April 10 (Bloomberg) -- Family Dollar Stores Inc., facing an increase in retail competition, is closing about 370 stores and conducting a review to improve its business.
The closings, about 4.6 percent of the company’s 8,100 locations, will generate as much as $45 million in annual cost savings beginning in the fiscal third quarter, the Matthews, North Carolina-based company said today in a statement. The review includes cutting an unspecified number of jobs, lowering prices on about 1,000 items and slowing new store growth.
Family Dollar, whose largest shareholder is billionaire hedge-fund manager John Paulson, is contending with more competition from rival discount chains and big-box retailers such as Target Corp. and Wal-Mart Stores Inc. Revenue at Family Dollar is projected to rise 1.7 percent this fiscal year, according to the average of analysts’ estimates compiled by Bloomberg, after gaining 11 percent last year.
The company will book a restructuring charge in the second half of this fiscal year of $85 million to $95 million related to the job cuts and store closings, according to the statement.
Chief Executive Officer Howard Levine said fiscal second-quarter results “did not meet our expectations,” as the company faced more competition and a more cash-strapped customer. Sales fell 6.1 percent to $2.72 billion in the quarter ended March 1.
The shares fell 3.2 percent to $57.17 at the close in New York. They have lost 12 percent this year.
Other companies have recently said they’re shutting locations to save costs amid more rivalry from mass and online retailers. Staples Inc. last month said it will close as many as 225 stores in North America, while J.C. Penney Co. in January said it plans to shutter 33 underperforming locations.
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