UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~July 30, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-25464

DOLLAR TREE, INC.

(Exact name of registrant as specified in its charter)


Virginia						26-2018846
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


500 Volvo Parkway
Chesapeake,	Virginia	23320
(Address of principal executive offices)		(Zip Code)

(757) 321-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	DLTR	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes			☒			No			☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Yes			☒			No			☐

Table of Contents

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes			☐			No			☒

As of ~~November 19, 2021,~~August 23, 2022, there were ~~224,956,059~~223,936,965 shares of the registrant’s common stock outstanding.

DOLLAR TREE, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~OCTOBER~~JULY 30, ~~2021~~2022

TABLE OF CONTENTS


		Page
	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Income Statements	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Shareholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2829
Item 4.	Controls and Procedures	2829

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	2931
Item 1A.	Risk Factors	2931
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	3132
Item 6.	Exhibits	3132
Signatures		33

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Unaudited)


		13 Weeks Ended				39 Weeks Ended					13 Weeks Ended				26 Weeks Ended
		October 30,		October 31,		October 30,		October 31,			July 30,		July 31,		July 30,		July 31,
(in millions, except per share data)	(in millions, except per share data)	2021		2020		2021		2020		(in millions, except per share data)	2022		2021		2022		2021
Net sales	Net sales	$	6,415.4	$	6,176.7	$	19,232.4	$	18,741.1	Net sales	$	6,765.3	$	6,340.2	$	13,665.4	$	12,817.0
Other revenue	Other revenue	2.3		0.3		8.2		0.3		Other revenue	3.2		3.0		5.7		5.9
Total revenue	Total revenue	6,417.7		6,177.0		19,240.6		18,741.4		Total revenue	6,768.5		6,343.2		13,671.1		12,822.9
Cost of sales	Cost of sales	4,651.7		4,252.6		13,643.6		13,105.9		Cost of sales	4,640.9		4,479.2		9,200.5		8,991.9
Selling, general and administrative expenses	Selling, general and administrative expenses	1,455.5		1,458.9		4,364.4		4,429.2		Selling, general and administrative expenses	1,622.2		1,461.8		3,233.7		2,908.9
Operating income	Operating income	310.5		465.5		1,232.6		1,206.3		Operating income	505.4		402.2		1,236.9		922.1
Interest expense, net	Interest expense, net	33.4		38.1		99.4		113.1		Interest expense, net	30.6		33.0		64.6		66.0
Other expense, net	Other expense, net	0.2		0.1		0.2		0.8		Other expense, net	0.1		—		0.1		—
Income before income taxes	Income before income taxes	276.9		427.3		1,133.0		1,092.4		Income before income taxes	474.7		369.2		1,172.2		856.1
Provision for income taxes	Provision for income taxes	60.1		97.3		259.3		253.3		Provision for income taxes	114.8		86.8		275.9		199.2
Net income	Net income	$	216.8	$	330.0	$	873.7	$	839.1	Net income	$	359.9	$	282.4	$	896.3	$	656.9
Basic net income per share	Basic net income per share	$	0.96	$	1.39	$	3.82	$	3.54	Basic net income per share	$	1.61	$	1.24	$	3.99	$	2.84
Diluted net income per share	Diluted net income per share	$	0.96	$	1.39	$	3.80	$	3.53	Diluted net income per share	$	1.60	$	1.23	$	3.97	$	2.83

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		13 Weeks Ended				39 Weeks Ended					13 Weeks Ended				26 Weeks Ended
		October 30,		October 31,		October 30,		October 31,			July 30,		July 31,		July 30,		July 31,
(in millions)	(in millions)	2021		2020		2021		2020		(in millions)	2022		2021		2022		2021
Net income	Net income	$	216.8	$	330.0	$	873.7	$	839.1	Net income	$	359.9	$	282.4	$	896.3	$	656.9

Foreign currency translation adjustments	Foreign currency translation adjustments	0.7		0.6		3.9		(0.8)		Foreign currency translation adjustments	(1.0)		(1.8)		(1.1)		3.2

Total comprehensive income	Total comprehensive income	$	217.5	$	330.6	$	877.6	$	838.3	Total comprehensive income	$	358.9	$	280.6	$	895.2	$	660.1

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in millions)	(in millions)	October 30, 2021		January 30, 2021		October 31, 2020		(in millions)	July 30, 2022		January 29, 2022		July 31, 2021
ASSETS	ASSETS							ASSETS
Current assets:	Current assets:							Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	701.4	$	1,416.7	$	1,118.3	Cash and cash equivalents	$	688.9	$	984.9	$	720.8

Merchandise inventories	Merchandise inventories	4,316.0		3,427.0		3,792.3		Merchandise inventories	5,422.2		4,367.3		3,667.7
Other current assets	Other current assets	357.1		207.1		260.4		Other current assets	266.2		257.0		259.6
Total current assets	Total current assets	5,374.5		5,050.8		5,171.0		Total current assets	6,377.3		5,609.2		4,648.1
Property, plant and equipment, net of accumulated depreciation of $5,209.9, $4,765.0 and $4,618.1, respectively		4,377.4		4,116.3		4,095.6
Property, plant and equipment, net of accumulated depreciation of $5,688.9, $5,363.8 and $5,058.6, respectively								Property, plant and equipment, net of accumulated depreciation of $5,688.9, $5,363.8 and $5,058.6, respectively	4,652.9		4,477.3		4,250.2

