Dollar Tree Scoops Up 99 Cents Only Stores

A U.S. Bankruptcy Court in Delaware has approved the transfer of designation rights for the leases of 170 shuttered 99 Cents Only outlets to industry giant Dollar Tree.

The 170 stores, located in Texas, Arizona, Nevada and California, will be reopened later this year as Dollar Tree outlets, Dollar Tree announced. More than a third of the locations acquired by Dollar Tree are in Southern California.

As part of its winning bid, Dollar Tree also acquired the North American Intellectual Property of 99 Cents Only Stores and select on-site furniture, fixtures and equipment.

99 Cents Only Stores filed for Chapter 11 bankruptcy protection last month, announcing it would close all of its 371 stores and begin selling off its assets. Hilco Real Estate was tapped to handle the company's asset sales.

The discount chain, which started in 1982 in Los Angeles, cited in a release rising levels of shrink, inflation and shifting consumer demand as the main causes of its demise.

In a statement, Michael Creedon, Dollar Tree's chief operating officer, said the 99 Cents Only locations acquired by Dollar Tree are in priority markets where it expects strong growth potential.

"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," Creedon said.

Dollar Tree is acquiring stores at the same time it is shedding them. After posting a loss in Q4 2023, Dollar Tree announced in March it would close 970 stores operating under its Family Dollar brand by 2025.

Dollar Tree acquired Family Dollar in 2015 for $8.5B, outbidding discount rival Dollar General. Overall, Dollar Tree operates nearly 17,000 discount stores, second only to Dollar General.

The proliferation of discount stores, also known as dollar stores, is generating pushback in some urban areas. In February, Chicago's City Council in a 42-7 vote adopted a measure, known as the small-box retailer ordinance, which blocks dollar stores from opening with one mile of existing discount outlets.

Alderman Matt O'Shea, who sponsored the ordinance, said the law is designed to inhibit "over-saturation" of neighborhoods with the stores as well as force owners to take better care of these outlets.

"When a dollar store comes into a neighborhood, they undercut other retailers, especially grocery stores," O'Shea told the Chicago Tribune, adding that in some neighborhoods dollar stores become the only option, "exacerbating our already very serious food desert problems."

According to O'Shea, there are now 149 dollar stores operating in Chicago, including Dollar Tree, Dollar General and Family Dollar, with many of these discount stores concentrated in the same neighborhoods.