CHESAPEAKE, Va. — Dollar Tree Inc. reported disappointing quarterly earnings and offered a downbeat outlook on March 13 and announced plans to shutter about 1,000 stores, nearly all of which operate under its Family Dollar banner.

As part of an ongoing portfolio review, company executives have identified some 600 Family Dollar stores to close in the first half of fiscal 2024, which began February 1, said Rick Dreiling, the company’s chairman and chief executive officer. Another 370 or so Family Dollar locations and 30 Dollar Tree stores will be closed when their leases run out.

“We believe rationalizing these unprofitable locations will help to unlock meaningful value at the enterprise level,” Dreiling said on an earnings call.

Dreiling said persistent inflation and reduced government benefits continue to pressure Family Dollar’s customers. The banner’s comparable-store sales declined 1.2% in the fourth quarter despite a 0.7% increase in traffic. Average ticket declined 2%.

Dollar Tree reported a net loss of $1.7 billion for the quarter on sales of $8.4 billion, below the market consensus of $8.6 billion but up 12% from the year-earlier quarter.

For the full year, Dollar Tree swung to a net loss of $998 million from a $1.6 billion profit the previous year. Consolidated net sales rose 8% to $30.6 billion. Overall same-store sales increased 4.6%. By banner, Dollar Tree’s comps rose nearly 6%, while Family Dollar’s comps grew 3.2% in fiscal 2023.

Net cash provided by operating activities increased $1.07 billion last year.

“As an organization, we continue to execute at a high level,” said chief financial officer Jeff Davis. “Our core operating performance was strong in the fourth quarter, despite some unanticipated developments related to general liability claims.”

The Dollar Tree segment gained 3.4 million new customers in 2023, mostly from households earning over $125,000 a year, according to Dreiling, who cited the banner’s ongoing rollout of a multi-price-point strategy that allows the retailer to diversify its assortment by adding more food and general merchandise. Despite this expansion, the “vast majority” of items sold at Dollar Tree stores will remain at the entry-level fixed price of $1, he said.

“We finished the year strong, with fourth quarter results reflecting positive traffic trends, market share gains, and adjusted margin improvement across both segments,” said Dreiling. “While we are still in the early stages of our transformation journey, I am proud of what our team accomplished in 2023 and see a long runway of growth ahead of us.”

As of early February, Dollar Tree had 16,774 stores across 48 states and five Canadian provinces. Store closures anticipated over the next few years could reduce the Family Dollar footprint by about 12%. Dollar Tree revealed its pullback a day after Dollar General Corp. said on an earnings call that it plans to open 800 more stores this year.

Dollar Tree cited additional business highlights in the quarter, including the opening of 219 stores, bringing the full-year total store openings to 641. The company also added center-store offerings priced at $3 and $5 at about 5,000 Dollar Tree locations, and added  frozen and refrigerated offerings priced at $3, $4 and $5 at 6,500 Dollar Tree stores.