Restricted cash	Restricted cash	53.4		46.9		46.9		Restricted cash	53.5		53.4		46.9
Operating lease right-of-use assets	Operating lease right-of-use assets	6,424.0		6,324.1		6,185.1		Operating lease right-of-use assets	6,433.6		6,425.3		6,341.2
Goodwill	Goodwill	1,985.3		1,984.4		1,983.1		Goodwill	1,984.3		1,984.4		1,985.1
Trade name intangible asset	Trade name intangible asset	3,100.0		3,100.0		3,100.0		Trade name intangible asset	3,100.0		3,100.0		3,100.0
Deferred tax asset	Deferred tax asset	22.3		23.2		23.3		Deferred tax asset	17.7		20.3		23.9

Other assets	Other assets	53.1		50.3		47.2		Other assets	57.0		51.9		49.8
Total assets	Total assets	$	21,390.0	$	20,696.0	$	20,652.2	Total assets	$	22,676.3	$	21,721.8	$	20,445.2
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY							LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:							Current liabilities:
Current portion of long-term debt		$	—	$	—	$	300.0

Current portion of operating lease liabilities	Current portion of operating lease liabilities	1,388.0		1,348.2		1,296.5		Current portion of operating lease liabilities	$	1,428.3	$	1,407.8	$	1,368.6
Accounts payable	Accounts payable	1,984.8		1,480.5		1,587.2		Accounts payable	2,011.3		1,884.2		1,559.6
Income taxes payable	Income taxes payable	—		86.3		—		Income taxes payable	27.4		82.6		11.7
Other current liabilities	Other current liabilities	918.4		815.3		858.6		Other current liabilities	913.5		802.0		782.8
Total current liabilities	Total current liabilities	4,291.2		3,730.3		4,042.3		Total current liabilities	4,380.5		4,176.6		3,722.7
Long-term debt, net, excluding current portion		3,231.1		3,226.2		3,225.3
Long-term debt, net								Long-term debt, net	3,419.3		3,417.0		3,229.5
Operating lease liabilities, long-term	Operating lease liabilities, long-term	5,151.0		5,065.5		4,962.1		Operating lease liabilities, long-term	5,139.5		5,145.5		5,078.7
Deferred income taxes, net	Deferred income taxes, net	1,096.8		1,013.5		1,043.1		Deferred income taxes, net	1,063.6		987.2		1,030.9
Income taxes payable, long-term	Income taxes payable, long-term	26.4		22.6		31.0		Income taxes payable, long-term	20.7		20.9		24.0
Other liabilities	Other liabilities	349.1		352.6		387.3		Other liabilities	256.2		256.1		347.7
Total liabilities	Total liabilities	14,145.6		13,410.7		13,691.1		Total liabilities	14,279.8		14,003.3		13,433.5
Commitments and contingencies (Note 2)	Commitments and contingencies (Note 2)	0		0		0		Commitments and contingencies (Note 2)	0		0		0
Shareholders’ equity	Shareholders’ equity	7,244.4		7,285.3		6,961.1		Shareholders’ equity	8,396.5		7,718.5		7,011.7
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	21,390.0	$	20,696.0	$	20,652.2	Total liabilities and shareholders’ equity	$	22,676.3	$	21,721.8	$	20,445.2

Common shares outstanding	Common shares outstanding	224.9		233.4		235.2		Common shares outstanding	223.9		225.1		224.9

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


		13 Weeks Ended October 30, 2021												13 Weeks Ended July 30, 2022
(in millions)	(in millions)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Shareholders' Equity		(in millions)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Shareholders' Equity
Balance at July 31, 2021		224.9	$	2.2	$	1,204.9	$	(32.0)	$	5,836.6	$	7,011.7
Balance at April 30, 2022													Balance at April 30, 2022	225.5	$	2.2	$	1,230.6	$	(35.3)	$	7,044.0	$	8,241.5
Net income	Net income	—	—		—		—		216.8		216.8		Net income	—	—		—		—		359.9		359.9
Total other comprehensive income		—	—		—		0.7		—		0.7
Total other comprehensive loss													Total other comprehensive loss	—	—		—		(1.0)		—		(1.0)
Issuance of stock under Employee Stock Purchase Plan	Issuance of stock under Employee Stock Purchase Plan	—	—		2.4		—		—		2.4		Issuance of stock under Employee Stock Purchase Plan	—	—		1.9		—		—		1.9

Stock-based compensation, net	Stock-based compensation, net	—	—		12.8		—		—		12.8		Stock-based compensation, net	0.1	—		30.0		—		—		30.0

Balance at October 30, 2021		224.9	$	2.2	$	1,220.1	$	(31.3)	$	6,053.4	$	7,244.4
Repurchase of stock													Repurchase of stock	(1.7)	—		(235.8)		—		—		(235.8)
Balance at July 30, 2022													Balance at July 30, 2022	223.9	$	2.2	$	1,026.7	$	(36.3)	$	7,403.9	$	8,396.5


