By Granth Vanaik and Anuja Bharat Mistry

(Reuters) -Dollar Tree missed market expectations for holiday-quarter sales and profit on Wednesday and laid out plans to shutter 970 of its Family Dollar stores, as the retailer looks to revamp the struggling business.

Shares of Dollar Tree fell about 14% after it also forecast 2024 sales and profit below expectations. Shares of rival Dollar General Corp fell 2.8%.

Dollar stores have struggled following competition for consumer spending from Chinese e-commerce platform Temu, owned by PDD Group, which sells $4 home decor items and other low-cost discretionary merchandise in the United States. Other rivals seeking to draw penny-pinchers to their stores include Walmart, which is keeping its prices low, particularly on groceries, and Target, which is launching hundreds of home, personal care and electronics products below $10.

"Our biggest problem right now is getting enough merchandise into the stores fast enough so the consumer can respond," said CEO Rick Dreiling, adding that Family Dollar was continuing to be hurt by macroeconomic uncertainties.

In November, Dollar Tree said it would be reviewing its Family Dollar business, including potentially shutting underperforming stores, to return to growth.

The company, which operates around 16,774 stores, said it would close about 600 Family Dollar stores in the first half of fiscal-year 2024 and 370 more over a period of a few years, along with 30 Dollar Tree outlets, as their lease terms expire.

Meanwhile, Temu is investing in digital and television marketing to attract customers from dollar stores and other brick-and-mortar retailers.

As a result, Dollar Tree took a $594.4 million charge for a portfolio optimization review and incurred a goodwill impairment charge of $1.07 billion, as well as $950 million in other asset impairment charges in the reported quarter.

Dollar Tree reported a net loss of $1.71 billion, or $7.85 per share, in the quarter ended Feb. 3, compared with a year-ago profit of $452.2 million, or $2.04 per share.

It expects 2024 sales between $31 billion and $32 billion, the mid-point of which is below Wall Street's estimate of $31.65 billion, according to LSEG data.

Annual profit is expected to be between $6.70 and $7.30 per share, putting the midpoint of the range slightly below expectations of $7.04 per share.

(Reporting by Granth Vanaik and Anuja Bharat Mistry in Bengaluru; Editing by Pooja Desai and Bill Berkrot)