Dollar Tree to Book $26.7 Million in 4Q Charges After Family Dollar Pled Guilty in Safety Products Case

By Sabela Ojea

Dollar Tree will be booking an additional charge of $26.7 million in the fourth quarter after Family Dollar plead guilty to several charges over an alleged adulteration of products regulated by the U.S. Food and Drug Administration.

The discount store chain on Monday said that its wholly owned subsidiary Family Dollar has agreed to pay $200,000 in fines and a forfeiture money judgement of $41.5 million after reaching an agreement with the U.S. Department of Justice.

The company had already recorded a $30 million charge in the first quarter of the prior year, which included a proposed settlement of 14 putative consumer class actions and a potential resolution of the DOJ investigation.

The plea agreement has been approved by the U.S. District Court for the Eastern District of Arkansas at a hearing, and resolves the federal criminal investigation of Family Dollar.

The U.S. Attorney has also agreed not to bring further criminal charges against the company.

As part of the agreement, Dollar Tree and Family Dollar have also agreed to adopt a new or to modify their internal controls, compliance code and procedures, the company added.

Two years ago, Family Dollar received putative class actions complaints after one of its distribution centers was found to have a rodent infestation following inspections by the FDA and U.S. Department of Agriculture.

Dollar Tree then initiated a recall of products stored and shipped to about 400 stores, and ended up closing the affected-facility and disposed all the inventory that was in the facility. It incurred costs related to the product recall, remediation efforts and asset impairment during fiscal 2022.

However, the violations identified during the inspection of the facility caused Dollar Tree's human food and dietary supplement products to be adulterated, according to a Nov. 2022 FDA warning letter.

Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix

(END) Dow Jones Newswires

February 26, 2024 17:24 ET (22:24 GMT)

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