		39 Weeks Ended October 30, 2021												26 Weeks Ended July 30, 2022
(in millions)	(in millions)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Shareholders' Equity		(in millions)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Shareholders' Equity
Balance at January 30, 2021		233.4	$	2.3	$	2,138.5	$	(35.2)	$	5,179.7	$	7,285.3
Balance at January 29, 2022													Balance at January 29, 2022	225.1	$	2.2	$	1,243.9	$	(35.2)	$	6,507.6	$	7,718.5

Net income	Net income	—	—		—		—		873.7		873.7		Net income	—	—		—		—		896.3		896.3
Total other comprehensive income		—	—		—		3.9		—		3.9
Total other comprehensive loss													Total other comprehensive loss	—	—		—		(1.1)		—		(1.1)
Issuance of stock under Employee Stock Purchase Plan	Issuance of stock under Employee Stock Purchase Plan	0.1	—		8.3		—		—		8.3		Issuance of stock under Employee Stock Purchase Plan	—	—		4.8		—		—		4.8
Exercise of stock options		—	—		0.7		—		—		0.7

Stock-based compensation, net	Stock-based compensation, net	0.6	—		22.5		—		—		22.5		Stock-based compensation, net	0.6	—		28.0		—		—		28.0
Repurchase of stock	Repurchase of stock	(9.2)	(0.1)		(949.9)		—		—		(950.0)		Repurchase of stock	(1.8)	—		(250.0)		—		—		(250.0)
Balance at October 30, 2021		224.9	$	2.2	$	1,220.1	$	(31.3)	$	6,053.4	$	7,244.4
Balance at July 30, 2022													Balance at July 30, 2022	223.9	$	2.2	$	1,026.7	$	(36.3)	$	7,403.9	$	8,396.5

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (cont.)

(Unaudited)


		13 Weeks Ended October 31, 2020												13 Weeks Ended July 31, 2021
(in millions)	(in millions)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Shareholders' Equity		(in millions)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Shareholders' Equity
Balance at August 1, 2020		237.3	$	2.4	$	2,505.5	$	(41.2)	$	4,346.9	$	6,813.6
Balance at May 1, 2021													Balance at May 1, 2021	231.8	$	2.3	$	1,885.0	$	(30.2)	$	5,554.2	$	7,411.3

Net income	Net income	—	—		—		—		330.0		330.0		Net income	—	—		—		—		282.4		282.4
Total other comprehensive income		—	—		—		0.6		—		0.6
Total other comprehensive loss													Total other comprehensive loss	—	—		—		(1.8)		—		(1.8)
Issuance of stock under Employee Stock Purchase Plan	Issuance of stock under Employee Stock Purchase Plan	—	—		2.5		—		—		2.5		Issuance of stock under Employee Stock Purchase Plan	—	—		2.1		—		—		2.1

Exercise of stock options													Exercise of stock options	—	—		0.5		—		—		0.5
Stock-based compensation, net	Stock-based compensation, net	—	—		14.4		—		—		14.4		Stock-based compensation, net	0.1	—		17.2		—		—		17.2
Repurchase of stock	Repurchase of stock	(2.1)	—		(200.0)		—		—		(200.0)		Repurchase of stock	(7.0)	(0.1)		(699.9)		—		—		(700.0)
Balance at October 31, 2020		235.2	$	2.4	$	2,322.4	$	(40.6)	$	4,676.9	$	6,961.1
Balance at July 31, 2021													Balance at July 31, 2021	224.9	$	2.2	$	1,204.9	$	(32.0)	$	5,836.6	$	7,011.7


		39 Weeks Ended October 31, 2020												26 Weeks Ended July 31, 2021
(in millions)	(in millions)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Shareholders' Equity		(in millions)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Shareholders' Equity
Balance at February 1, 2020		236.7	$	2.4	$	2,454.4	$	(39.8)	$	3,837.8	$	6,254.8
Balance at January 30, 2021													Balance at January 30, 2021	233.4	$	2.3	$	2,138.5	$	(35.2)	$	5,179.7	$	7,285.3

Net income	Net income	—	—		—		—		839.1		839.1		Net income	—	—		—		—		656.9		656.9
Total other comprehensive loss		—	—		—		(0.8)		—		(0.8)
Total other comprehensive income													Total other comprehensive income	—	—		—		3.2		—		3.2
Issuance of stock under Employee Stock Purchase Plan	Issuance of stock under Employee Stock Purchase Plan	0.1	—		7.6		—		—		7.6		Issuance of stock under Employee Stock Purchase Plan	0.1	—		5.9		—		—		5.9
Exercise of stock options	Exercise of stock options	0.1	—		6.7		—		—		6.7		Exercise of stock options	—	—		0.7		—		—		0.7
Stock-based compensation, net	Stock-based compensation, net	0.4	—		53.7		—		—		53.7		Stock-based compensation, net	0.6	—		9.7		—		—		9.7
Repurchase of stock	Repurchase of stock	(2.1)	—		(200.0)		—		—		(200.0)		Repurchase of stock	(9.2)	(0.1)		(949.9)		—		—		(950.0)
Balance at October 31, 2020		235.2	$	2.4	$	2,322.4	$	(40.6)	$	4,676.9	$	6,961.1
Balance at July 31, 2021													Balance at July 31, 2021	224.9	$	2.2	$	1,204.9	$	(32.0)	$	5,836.6	$	7,011.7

