Dollar Tree is closing 1,000 stores as it looks to revamp struggling business

Dollar Tree will close nearly 1,000 stores as the discount chain looks to revamp its struggling business.

Dollar Tree acquired Family Dollar for more than $8 billion almost a decade ago after a bidding war with rival Dollar General, but has had difficulty absorbing the chain. 

The budget retailer announced it plans to close around 600 Family Dollar stores in the first half of this year, and 370 of its 8,000 locations over the next several years. 

It will also shut 30 Dollar Tree stores over the next few years at the end of each store's current lease term, but did not announce which locations would be affected.

It comes weeks after the company was slapped with a $41.7 million fine after pleading guilty to selling food, cosmetics and personal care items from rodent-infested warehouse. 

The budget retailer announced it plans to close around 600 Family Dollar stores in the first half of this year, and 370 of its 8,000 locations over the next several years

Shares in the company fell more than 14 percent following the announcement to their lowest level this year

The plans to shut underperforming stores comes as Dollar Tree announced it had lost $1.71 billion in the three months ending February 3.

Shares in the company fell more than 14 percent following the announcement to their lowest level this year.

'This dramatic cull is the coup de grâce in the rather botched acquisition of the Family Dollar chain, which has caused Dollar Tree nothing but hassle since it was completed back in 2015,' Neil Saunders, managing director of GlobalData, told the Associated Press. 

'Basically, almost ten years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around,' he said. 

Dollar Tree is still 'sifting through the mess it inherited' with Family Dollar, said Neil Saunders, managing director of GlobalData

Dollar General was in the enws again yesterday.  A store in Wisconsin was forced to remain closed after its entire staff resigned due to being underpaid and overworked.

Dollar Tree focuses more on middle-income shoppers in suburbs, while Family Dollar caters mainly for low-income consumers in cities across the US.

When it bought Family Dollar, Dollar Tree hoped combining the retailers could help increase its customer base across different demographics and areas - while fighting off competition from rivals such as Dollar General and Walmart. 

But Dollar Tree has struggled with the poor condition of many Family Dollar stores, and has closed hundreds of locations in recent years.

The stores have been plagued with reports of unsafe working conditions. 

The company was ordered to pay $41.6 million earlier this year for using a rat-infested warehouse to distribute products - including food - to more than 400 stores across the South.

It was the largest ever criminal penalty of its kind, the Justice Department said. 

The investigation found 'live rodents, dead and decaying rodents, rodent feces, urine, and odors, and evidence of gnawing and nesting,' at the company's distribution center in West Memphis, Arkansas.

The Occupational Safety and Health Administration (OSHA) last year said the company had a 'continued disregard for human safety' which 'suggests the company thinks profits matter more than people.'

Family Dollar Stores LLC pleaded guilty to holding food, drugs, medical devices, and cosmetic products at a rodent infested warehouse at the Arkansas distribution center on February 26

The company will also shut 30 Dollar Tree stores over the next few years at the end of each store's current lease term

For the three months ended February 3, Dollar Tree lost $1.71 billion. A year earlier the Chesapeake, Virginia, company earned $452.2 million.

Revenue climbed to $8.64 billion from $7.72 billion, a bit below Wall Street's estimate of $8.67 billion.

At Family Dollar, sales slipped 1.2 percent in the last quarter. Dollar Tree, meanwhile, fared better, with sales up 6.3 percent.

Persistent inflation and reduced government benefits continue to pressure the lower-income consumers that comprise a sizable portion of Family Dollar's customer base, CEO Rick Dreiling said Wednesday on a call with analysts. 

But while Family Dollar has struggled, rival Dollar General has boomed.

It is now the fastest-growing retailer in the US, opening around 1,000 stores a year.