Dollar Tree Inc. has revealed plans to shutter nearly 1,000 stores and has reported an unexpected fourth-quarter loss. The discount retailer attributed this loss to a $1.07 billion goodwill impairment charge.

The news sent shares plummeting by 15% prior to the opening bell on Wednesday.

According to Dollar Tree's strategy, approximately 600 Family Dollar stores will be closed within the first half of this year, followed by the closure of 370 Family Dollar and 30 Dollar Tree stores over the coming years.

The acquisition of Family Dollar by Dollar Tree over a decade ago, for a sum exceeding $8 billion, following a heated bidding war with rival Dollar General, has proven challenging for the company.

Neil Saunders, managing director of GlobalData, commented on the development, stating, "This dramatic cull is the coup de grâce in the rather botched acquisition of the Family Dollar chain, which has caused Dollar Tree nothing but hassle since it was completed back in 2015." Saunders continued, "Basically, almost ten years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around."

In an emailed statement, Saunders revealed that nearly 12% of the existing Family Dollar stores will be shut down over the next three years.

For the three months ending Feb. 3, Dollar Tree reported a loss of $1.71 billion, equivalent to $7.85 per share. In comparison, the company had earned $452.2 million, or $2.04 per share, during the same period the previous year.

This unexpected turn of events poses significant challenges for Dollar Tree as it navigates the fallout from the closure of these stores and seeks to revitalize its financial performance.

During the quarter, sales at Dollar Tree stores open at least a year climbed 6.3%, with traffic up 7.1%. While more shoppers were heading to stores, they were closely watching how much they spent, with average ticket down 0.7%. Despite the increase in sales, Dollar Tree has been facing challenges due to inflation, prompting consumers to cut back on spending.