anyone but themselves. I believe that we all must pull together and be United, for the good of all. Stop the lies, stop the hate. Put America back to work United we stand divided we fall.

Vladtheimp

Ahem - addressing only one of your false factoids, Obama cut $716 Billion from Medicare to pay for Obamacare, according to the Congressional Budget Office, taking funds from a program dedicated to Seniors and re-distributing those funds to non-seniors - Republicans had nothing to do with that, since it was included in Obamacare which received only democrat votes. http://www.washingtonpost.com/bl...

In fact, you may recall that earlier this week, Democrats in jeopardy of being voted out of office because of Obamacare convinced the White House NOT to take even more from Medicare Advantage

"Cuts to Medicare Advantage plans are part of the $716 billion in Medicare spending reductions the health law calls for over the next decade.

Those cuts were strong ammunition for Republicans in the 2010 congressional midterm elections when the GOP recaptured the House and in the 2012 presidential contest. In a recent flurry of letters to the administration, both Democrats and Republicans have expressed concerns about the impending cuts." http://www.kaiserhealthnews.org/...

Lanivan

Medicare: Your buddy, Paul Ryan, proposes major changes to Medicare in his 2014 budget (which is about the same for all the others as well). It would: "Since under the Ryan budget, Medicare would no longer make payments to health care providers such as doctors and hospitals, the only way to keep Medicare cost growth within the target of GDP growth plus one-half percentage point would be to limit the annual increase in the amount of the premium-support vouchers. As a result, the vouchers would purchase less coverage with each passing year, pushing more costs on to beneficiaries. Over time, seniors would have to pay more to keep the health plans and the doctors they like, or they would get fewer benefits." http://www.cbpp.org/cms/?fa=view...

In other words, this Republican budget proposal would gut Medicare.

Now, compare this with the $716 million Medicare spending reduction example you are so choked up about. Would you kindly explain to me how and why Republicans seem to be so very concerned about senior citizens and a potential for some future suggestion of benefit reduction, when they nearly all voted for Paul Ryan's budget that absolutely guts, eviscerates, and destroys the entire Medicare program right from the get-go??

Vladtheimp

Let's stay focused - Skyking stated Republicans cut Medicare. I noted Obama and the Democrats were the ones that took $716 Billion from Medicare, a program for Seniors, and redistributed it to their constituents, mostly non-seniors, such as those on Medicaid, according to the Congressional Budget Office. Paul Ryan's budget has nothing to do with it - save that for a germane discussion - like when it passes and is signed into law. We're talking about the actual theft of Medicare money and giving it in the form of subsidies to non-seniors - it happened, it's real, and it will continue to impact those who worked and saved and contributed to Medicare over their working lives.

This is just the latest example of why it is virtually impossible to have an honest discussion with a Progressive.

Lanivan

Frankly, it's pathetic that you don't seem to want to recognize how very germane it is to compare the biotching ad nauseum of Republicans regarding the reduction of overpayments to healthcare providers over 10 years (the $716 billion shift) and their unanimous approval to the Ryan Plan that would make that $716 billion over 10 years in reduced reimbursements to healthcare providers seem like a walk in the park once the Ryan Plan would totally destroy Medicare, replace it with a voucher program that economic experts say would lead to a direct increase in the federal debt as well as force seniors to pay more as they get older - when they least are able. The Paul Ryan plan is evil. It's a proven fact that as seniors age, they have less retirement money, they have many more healthcare needs, and are less capable of navigating the labyrinth of insurance and medical fine print.

There was a time when the senior population made up the majority of those living in poverty. Social Security and Medicare made the difference in helping those seniors move through the end of their lives comfortably and with security. And Paul Ryan's plan is determined to remove that security and comfort.

Actually, your whining about the $716 Billion Medicare thing is just another manufactured echo chamber Republican talking point that is way past it's prime. Since you seem to be operating on erroneous information. Let's spell it out:

#1. There are no direct cuts to Medicare benefits, nor negative effects to basic Medicare benefits.

#2. 1/3 of the total amount (over 10 years) is from a reduction in overpayments to insurers in the Medicare Advantage program.

#3. 1/3 of the total amount (over 10 years) reduces overpayments to hospital providers.

#3. 1/3 of the total amount (over 10 years) are cuts in reimbursement to other healthcare providers.

http://www.cjr.org/campaign_desk...

This has been shown by independent budget number-crunchers to be a viable way to reduce the Medicare debt burden, unlike the Ryan Plan which would actually increase the federal debt.

To make this a more honest discussion, please provide specific instances where there have been direct cuts to benefits or services to Medicare recipients. Not just more whining - real specifics......(crickets).

Since you apparently struggle with progressives and your inability to have an honest discussion, I suggest you simply stop forthwith.

Vladtheimp

Frankly, I would love to if you would only stop mischaracterizing and, well, fibbing about things. For example, you state that the Obama theft of $716 Billion from Medicare is "from a reduction in overpayments to insurers in the Medicare Advantage program." That is simply untrue, and you have to know it. The $716 Billion is a reduction in the rate of growth over 10 years, according to the Congressional Budget Office and the Joint Committee on Taxation, which even identified where the Obama cuts would be made:

1. Hospital reimbursements would be reduced by $260 billion;

2. Medicare Advantage would be cut by approximately $156 billion;

3. Skilled nursing services would suffer a cut of $39 billion;

4. Home health care would be cut $66 billion;

5. Hospice care would lose $17 billion.

That's all well and good, but anytime a Republican attempts to reduce the rate of growth in a federal program, Progressives identify it as a cut, whether it be for food stamps, welfare, education, the environment, etc. even though such reductions in the rate of growth would "result in no direct cuts" to such programs. Although you are used to getting your way in the media, you can't have it both ways - these are either cuts or they aren't. We call them cuts to Medicare because that is how Progressives and the media have characterized them for decades, and they have nothing to do with overpayments under Medicare Advantage - that's just made up.

And since you're fixated on Paul Ryan's Budgets, maybe you should take a close look at the Senate Democrat's budget - oh yea - you can't because they ignored the legal requirement to pass one and didn't for 4 years, and when they finally did pass one at the end of last year, and reached a compromise with the House, the first thing Democrats did was ignore the compromise and try to bust the new budget. And why didn't Harry Reid pass a budget? Because he would have had to allow some sunshine in and people would see his plans for new taxing and spending. Well, maybe you can study Obama's budget, even though it's perennially late. Why, they have been so popular that they have received ZERO votes in the House and the Senate. He tried again this year, and actually got 2 votes in the House. So, Ryan does his job, the House does its job, and you biotch because you don't like the result, while giving the Senate a pass for violating the law for 4 years, for reneging on the one budget compromise actually agreed upon, and forgetting Obama's budgets because they stunk so bad his own party wouldn't support them - how very Progressive of you!!

Tri-cities realist

As usual Vlad, that should end the discussion, but until we ban shiny objects, I'm sure I'll be proven wrong on this...

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