The US Consumer Is So Strong, Family Dollar Is Closing 370 Stores
First, they came for the upper middle-priced retailers when Macy's shut down 5 stores and fired 2500... and nobody said anything.
Then, they came for the middle-priced retailers when JCPenney announced it would shut down 33 stores and fire 2000... and nobody said anything.
Then, they came for the lower-priced retailers when Radioshack celebrated the one year anniversary of shutting down 500 stores by shutting down 500 more... and nobody said anything.
Today, as we plumb the depths of the US economic food-chain in that last bastion for the impoverished US consumer, dollar stores, we find that that staple for low-cost "everything" Family Dollar, which operates 8,100 stores around the country, will be shutting down 370 stores "as it tries to reverse sagging sales and earnings." It was not clear immediately how many thousands of workers would be affected by the store shuttering. We assume "many to quite many."
And what do they say? Why, that "the US economic recovery is obviously stronger than ever" of course!
The retail chain follows competitors in highlighting the split between shoppers who are enjoying an improving economy and those being left behind.
Dollar General, the nation's largest dollar-store chain with 11,100 locations, offered a weak profit outlook last month after reporting weak fourth-quarter sales. And Dollar Tree, which operates about 5,000 locations, missed profit expectations for the holiday quarter in February.
Family Dollar has stumbled even more than its rivals because it has made mistakes in pricing, merchandising and the locations of its stores, analysts say. Still, the industry's problems are a big departure from a few years ago, when Family Dollar and other chains packed in customers and expanded rapidly by catering to cash-strapped people during the Great Recession.
But that expansion has spread shoppers thin. And retailing giant Wal-Mart is muscling in, too, by accelerating its growth in small stores, while increasing its offerings of small packages that are easy on the budget.
It wouldn't be a pathetic management team if it didn't scapegoat the weather instead of casting blame where it truly lies: an incompetent Federal Reserve that has done nothing for the recovery of the "non-1%" and sure enough:
Family Dollar Chairman and CEO Howard Levine told investors on a call that the poor weather led to numerous store closings, disruptions in merchandise deliveries and higher-than-expected utility and maintenance expenses.
Oh so, the reason revenue dropped 3.8% in the quarter was snow. So why did revenue drop 2.8% in the last quarter of 2013? Fear of imminent snow?
Levine did retain a tiny shred credibility when he added that "shoppers' financial constraints and a discount-driven holiday season also played a role." A rather massive one.
What other mistakes did management make?
Family Dollar had shifted away from its focus on $1 items and had offered too many temporary promotions, retail consultant Craig R. Johnson said. The company now says it wants to go back to focusing on everyday low prices and $1 items to restore confidence it offers a predictably good deal every time a shopper visits the store.
Yup: the US recovery is so strong, consumers can't even afford to spend $1 on groceries. And now buy stawks. The Fed demands it.
Finally, we are not being entirely fair. It is not every retailer that is getting crushed. Only those catering to the non 1% of course. "The retail chain follows competitors in highlighting the split between shoppers who are enjoying an improving economy and those being left behind." Indeed, as we first showed several months ago in "Shopping With Bernanke: Where QE Cash Ends Up Tells Us Who Benefited"...
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