Family Dollar is closing stores, cutting jobs and lowering prices in response to sinking profits. The Matthews-based company announced the changes Thursday.
Family Dollar's profit is down 35 percent compared to around this time last year.
Marianne Wilson is editor-in-chief of a retail industry trade publication called "Chain Store Age." And she says the problems go beyond the past few months.
"Family Dollar has really struggled past maybe two years to compete with rivals that have gotten much stronger, specifically Dollar General Corp. and Dollar Tree and probably more recently with Wal-Mart, which has made a big commitment to opening smaller stores with their Wal-Mart Express format," she said.
Family Dollar CEO Howard Levine acknowledged on a conference call with investors that his company's performance clearly isn't meeting expectations.
So it's closing about 370 stores this year. Levine didn't say where they are, but he did give this perspective:
"The characteristics of these stores that we're closing are sales about half of what the average is, so around $650,000," he said. "These stores are older stores, generally a little bit smaller."
Levine also said that next year Family Dollar will slow the pace at which it's building new stores. Chief Financial Officer Mary Winston said the company still sees opportunities.
"But as we adjust our financial performance in the business, we want to make sure that we're refocusing our store investment on those that are going to deliver the highest return, and so that's how we got to the lower store number," she said.
That's step one: get the right number of stores in the right places. Step two is cutting jobs.
"Last week we implemented a number of organizational changes, which included the reduction of about 10 percent of our corporate workforce," Winston said.
And step three is lowering prices. Levine said his company had lost its way with how expensive its products had become. So it's cutting the cost of about 1,000 of its standard items.
"We feel that as a result of these changes, we have become absolutely more competitive," he said.
Levine says altogether, the changes will save the Matthews-based company $40 to $45 million.