Dollar Tree is moving into 99 Cents Only stores

Goodbye 99 Cents Only. Hello Dollar Tree.

Dollar Tree announced Wednesday it acquired leases for 170 of 99 Cents Only's stores out of bankruptcy in Arizona, California, Nevada and Texas. Dollar Tree will reopen these stores with its own products under its brand beginning in the fall.

99 Cents Only had filed for bankruptcy in April and closed all of its 370 locations.

The two chains are very different, and the announcement is a sign of consolidation in the retail industry.

99 Cents Only was a regional chain and sold groceries. Dollar Tree, a national company with mostly suburban locations, primarily offers discretionary merchandise like party supplies and home goods. Dollar Tree was the last dollar store chain to sell everything for $1 before raising prices in 2021 to $1.25 and above.

Dollar Tree also owns Family Dollar, based mostly in cities. Family Dollar has underperformed Dollar Tree and other discount chains in recent years, and it's closing 975 stores.

The acquisition of 99 Cents Only leases out of bankruptcy gives Dollar Tree a cheaper way to grow rather than building new stores and helps the Virginia-based chain extend its reach on the West Coast.

"Management felt that these locations are fundamentally good and in relatively short supply, so they took advantage of competitor weakness," Michael Montani, an analyst at Evercore IRI, wrote in a note to clients Wednesday.

One challenge for Dollar Tree could be the size of 99 Cents Only stores.

99 Cents Only stores are on average approximately 20,000 square feet, more than double the size of a typical dollar store chain.

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