In April, 99 Cents Only Stores, which had been in business for 41 years, filed for bankruptcy. As part of its financial restructuring, it began selling off its assets.
Recently, Dollar Tree purchased the rights to lease 170 locations previously held by 99 Cents Only Stores.
Dollar Tree Expands with 170 New Leases
Dollar Tree announced Wednesday that it has acquired the rights to lease 170 locations previously held by 99 Cents Only Stores.
These stores are spread across Arizona, California, Nevada, and Texas. Michael Creedon, Jr., Dollar Tree's chief operating officer, expressed excitement about the opportunity, stating, "As we continue to execute on our accelerated growth strategy for the Dollar Tree brand, this was an attractive opportunity to secure leases in priority markets where we see strong, profitable growth potential."
Creedon added, "The portfolio complements our existing footprint and will provide us access to high-quality real estate assets in premium retail centers, enabling us to rapidly grow the Dollar Tree brand across the western United States, reaching even more customers and communities."
Dollar Tree plans to open these new locations to customers as early as fall 2024.
In April, 99 Cents Only Stores, based in Southern California, filed for Chapter 11 bankruptcy, initiating the sale of its assets, including inventory, real estate, and leases at all 370 locations. The closures hit some customers hard, especially those struggling to afford groceries.
In 1982, 99 Cents Only Stores specialized in discount groceries and general merchandise. In contrast, Dollar Tree, a discount variety store, offers various products such as party supplies, crafts, snacks, household items, kitchenware, toys, school supplies, cleaning supplies, and more.
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Dollar Tree's Diverse Retail Landscape
As CNN revealed, Dollar Tree recently acquired the leasing rights of 99 Cents Only Stores in a move signaling consolidation within the retail sector. This highlights the stark differences between the two chains.
99 Cents Only Stores, a regional chain known for selling groceries, contrasts with Dollar Tree, a national company primarily offering discretionary items like party supplies and home goods. Dollar Tree, once known for pricing everything at $1, raised its prices to $1.25 and above in 2021, distinguishing itself from other dollar store chains.
Dollar Tree's acquisition of 99 Cents Only leases out of bankruptcy provides a cost-effective method for growth, bypassing the need for new store constructions. This move also allows the Virginia-based chain to extend its presence on the West Coast.
Michael Montani, an analyst at Evercore IRI, noted that Dollar Tree's management seized the opportunity presented by the bankruptcy to acquire prime locations, capitalizing on competitor weaknesses.
However, Dollar Tree may face challenges with the larger footprint of 99 Cents Only stores, which are, on average, approximately 20,000 square feet, more than double the size of a typical dollar store.
Meanwhile, this week, Ollie's, a fellow discount chain, announced plans to acquire 11 former 99 Cents Only Stores.
The US Bankruptcy Court approved Ollie's $14.6 million bid for these stores. Ollie's
CEO John Swygert expressed excitement, noting the stores' ideal size, prime locations, and long-standing appeal to value-focused shoppers.
The stores, all situated in key markets within Texas, include three owned and eight leased properties. The acquisitions are set to conclude early next month. Swygert highlighted Texas as a high-potential market due to its strong population growth.
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