FRANKLIN, NJ—About 130 workers at more than a dozen Dollar Express stores will be without jobs by June 30, according to a Worker Adjustment and Retraining Notification (WARN) filed with the New Jersey Department of Labor and Workforce Development.

The Dollar Express banner is only two years old and was created in 2015 by a private equity group so that Family Dollar could sell about 323 stores, and thus satisfy Federal Trade Commission’s (FTC) antitrust concerns — paving the way for it to merge with Dollar Tree.

The WARN comes amid a lawsuit filed in Delaware Superior Court on June 1 by Dollar Express, claiming that Family Dollar and Dollar Tree leveraged proprietary information to open stores geographically too close to the removed or divested stores. 

Dollar Express obtained FTC approval in April to sell their stores to Dollar General, another competitor.

“By undercutting it on prices,” Dollar Express maintains that Dollar Tree forced it out of business and alleges a myriad of damages, including that “the lost prospective value of the acquisition of the stores,” which the complaint says “may exceed one-half a billion dollars.”

“Dollar Express saw these stores as an exciting platform opportunity to create a nationwide discount retailer, and its plan was to grow by opening numerous Dollar Express-branded stores throughout the country,” the suit reads.

But Dollar Express reportedly had little choice other than to wind down the 323 stores, which are now set to be acquired by Dollar General before the end of the year.

“Had Dollar Express known defendants’ true intentions, Dollar Express never would have purchased the stores,” the suit reads. “Similarly, defendants’ false representations enabled them to obtain the pre-merger approvals from the [FTC] required to consummate the merger.”

Dollar General says they are “pleased” the FTC gave approval “for the company’s asset purchase agreement with Dollar Express LLC, a portfolio company of private equity firm Sycamore Partners, to acquire all 323 of Dollar Express’s store locations across 36 states.”

“With this decision, the asset acquisition can proceed forward with a tentative closing date in late June,” said Crystal Ghassemi, of Dollar General Corporation’s Corporate Communications department.

“Dollar General is unable to provide additional information on its plans for specific store locations until the asset acquisition is completed,” Ghassemi said.

All 15 stores in New Jersey, along with those in the other states, are set to be converted to the Dollar General banner this year.  There are already 100 stores operating under that name in New Jersey, according to Ghassemi.

Randy Guiler, Vice President of  Investor Relations at Dollar Tree, Inc. says his company now has 254 stores in New Jersey, including 152 Dollar Trees and 102 Family Dollars.

While Dollar Tree does not have a store in the Hub City, it has locations in North Brunswick, South Brunswick, East Brunswick, and Franklin. Franklin is home to two Family Dollar locations, and Edison has one as well.

The suit accuses the combined company of purposely attempting to “kill” the 323 units it spun-off, violating a transition services agreement intended to help support and make the stores trading as Dollar Express autonomous.

Dollar Tree recently signed five new leases in the Garden State, the largest among them a 12,230 square-foot space at Plainfield Plaza, which is anchored by a Supremo Foodmarket, a grocer with 10 other locations in Jersey.

The other new Dollar Tree outposts will be in Toms River, Bayonne, Marlton and Bellmawr, and average 9,650 square feet each.

“The Dollar Tree banner continues to generate results that are strong, consistent and growing, and we are enthusiastic about the opportunity to improve the Family Dollar business as we launch our renovation initiatives,” added Sasser in a statement.

Meanwhile, Dollar General has locations in Franklin and Perth Amboy. The nearest Dollar Express to New Brunswick is located in Elizabeth.

A spokesman for Sycamore, the firm that represents Charlotte-based Dollar Express confirmed that, on April 3, the short-lived company sold all 323 locations to Dollar General Corporation.

However, the terms of the deal are not being disclosed, according to Sycamore and Dollar General.

“The transaction is subject to customary closing conditions and approval by the Federal Trade Commission,” added a news release.

“Dollar Express was created in November 2015 in conjunction with a divestiture transaction that satisfied a condition of Dollar Tree Inc.’s acquisition of Family Dollar Stores, Inc., as required by the FTC.”

While the liquidation pulls the plug on less than 5% of the discounter’s total workforce, some of those  losing jobs may get rehired by Dollar General, but they must re-apply to work in the stores that remain open.   

Dollar General is growing quite rapidly and new store growth remains robust, according to CEO Todd Vasos.  He said on the company’s most recent quarterly earnings call that their goal to make “the pending sites” as complimentary as possible to recently launched stores.

“We expect the transaction to bring our new store count for 2017 to 1,290,” said Vasos on the call.

He indicated that certain areas in and around large cities have less direct competition, and are therefore targets for new stores.

“There’s a lot of metro areas… that we’re actually [considering] opening [stores in], as well as part of the 292 stores that we’re going to be opening from our recent acquisition,” said Vasos.

Yet, the company expects to incur charges and expenses associated with “the converging of acquired store locations to the Dollar General banner,” said CFI John Garratt, adding the change could be completed by November.

Garratt indicated on the call that some costs will be “related to lease termination costs for [a few] overlapping store locations.”

Vasos cited real estate growth as dovetailing with Dollar General’s “proven” model, adding that the chain could “extend this model opportunistic purchases of the 322 sites.”

“The majority of these sites are in strategic trade areas that we would have anticipated for new store site selection over time,” said Vasos. 

Still, the company said it would have considered stores in most of the zones anyway but that the deal would speed up expansion with “organic growth.” 

“Our core customer… doesn’t have large bank accounts to fall back on, and so, during times like these where she’s starting to feel little bit more comfortable because she’s back to work and seeing a little bit of wage growth, she wants to make sure it’s sustainable,” added Vasos.

“The huge downturn that we all experienced [eight years back] hit our consumer extremely hard, probably the hardest of any group … And I think that’s still very fresh in her mind. She is making sure that what she’s doing now is sustainable … I believe once that happens, we’ll start to see that purse string loosen,” said Vasos on the call.  

Dollar Tree apparently retaliated by filing a suit against Dollar Express over allegedly not being paid millions of dollars for goods and services, plus additional accusations. 

The company has entered “an era where it will need to run faster” in order sell roughly the same volume of merchandise, said GlobalData Retail Analysts, Hakon Helgesen.

While business could be worse for the biggest United States dollar-store chain, certain methods of operation raised red flags, according to GlobalData, which feels the chain is struggling. 

Same-store sales, an important metric retailers use to compare revenue at existing stores to an identical period in the past, deteriorated during the past half year. That, combined with heavy discounting, have put a strain on profits.

Additionally, the delay in consumers’ tax refunds, which which also hurt other retailers such as Foot Locker in the first quarter, had an effect on the chain’s overall volume, according to Helgesen, who added that those with less to spend only purchased essentials.

“[Consumers] bought what they needed to get by,” said Sasser on an earnings call.  “The difference [between] what they wanted to buy across discretionary departments was really what we felt [most],” said Sasser. 

Finally, competition has been on the rise, according to Helgesen. 

“Walmart has sharpened pricing,” and so have other grocers.

GlobalData said its numbers show an increase in “customer sharing with Walmart,” over the past several months.

Still, the “tightening of disposable incomes” hasn’t been too bad, said Helgesen, citing “increased gas prices and other inflationary pressures” as factors causing consumers with less to spend, to “trim back a bit,” taking volume away from Dollar Tree.

Still, Dollar Tree is a relevant business, said Helgesen, noting the possibility of growth on the digital side of the business. 

GlobalData doesn’t expect price competition to ease up over the remainder of the year, it said. 

Business Reporter at New Brunswick Today |

Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.

Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.