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Family Dollar to close some stores

By: ANNE D'INNOCENZIO, AP Retail Writer

NEW YORK — Family Dollar plans to cut jobs and close about 370 underperforming stores as it tries to reverse sagging sales and earnings.

Public & Media Relations Manager Bryn R. Winburn would not say on Friday whether any stores in the North Country would be among them.

“The company is working to finalize the store closure plan and will disclose information on impacted locations at the appropriate time,” she told the Press-Republican via email.

Four Family Dollar stores are located in the North Country.

Two are in Plattsburgh: one in Plattsburgh Plaza on Cornelia Street and the other in Skyway Plaza near the former Plattsburgh Air Force Base.

There is one in Keeseville, and the Altona store opened in February; it still says “grand opening” by its name on the Family Dollar website’s locator map.

The chain also plans to 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.

WEAK OUTLOOK

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 low prices. It’s also increasing its offerings of small packages that are easy on the budget.

REDUCING COSTS

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 this winter 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.

— AP Economics Writer Chris Rugaber in Washington and Press-Republican News Editor Suzanne Moore contributed to the report.

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