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		39 Weeks Ended					26 Weeks Ended
		October 30,		October 31,			July 30,		July 31,
(in millions)	(in millions)	2021		2020		(in millions)	2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	873.7	$	839.1	Net income	$	896.3	$	656.9
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	527.3		503.7		Depreciation and amortization	382.4		348.8
Provision for deferred income taxes	Provision for deferred income taxes	85.0		59.4		Provision for deferred income taxes	78.8		17.3
Stock-based compensation expense	Stock-based compensation expense	63.1		70.5		Stock-based compensation expense	66.1		49.6
Amortization of debt discount and debt-issuance costs	Amortization of debt discount and debt-issuance costs	4.9		3.1		Amortization of debt discount and debt-issuance costs	2.3		3.3

Other non-cash adjustments to net income	Other non-cash adjustments to net income	8.6		7.4		Other non-cash adjustments to net income	18.8		6.0

Changes in operating assets and liabilities	Changes in operating assets and liabilities	(543.9)		250.5		Changes in operating assets and liabilities	(924.1)		(345.8)
Net cash provided by operating activities	Net cash provided by operating activities	1,018.7		1,733.7		Net cash provided by operating activities	520.6		736.1
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(749.6)		(707.0)		Capital expenditures	(529.6)		(454.0)

Proceeds from governmental grant	Proceeds from governmental grant	2.9		—		Proceeds from governmental grant	—		2.3
Proceeds from (payments for) fixed asset disposition	Proceeds from (payments for) fixed asset disposition	0.4		(0.5)		Proceeds from (payments for) fixed asset disposition	(3.8)		0.2
Net cash used in investing activities	Net cash used in investing activities	(746.3)		(707.5)		Net cash used in investing activities	(533.4)		(451.5)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Principal payments for long-term debt		—		(250.0)

Proceeds from revolving credit facility		—		750.0
Repayments of revolving credit facility		—		(750.0)

Proceeds from stock issued pursuant to stock-based compensation plans	Proceeds from stock issued pursuant to stock-based compensation plans	9.0		14.3		Proceeds from stock issued pursuant to stock-based compensation plans	4.8		6.6
Cash paid for taxes on exercises/vesting of stock-based compensation	Cash paid for taxes on exercises/vesting of stock-based compensation	(40.6)		(16.8)		Cash paid for taxes on exercises/vesting of stock-based compensation	(38.1)		(39.9)
Payments for repurchase of stock	Payments for repurchase of stock	(950.0)		(194.2)		Payments for repurchase of stock	(250.0)		(947.5)
Net cash used in financing activities	Net cash used in financing activities	(981.6)		(446.7)		Net cash used in financing activities	(283.3)		(980.8)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	0.4		(0.3)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	0.2		0.3
Net increase (decrease) in cash, cash equivalents and restricted cash		(708.8)		579.2
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	(295.9)		(695.9)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	1,463.6		586.0		Cash, cash equivalents and restricted cash at beginning of period	1,038.3		1,463.6
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	754.8	$	1,165.2	Cash, cash equivalents and restricted cash at end of period	$	742.4	$	767.7
Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid for:	Cash paid for:					Cash paid for:
Interest, net of amounts capitalized	Interest, net of amounts capitalized	$	65.7	$	80.4	Interest, net of amounts capitalized	$	64.3	$	65.1
Income taxes	Income taxes	$	362.5	$	300.5	Income taxes	$	253.2	$	285.8
Non-cash transactions:	Non-cash transactions:					Non-cash transactions:
Right-of-use assets obtained in exchange for new operating lease liabilities	Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,134.3	$	959.6	Right-of-use assets obtained in exchange for new operating lease liabilities	$	726.1	$	700.2
Accrued capital expenditures	Accrued capital expenditures	$	63.4	$	41.3	Accrued capital expenditures	$	96.1	$	61.2

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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DOLLAR TREE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

Unless otherwise stated, references to “we,” “us,” and “our” in this quarterly report on Form 10-Q refer to Dollar Tree, Inc. and its direct and indirect subsidiaries on a consolidated basis. We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended January ~~30, 2021.~~29, 2022. The results of operations for the 13 and 3926 weeks ended ~~October~~July 30, ~~2021~~2022 are not necessarily indicative of the results to be expected for the entire fiscal year ending January ~~29, 2022.~~28, 2023.

In our opinion, the unaudited condensed consolidated financial statements included herein contain all adjustments (including those of a normal recurring nature) considered necessary for a fair presentation of our financial position as of ~~October~~July 30, ~~2021~~2022 and ~~October~~July 31, ~~2020~~2021 and the results of our operations and cash flows for the periods presented. The January ~~30, 2021~~29, 2022 balance sheet information was derived from the audited consolidated financial statements as of that date.

~~Certain prior year amounts have been reclassified for consistency with the current year presentation.~~

Note 2 - ~~Commitments and Contingencies~~

~~Purchase Obligations~~

~~At October 30, 2021, we have commitments totaling $253.8 million related to agreements for ocean shipping contracts.~~

Contingencies

We are defendants in legal proceedings including the class, collective, representative and large cases described below as well as individual claims in arbitration. We will vigorously defend ourselves in these matters. We do not believe that any of these matters will, individually or in the aggregate, have a material effect on our business or financial condition. We cannot give assurance, however, that one or more of these matters will not have a material effect on our results of operations for the quarter or year in which they are reserved or resolved.

