Family Dollar, a discount retailer with multiple locations in metro Atlanta and rural Georgia, said it will close 370 underperforming stores in the coming months after reporting lower profit and sales in the second quarter.
The Matthews, N.C.-based chain, which has located many of its stores in rural and low-income urban areas, said it will also cut prices on about 1,000 basic items in hopes of increasing store traffic.
Family Dollar spokeswoman Bryn Winburn told The Atlanta Journal-Constitution the company is in the process of determining which stores will be closed. The retailer hasn’t said how many jobs will be affected.
“The company is working to finalize the store closure plan and will disclose information on impacted locations at the appropriate time,” Winburn said. The store closings represent less than 5 percent of the retailer’s 8,100 stores.
Family Dollar blamed its financial performance partly on a fierce winter that kept millions of its customers bound by snow and ice, but also left them facing higher costs for basic necessities such as food and fuel.
Many of the customers Family Dollar and its competitors, including Wal-Mart, Dollar General and Dollar Tree, market to have also faced cuts to public assistance programs, leaving them with less spending power.
Wal-Mart has warned its investors that its business could be affected by reductions in the federal food stamp program that went into effect last fall and other changes to public assistance being contemplated on Capitol Hill.
Family Dollar hopes its price reductions and the closing of underperforming stores, along with a plan to open fewer stores this year, will make it more efficient and improve sales and profit.
The company, which sells name brand and private label merchandise, had planned to open 525 new stores this year, but now plans to open 350 to 400.
Chairman and Chief Executive Officer Howard Levine said the store closings and job cuts are expected to bring cost savings of $40 million to $45 million annually.