Kroger, the largest supermarket chain in the U.S., says it plans to close around 60 stores across the country over the next 18 months in a bid to improve profitability and streamline operations.

The announcement came during the company’s earnings call last Friday. While Kroger has yet to release a list of which locations will close, company leadership emphasized that the closures will be spread nationwide and that impacted employees will be offered positions at nearby stores.

“We see this as an opportunity to move sales from underperforming locations to more successful ones,” said interim Chairman and CEO Ronald Sargent. “We believe this will help improve overall profitability.”

Store Closures Come Amid Shifting Strategy

The planned closures mark a shift for Kroger, which had held off on shuttering any stores during its now-defunct merger attempt with rival grocer Albertsons. That $24.6 billion deal, announced in 2022, collapsed late last year after being blocked in court over antitrust concerns.

Sargent noted that Kroger typically evaluates store performance annually, but store closures were paused during the merger process. With that effort now behind them, the company is once again turning its focus to optimizing its footprint.

Expansion Still on the Horizon

Despite the closures, Kroger isn’t slowing down entirely. The company plans to open at least 30 new stores this year and says it will accelerate store openings in “high-growth geographies” starting next year.

The Cincinnati-based chain currently operates 2,731 stores across 35 states and Washington, D.C., under a variety of brand names including Ralphs, Fred Meyer, Smith’s, and King Soopers.

Labor Tensions Simmer

Kroger’s announcement comes at a tense moment for the company, which is facing ongoing labor unrest. Workers represented by the United Food and Commercial Workers union have raised concerns about chronic understaffing and difficult working conditions.

Union members in Southern California began picketing outside a Los Angeles Ralphs last week. Earlier this year, employees at King Soopers stores in Colorado also went on strike over similar issues.

As the company navigates a changing retail landscape and increasing pressure from labor groups, it remains to be seen how these strategic shifts will play out for both shoppers and employees.

Source: AP News – Kroger plans to close 60 US stores in 18 months to improve profits

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Dollar Tree Inc. has decided to part ways with Family Dollar, selling the bargain store chain to private equity firms Brigade Capital Management and Macellum Capital Management for $1 billion. This move marks the end of a decade-long attempt to integrate Family Dollar into its operations.

Dollar Tree originally purchased Family Dollar in 2015 for over $8 billion, acquiring more than 7,000 stores. However, the company has faced numerous challenges since the acquisition, including supply chain disruptions, poor store locations, and operational inefficiencies.

“Basically, Dollar Tree bit off far more than it could chew,” said Neil Saunders, managing director of GlobalData.

Last year, Dollar Tree announced plans to close hundreds of Family Dollar locations due to ongoing difficulties.

Family Dollar stores, which provide essential household goods at low prices, are largely located in underserved urban areas. The ongoing closures—and potential additional closures under new ownership—could significantly impact lower-income families who rely on these stores for affordable necessities.

Marshal Cohen, chief industry advisor at Circana, emphasized the impact, stating, “The lower-income consumer will be losing a critical place to purchase value products. They’re losing the breadth of the assortment, the depth of the discount, and the convenience.”

Independent stores in these areas typically offer fewer options at higher prices, making the loss of Family Dollar locations even more significant for these communities.

Dollar Tree had been exploring options for Family Dollar for some time. CEO Mike Creedon, who was appointed permanently last year, said the sale aligns with the company’s long-term goals.

“This is a major milestone in our multiyear transformation journey to help us fully achieve our potential,” Creedon said.

During a conference call, he noted that Dollar Tree and Family Dollar were “two different businesses with limited synergies.” The sale will now allow each to focus on its distinct operations.

Dollar Tree primarily caters to middle-income shoppers and is typically found in suburban areas. Its product selection leans toward seasonal goods, party supplies, crafts, and snacks. Analysts believe the sale will help Dollar Tree sharpen its focus.

“Family Dollar turnaround efforts had been consuming massive amounts of both management focus and financial resources, and now the company can focus all of its efforts toward growing and optimizing Dollar Tree,” said Scot Ciccarelli, an analyst at Truist Securities.

Following the sale, Family Dollar will continue to be headquartered in Chesapeake, Virginia. However, new owners Brigade and Macellum will need to address key challenges, including pricing competitiveness and a lack of customer loyalty.

Saunders noted that Family Dollar’s pricing isn’t as competitive as some of its rivals, which has weakened its appeal.

The deal is expected to close in the second quarter of 2025.

With the sale finalized, Dollar Tree can now focus on expanding its core business. The company has also observed an increase in higher-income customers seeking cost-effective shopping options.

“We are seeing stronger demand from higher-income customers who increasingly see Dollar Tree as a cost-effective source for an expanding range of products,” Creedon said.

However, Dollar Tree faces new challenges, including rising tariff risks. Due to its higher concentration in general merchandise, the company is more exposed to tariffs on Chinese imports than Family Dollar was. Recent tariff hikes, including a 10% increase announced last month and additional tariffs on goods from Canada and Mexico, could impact profitability.

Creedon reassured investors that Dollar Tree has been taking steps to mitigate these effects by negotiating cost concessions and diversifying its supply chain.

Despite concerns, investors responded positively to the sale. Shares of Dollar Tree rose 3% on Wednesday following the announcement.

Source: AP News – Dollar Tree offloads Family Dollar chain for $1 billion, ending a decade-long effort to find a fit

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Macy’s is accelerating its store closure plans, announcing it will shut down 65 locations this year—an increase from the 50 closures previously scheduled for the fiscal year. This move is part of the company’s larger strategy to eliminate around 150 underperforming stores over the next three years.

The update was shared during Macy’s third-quarter earnings call on Wednesday.

Post-Holiday Closures Expected

“We now expect to close roughly 65 locations this year,” said Macy’s CEO Tony Spring. He added that the closures would occur after the holiday shopping season.

The announcement comes as Macy’s addresses broader challenges within the retail industry, including dwindling mall traffic and rising online shopping trends.

Accounting Scandal Revealed

Macy’s had delayed reporting its third-quarter earnings after uncovering a $151 million accounting error tied to small-package delivery expenses. An independent investigation found that a single employee intentionally falsified accounting records and documentation.

Adrian Mitchell, Macy’s COO and CFO, clarified that the issue did not involve theft and had no impact on revenue, cash flow, or inventory, as all vendors were fully paid. The company is now revamping its financial reporting controls to prevent future issues.

Department Stores Face Industry-Wide Challenges

Macy’s closures reflect broader struggles in the retail sector. With fewer customers visiting physical stores, U.S. retailers have announced over 7,100 store closures by the end of November 2024—a 69% increase compared to the same period last year, according to CoreSight Research.

The number of retail bankruptcies has also surged, with 45 retailers filing for protection in 2024, compared to 25 in 2023.

Largest Retail Store Closures in 2024

The retail chains leading store closures in 2024 include:

• Family Dollar: 677 closures
• CVS Health: 586 closures
• Big Lots: 580 closures
• Conn’s: 553 closures
• Macy’s: 55 closures

Macy’s Strategic Shift

Despite challenges, Macy’s is focusing on growth through its Bloomingdale’s and Bluemercury brands. Over the next three years, the company plans to:

• Open 15 new Bloomingdale’s stores.
• Launch 30 new Bluemercury locations.
• Remodel 30 existing Bluemercury stores.

Stock Performance

Macy’s stock has dropped approximately 20% over the past year, reflecting investor concerns amid the company’s restructuring efforts and broader retail struggles.

Source

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