Dollar Tree Earnings: Dollar Tree Banner Remains Strong as Store Closures Imminent at Family Dollar

No-moat Dollar Tree's fiscal 2023 fourth-quarter results landed mostly in line with our expectations—revenue expanded nearly 12% to $8.6 billion and adjusted operating margin improved 70 basis points to 8.7%—led by strong performance at the firm's namesake banner. However, the stock suffered a precipitous 14% decline as its Family Dollar segment grappled with reduced spending capacity from its core low-income consumer. Upon Rick Dreiling's ascension to CEO last year, management has stressed the need for operational improvement and store rationalization at the floundering banner, which seemingly culminated in plans to close 970 underperforming Family Dollar stores (about 12% of the banner's store base), with 600 of these closures planned for the first half of fiscal 2024. The firm incurred a nearly $600 million noncash charge from the strategic review and added a $2 billion write-down of goodwill and intangible assets associated with Family Dollar.