We assess our legal proceedings monthly and reserves are established if a loss is probable and the amount of such loss can be reasonably estimated. For matters that have settled, we reserve the estimated settlement amount even if the settlement has not been approved by the court. Many, if not substantially all, of our legal proceedings are subject to significant uncertainties and, therefore, determining the likelihood of a loss and the measurement of any loss can be complex and subject to judgment. With respect to legal proceedings where we have determined that a loss is reasonably possible but not probable, we are unable to estimate the amount or range of the reasonably possible loss due to the inherent difficulty of predicting the outcome of and uncertainties regarding legal proceedings. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. Management’s assessment of legal proceedings could change because of future determinations or the discovery of facts which are not presently known. Accordingly, the ultimate costs of resolving these proceedings may be substantially higher or lower than currently estimated.

Dollar Tree Active Matters

The Food and Drug Administration (“FDA”) has alleged that we improperly sold certain topically applied, over the counter (“OTC”) products manufactured by certain Chinese factories that were on an import “alert” restriction issued by the FDA. We ~~responded~~believe we have made significant improvements in our processes, and the FDA has asked us to make certain additional improvements, which we are addressing.

From time to time, the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”) has found violations of OSHA regulations at Dollar Tree stores and Family Dollar stores and assessed penalties relating to the ~~FDA by proposing and implementing enhanced procedures and processes for any OTC products~~violations. For those periods in which this occurs, pending resolution of the matters, we ~~import from China.~~record the associated estimated liabilities in the financial statements.

Actual or threatened California state court lawsuits have been filed against Dollar Tree and Family Dollar for similar employment-related claims brought under the Private Attorney General Act (“PAGA”). These cases may allege violations such as failure to provide employees with compliant rest and meal breaks, suitable seating and overtime pay, reimburse business expenses, pay minimum wages for all time worked, provide accurate wage statements, and timely pay wages as well as other off-the-clock and potential labor code violations.

NaN personal injury lawsuits are pending against usDollar Tree and ~~our vendors~~2 against Family Dollar alleging that ~~personal~~certain talc ~~powder~~ products that were sold in the past caused ~~cancer. We do not believe the products~~cancer, 1 of which is set for trial this year. Although we ~~sold caused the illnesses. Our past~~have been able to resolve previous talc lawsuits ~~have been resolved~~against us without material loss to the company, given the inherent uncertainties of litigation there can be no assurances regarding the outcome of pending or future cases. Future costs to litigate these cases are not known but may be material, and it is uncertain whether

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~~no assurance can~~our costs will be ~~given as to the outcome of pending or future cases. Although~~covered by insurance. In addition, although we have indemnification rights against our vendors in several of these cases, it is uncertain whether the vendors will have the financial ability to carry out their obligations. ~~It is also uncertain whether our insurers will deny coverage under our various policies.~~

~~Dollar Tree Resolved Matters~~

In December 2020, a former store manager brought a class action in California state court alleging we failed to reimburse employees for business expenses and in so failing, engaged in unfair competition. The case has been resolved.

Family Dollar Active Matters

On February 11, 2022, the FDA issued Form 483 observations primarily regarding rodent infestation at our West Memphis, Arkansas distribution center (“DC 202”) and the related sale and distribution of adulterated product, as well as other processes and procedures that require remediation. In ~~August 2020,~~connection therewith, we initiated a ~~consumer~~voluntary retail-level product recall of FDA and U.S. Department of Agriculture-regulated products stored and shipped from DC 202 from January 1, 2021 through February 18, 2022 (the “Recall”), temporarily closed DC 202 for extensive cleaning, temporarily closed the affected stores to permit the removal and destruction of inventory subject to the Recall, ceased sales of relevant inventory subject to the Recall, permanently ceased the shipment of FDA-regulated products from DC 202, and initiated corrective actions. We are taking this matter extremely seriously and are responding to all observations made in the Form 483. The circumstances leading to the Recall (and/or the Recall itself) may have other negative impacts, which could include reputational damage, lost sales, further or additional governmental investigations and/or enforcement actions, and/or private litigation (see below), which could have a material adverse effect, individually or collectively, on our business, results of operations and/or financial condition.

Since February 22, 2022, we have received 14 putative class action complaints primarily related to issues associated with DC 202 described above. The lawsuits are proceeding in federal court in Tennessee using the federal court’s multidistrict litigation process. A consolidated complaint seeking class action status was filed ~~against us in New York~~August 12, 2022 alleging ~~Smoked Almonds sold by us are mislabeled because~~violations of the ~~almonds do not go through a smoking process but rather acquire their smoky taste through the use of smoked flavoring. The legal claims include New York~~Mississippi, Arkansas, Louisiana, Tennessee, Alabama and Missouri consumer protection laws, ~~negligent misrepresentations,~~ breach of ~~warranties, fraud~~warranty, negligence, misrepresentation, deception and unjust ~~enrichment.~~enrichment related to the sale of products that may be contaminated by virtue of rodent infestation and other unsanitary conditions. Plaintiffs seek damages, attorney fees and costs, punitive damages and the replacement of, or refund of, money paid to purchase the relevant products, and any other legal relief available for their claims (in each case in unspecified amounts), including equitable and injunctive relief.

