Dollar Tree eyes locking up merchandise, discontinuing sales of some products

Dollar Tree is planning to lock up some of its merchandise and may discontinue the sale of certain products, as theft makes a dent in the company’s profit margins.

Richard Dreiling, Dollar Tree’s CEO, said on a call with analysts Thursday that the company is introducing new measures in the second half of the year to combat “shrink,” or the loss of inventory from theft and other causes.

“We are now taking a very defensive approach to shrink,” Dreiling said, noting that such inventory losses “advanced a little further than what we had anticipated.” 

Dollar Tree and Family Dollar, both of which are owned by Dollar Tree Inc., will begin to move some items behind the checkout stand or lock up others, he said. However, in some cases, merchandise may simply be discontinued if stores are unable to keep it on the shelves, Dreiling added.

The company’s gross profit margins fell from 32.7 percent in the second quarter of 2022 to 29.8 percent in the second quarter of 2023, which Dollar Tree CFO Jeffrey Davis blamed primarily on such inventory losses.

Dollar Tree is not the first retailer to lock up its products over rising theft concerns. Stores such as Walmart, CVS, Walgreens, Rite Aid and Target have also implemented similar measures.