No one likes to see a store close, even if they don't shop at that particular retailer. Retail store closures can have a ripple effect, especially when one store is the destination.
If a key retailer closes, nearby businesses will be affected. Maybe you go to Five Below or Ulta Beauty because you like shopping at those chains, but when you're done you grab a snack at a local business, or make an appointment for a haircut or manicure because you know you'll be in the area.
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One closed retailer can damage an entire shopping center and in tough economic times where labor, rent and loans have become more expensive, it doesn't take much to drive many businesses into failure.
That's why it's very bad news when destination chains like Christmas Tree Shops, Tuesday Morning, and Bed Bath and Beyond are failing. People are not only losing a place to shop, they are losing an anchor business that brings them to a shopping plaza.
It's not easy to fill those spaces with another business that attracts foot traffic. That makes it a relief when a growing chain acquires leases once held by a bankrupt company.
In this case, Dollar Tree will step in and take over the leases for a significant number of 99 Cents Only locations.
Image source: The street
Communities will still have a discount retailer
When 99 Cents Only shared that it was closing and liquidating its nearly 400 locations in an April 4 web post, it was shocking news for many of its longtime customers. The retailer was more than a traditional dollar store, as it sold items such as fresh produce that are not typically associated with that type of discount store.
The chain began liquidating almost immediately, although it was always possible that a buyer would step in to buy the brand.
“The company has entered into an agreement with Hilco Global to, among other things, liquidate all company-owned merchandise and dispose of certain fixtures, furniture and equipment in the company's stores,” according to the post. “Sales under this agreement are expected to begin on April 5, 2024 and will occur in the company's 371 stores.”
It appears that many of the company's former locations will remain discount retailers, although none of the current offerings will keep the 99 Cents Only brand alive. Ollie's Bargain Outlet (OLLI) reached a deal on May 24 to acquire leases for 11 99 Cents Only stores in Texas, while about half of the chain's leases were purchased out of bankruptcy by Dollar Tree.
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Dollar Tree acquires 170 99 Cents Only stores
While the dollar tree (DLTR) It may not be as beloved as 99 Cents Only, its move means the chain's customers in many markets will still have a discounted purchasing option.
“Dollar Tree has acquired designation rights for 170 99 Cents Only store leases in Arizona, California, Nevada and Texas. The deal was completed through two transactions in May that were approved by the United States Bankruptcy Court for the District of Delaware. As part of the transactions, Dollar Tree also acquired the North American intellectual property of the 99 Cents Only stores and select furniture, fixtures and equipment at the location.
The new owner of the 99 Cents Only name does not seem like he will keep it, although he does not rule it out.
“As we continue to execute our accelerated growth strategy for the Dollar Tree brand, this was an attractive opportunity to secure leases in priority markets where we see strong potential for profitable growth. The portfolio complements our existing presence and will provide us with access to high-quality assets. real estate in premium retail centers, allowing us to rapidly grow the Dollar Tree brand throughout the Western United States, reaching even more customers and communities,” said Dollar Tree Chief Operating Officer Michael Creedon.
Dollar Tree hopes to reopen its newly acquired locations by the fall.
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