On March 1, 2022, a federal grand jury subpoena was issued to us by the Eastern District of Arkansas requesting the production of information, documents and records pertaining to pests, sanitation, compliance with law, and the issues described above. We are cooperating with the subpoena and the related investigation; however, no assurance can be given as to the timing or outcome of this matter.

On April 28, 2022, the State of Arkansas filed a complaint in state court alleging violations of the Arkansas Deceptive Trade Practices Act, gross negligence and negligence, strict liability in tort, unjust enrichment and civil conspiracy related to the sale of products that may have been contaminated by virtue of rodent infestation and other unsanitary conditions. The State of Arkansas is seeking injunctive relief, restitution, disgorgement, damages, civil penalties, punitive damages and suspension or revocation of our authorization to do business in Arkansas.

In January, April, and September 2021, state-wide consumer class actions were filed against us by the same law firm in Georgia, Alabama and ~~Alabama,~~Florida, respectively, for breach of warranty based on the allegation that the coffee we sold was mislabeled because the canisters did not contain enough coffee to make the number of cups of coffee stated on the label.

Please see the ~~description~~Dollar Tree Active Matters section above for ~~talc~~descriptions of OSHA proceedings, PAGA lawsuits and ~~PAGA~~2 talc lawsuits against Family Dollar.

Family Dollar Resolved Matters

In ~~late 2019~~August 2020 and ~~early 2020, personal injury and~~July 2021, consumer class actions were filed against us in New York and Illinois, respectively, alleging ~~that we~~Smoked Almonds sold ~~Zantac containing~~by us are mislabeled because the almonds do not go through a ~~probable carcinogen. The lawsuits were~~smoking process but rather acquire their smoky taste through the use of smoked flavoring. Both actions alleged violation of consumer protection laws, negligent misrepresentation, breach of warranties, fraud and unjust enrichment. Both have been dismissed ~~in June 2021. The time for appealing the dismissal has not run.~~with prejudice.

Note 3 - Fair Value Measurements

As required, financial assets and liabilities are classified in the fair value hierarchy in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment). We did not record any ~~significant~~material impairment charges during the 13 or 3926 weeks ended ~~October~~July 30, ~~2021 and October~~2022 or July 31, ~~2020.~~2021.

Fair Value of Financial Instruments

The carrying amounts of Cash and cash equivalents, Restricted cash and Accounts payable as reported in the accompanying unaudited condensed consolidated balance sheets approximate fair value due to their short-term maturities.

The aggregate fair values and carrying values of our long-term borrowings were as follows:


		October 30, 2021				January 30, 2021				October 31, 2020					July 30, 2022				January 29, 2022				July 31, 2021
(in millions)	(in millions)	Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		(in millions)	Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value
Level 1	Level 1													Level 1
Senior Notes	Senior Notes	$	3,532.4	$	3,234.5	$	3,654.4	$	3,231.5	$	3,966.3	$	3,531.2	Senior Notes	$	3,244.0	$	3,425.0	$	3,558.5	$	3,423.4	$	3,590.5	$	3,233.5

The fair values of our Senior Notes were determined using Level 1 inputs as quoted prices in active markets for identical assets or liabilities are available. The carrying value of our Revolving Credit Facility approximates its fair value because the interest rates vary with market interest rates.

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Note 4 - Net Income Per Share

The following table sets forth the calculations of basic and diluted net income per share:


		13 Weeks Ended				39 Weeks Ended					13 Weeks Ended				26 Weeks Ended
		October 30,		October 31,		October 30,		October 31,			July 30,		July 31,		July 30,		July 31,
(in millions, except per share data)	(in millions, except per share data)	2021		2020		2021		2020		(in millions, except per share data)	2022		2021		2022		2021
Basic net income per share:	Basic net income per share:									Basic net income per share:
Net income	Net income	$	216.8	$	330.0	$	873.7	$	839.1	Net income	$	359.9	$	282.4	$	896.3	$	656.9
Weighted average number of shares outstanding	Weighted average number of shares outstanding	224.9		236.8		228.9		237.0		Weighted average number of shares outstanding	224.2		228.6		224.7		230.9
Basic net income per share	Basic net income per share	$	0.96	$	1.39	$	3.82	$	3.54	Basic net income per share	$	1.61	$	1.24	$	3.99	$	2.84
Diluted net income per share:	Diluted net income per share:									Diluted net income per share:
Net income	Net income	$	216.8	$	330.0	$	873.7	$	839.1	Net income	$	359.9	$	282.4	$	896.3	$	656.9
Weighted average number of shares outstanding	Weighted average number of shares outstanding	224.9		236.8		228.9		237.0		Weighted average number of shares outstanding	224.2		228.6		224.7		230.9
Dilutive effect of stock options and restricted stock (as determined by applying the treasury stock method)	Dilutive effect of stock options and restricted stock (as determined by applying the treasury stock method)	0.9		1.1		1.0		0.8		Dilutive effect of stock options and restricted stock (as determined by applying the treasury stock method)	0.8		0.9		1.0		1.1
Weighted average number of shares and dilutive potential shares outstanding	Weighted average number of shares and dilutive potential shares outstanding	225.8		237.9		229.9		237.8		Weighted average number of shares and dilutive potential shares outstanding	225.0		229.5		225.7		232.0
Diluted net income per share	Diluted net income per share	$	0.96	$	1.39	$	3.80	$	3.53	Diluted net income per share	$	1.60	$	1.23	$	3.97	$	2.83

