Theft Is Apparently a Big Problem For Dollar Tree

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 A franchise one known for selling most things for $1.00 is facing some interesting challenges:

Dollar Tree had a miserable quarter, and company management is chalking it up to a mix of factors: changing consumer demands on top of higher prices for fuel and electricity … and theft.

The company’s chief executive and chief financial officer homed in on that last one on a call with Wall Street analysts Thursday.

Dollar Tree CEO Richard Dreiling and CFO Jeffrey Davis blamed a surprisingly large drop in gross profit margin — tumbling to 29.8% last quarter from 32.7% a year earlier — on “shrink,” the industry term for inventory losses due to theft, damages and other causes.

Davis said the company has taken steps to fix the problem, but the shrink issue is getting worse — and “definitely advanced a little further than what we had anticipated.”

In response, Dreiling said Dollar Tree and Family Dollar stores, which the company also owns, will take more drastic measures in the coming months.

“We are now taking a very defensive approach to shrink,” Dreiling told analysts Thursday. “We have several new shrink formats that we’ll introduce in the back half of the year, and it goes everything from moving certain SKUs to behind the check stand. It has to do with some cases being locked up. And even to the point where we have some stores that can’t keep a certain SKU on the shelf just discontinuing the item. So we have a lot of things in the works.”

"Locked up" as in, "how places like Target or Walmart treat valuable items."

Locked up items. At Dollar Tree.



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