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Dollar Tree has acquired 170 99 Cents Only stores and plans to reopen them as Dollar Trees.
new york
CNN
—
Goodbye, 99 cents only. Hello, Dollar Tree.
Dollar Tree said Wednesday it has acquired leases for 170 stores from 99 Cents Only Inc. out of bankruptcy in Arizona, California, Nevada and Texas. Dollar Tree plans to reopen those stores selling its own branded products starting in the fall.
99 Cents Only filed for bankruptcy in April and closed all 370 of its stores.
The two chains are very different and the announcement signals a consolidation in the retail industry.
99 Cents Only was a regional chain that sold groceries. Dollar Tree is a national company with stores primarily in suburban areas that primarily sells discretionary items such as party supplies and household goods. Dollar Tree was the last dollar store chain to sell all items for $1 until 2021, when it raised its prices to over $1.25.
Dollar Tree also owns Family Dollar, a mostly urban chain that has underperformed compared with Dollar Tree and other discount chains in recent years and has closed 975 stores.
The lease acquisition of 99 Cents Only, which has emerged from bankruptcy, gives Dollar Tree a cheaper way to grow than building new stores and will help the Virginia-based chain expand its presence on the West Coast.
“Management felt that these properties were fundamentally good and supply was relatively scarce, so they took advantage of competitor weaknesses,” Evercore IRI analyst Michael Montani wrote in a client note on Wednesday.
One challenge for Dollar Tree could be the size of its 99-cent stores.
99 Cents Only stores average about 20,000 square feet, more than twice the size of a typical dollar store chain.