~~For~~Stock options and other stock-based awards of 2.3 million shares and 2.8 million shares were excluded from the calculation of diluted net income per share for the 13 and 3926 weeks ended ~~October~~July 30, ~~2021~~2022, respectively, because their inclusion would be anti-dilutive. Stock options and ~~October 31, 2020, substantially all~~other stock-based awards of ~~the stock options outstanding~~less than 0.1 million shares and 0.8 million shares were ~~included in~~excluded from the calculation of diluted net income per share for the ~~weighted average number of shares~~13 and ~~dilutive potential shares outstanding.~~26 weeks ended July 31, 2021, respectively, because their inclusion would be anti-dilutive.

Note 5 - Stock-Based Compensation

For a discussion of our stock-based compensation plans, refer to “Note 1110 - Stock-Based Compensation Plans” of our Annual Report on Form 10-K for the year ended January ~~30, 2021.~~29, 2022. Stock-based compensation expense was ~~$63.1~~$66.1 million and ~~$70.5~~$49.6 million during the 3926 weeks ended ~~October~~July 30, 2022 and July 31, 2021, ~~and October 31, 2020,~~ respectively.

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Restricted Stock

We issue service-based RSUs to employees and officers and issue PSUs to certain of our officers. We recognize expense based on the estimated fair value of the RSUs or PSUs granted over the requisite service period, which is generally three years, on a straight-line basis or a shorter period based on the retirement eligibility of the grantee. The fair value of RSUs and PSUs is determined ~~using~~based on our closing stock price on the ~~date of grant.~~grant date.

Service-Based RSUs

The following table summarizes the status of service-based RSUs as of ~~October~~July 30, ~~2021~~2022 and changes during the 3926 weeks then ended:

Number of Shares Weighted Average
Grant Date
Fair Value
Nonvested at January 30, 2021 1,265,216 $ 83.16
Granted 631,587 108.90
Vested (604,670) 87.44
Forfeited (114,836) 92.57
Nonvested at October 30, 2021 1,177,297 $ 93.86

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	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested at January 29, 2022	1,096,066	$	94.16
Granted	420,474	159.37
Vested	(519,453)	93.21
Forfeited	(92,044)	116.85
Nonvested at July 30, 2022	905,043	$	122.69

PSUs

The following table summarizes the status of PSUs as of ~~October~~July 30, ~~2021~~2022 and changes during the 3926 weeks then ended:


		Number of Shares	Weighted Average Grant Date Fair Value			Number of Shares	Weighted Average Grant Date Fair Value
Nonvested at January 30, 2021		423,272	$	82.67
Nonvested at January 29, 2022					Nonvested at January 29, 2022	584,972	$	91.86
Granted	Granted	422,524	95.04		Granted	206,044	159.27
Vested	Vested	(218,232)	79.44		Vested	(303,026)	90.86
Forfeited	Forfeited	(42,592)	95.66		Forfeited	(209,824)	120.78
Nonvested at October 30, 2021		584,972	$	91.86
Nonvested at July 30, 2022					Nonvested at July 30, 2022	278,166	$	118.93

Stock Options

Stock options are valued using the Black-Scholes option pricing model and compensation expense is recognized on a straight-line basis over the requisite service period.

On March 19, 2022, we granted a one-time award of options to purchase 2,252,587 shares of our common stock with a fair value of $135.6 million to the Executive Chairman of the Board. The grant of options was subject to the terms and conditions of a five-year Executive Agreement with the Executive Chairman. The option award has a ten-year term and is scheduled to vest in equal installments on each of the first five anniversaries of the grant date, subject to the Executive Chairman’s continued employment with the company through each vesting date. The assumptions used in the Black-Scholes option pricing model for this award are as follows:


Expected term (in years)	6.5
Expected stock price volatility	34.1	%
Dividend yield	—	%
Risk-free interest rate	2.15	%

The simplified method was used to estimate the expected term of the options due to our lack of historical option exercise experience and the “plain vanilla” characteristics of the option award. The simplified method results in an expected term equal to the average of the weighted average time-to-vesting and the contractual life of the options. The expected stock price volatility is based on the historical volatility of our common stock over a period matching the expected term of the options granted. The dividend yield reflects that we have never paid cash dividends. The risk-free interest rate represents the yield curve in effect at the time of grant for U.S. Treasury zero-coupon securities with maturities that approximate the expected term of the options.

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The following table summarizes information about options outstanding at July 30, 2022 and changes during the 26 weeks then ended:


	Number of Shares	Weighted Average Per Share Exercise Price		Weighted Average Remaining Term (Years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 29, 2022	24,541	$	90.38
Granted	2,252,587	157.17
Exercised	(370)	76.97

Outstanding at July 30, 2022	2,276,758	$	156.46	9.6	$	20.3
Exercisable at July 30, 2022	24,171	$	90.59	4.3	$	1.8

Note 6 - Shareholders’ Equity

We ~~did not repurchase any~~repurchased 1,664,717 and 1,754,496 shares of common stock on the open market for $235.8 million and $250.0 million during the 13 and 26 weeks ended ~~October~~July 30, ~~2021. During the 39 weeks ended October 30, 2021, we~~2022, respectively. We repurchased 7,006,326 and 9,156,898 shares of common stock on the open market for ~~approximately~~$700.0 million and $950.0 ~~million. We repurchased 2,154,304 shares of common stock on the open market for approximately $200.0~~ million during the 13 and 3926 weeks ended ~~October~~July 31, ~~2020. Approximately $5.8~~2021, respectively. Of the shares repurchased during the 26 weeks ended July 31, 2021, approximately $2.5 million ~~in share repurchases~~ had not settled as of ~~October~~July 31, ~~2020.~~2021. This amount was accrued and is reflected in ~~“Other~~Other current ~~liabilities”~~liabilities within the accompanying unaudited condensed consolidated balance sheet as of ~~October~~July 31, ~~2020.~~

~~During the 13 weeks ended October~~2021. At July 30, ~~2021, the~~2022, we had $2.25 billion remaining under Board ~~increased our share~~ repurchase authorization by $1.05 billion to an aggregate amount of $2.5 billion, including $1.45 billion available for repurchases under the Board’s previous repurchase authorization approved on March 2, 2021.authorization.

Note 7 - Segments and Disaggregated Revenue

We operate a chain of more than ~~15,900~~16,200 retail discount stores in 48 states and 5 Canadian provinces. Our operations are conducted in 2 reporting business segments: Dollar Tree and Family Dollar. We define our segments as those operations whose results our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources.

The Dollar Tree segment is the leading operator of discount variety stores offering merchandise predominantly at the fixed price point of ~~$1.00.~~$1.25. The Dollar Tree segment includes our operations under the “Dollar Tree” and “Dollar Tree Canada” brands, 15 distribution centers in the United States and 2 distribution centers in Canada.

The Family Dollar segment operates a chain of general merchandise retail discount stores providing consumers with a selection of competitively-priced merchandise in convenient neighborhood stores. The Family Dollar segment consists of our operations under the “Family Dollar” brand and 11 distribution centers. The Family Dollar segment Operating income includes advertising revenue, which is a component of Other revenue in the accompanying unaudited condensed consolidated income statements.

We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating income. The CODM reviews these metrics for each of our reporting segments. We may revise the measurement of each segment’s operating income, as determined by the information regularly reviewed by the CODM. If the measurement of a segment changes, prior period amounts and balances are reclassified to be comparable to the current period’s presentation. Corporate, support and Other consists primarily of store support center costs that are considered shared services and therefore these selling, general and administrative costs are excluded from our 2 reporting business segments. These costs include operating expenses for our store support center and the results of operations for our Summit Pointe property in Chesapeake, Virginia.

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Information for our segments, as well as for Corporate, support and Other, including the reconciliation to Income before income taxes, is as follows:


		13 Weeks Ended				39 Weeks Ended					13 Weeks Ended				26 Weeks Ended
		October 30,		October 31,		October 30,		October 31,			July 30,		July 31,		July 30,		July 31,
(in millions)	(in millions)	2021		2020		2021		2020		(in millions)	2022		2021		2022		2021
Condensed Consolidated Income Statement Data:	Condensed Consolidated Income Statement Data:									Condensed Consolidated Income Statement Data:
Net sales:	Net sales:									Net sales:
Dollar Tree	Dollar Tree	$	3,417.4	$	3,303.2	$	10,003.0	$	9,557.6	Dollar Tree	$	3,571.1	$	3,264.3	$	7,352.9	$	6,585.6
Family Dollar	Family Dollar	2,998.0		2,873.5		9,229.4		9,183.5		Family Dollar	3,194.2		3,075.9		6,312.5		6,231.4
Consolidated Net sales	Consolidated Net sales	$	6,415.4	$	6,176.7	$	19,232.4	$	18,741.1	Consolidated Net sales	$	6,765.3	$	6,340.2	$	13,665.4	$	12,817.0

Gross profit:
Dollar Tree		$	1,031.1	$	1,154.2	$	3,207.1	$	3,206.8
Family Dollar		732.6		769.9		2,381.7		2,428.4
Consolidated Gross profit		$	1,763.7	$	1,924.1	$	5,588.8	$	5,635.2

Operating income (loss):
Dollar Tree		$	290.5	$	417.9	$	1,019.2	$	1,006.5
Family Dollar		88.6		131.4		456.3		472.0
Corporate, support and Other		(68.6)		(83.8)		(242.9)		(272.2)
Consolidated Operating income		310.5		465.5		1,232.6		1,206.3
Interest expense, net		33.4		38.1		99.4		113.1
Other expense, net		0.2		0.1		0.2		0.8
Income before income taxes		$	276.9	$	427.3	$	1,133.0	$	1,092.4

As of
October 30, January 30, October 31,
(in millions) 2021 2021 2020
Condensed Consolidated Balance Sheet Data:
Goodwill:
Dollar Tree $ 425.8 $ 424.9 $ 423.6
Family Dollar 1,559.5 1,559.5 1,559.5
Consolidated Goodwill $ 1,985.3 $ 1,984.4 $ 1,983.1
Total assets:
Dollar Tree $ 8,954.7 $ 8,669.3 $ 8,467.4
Family Dollar 11,869.8 11,562.2 11,703.0
Corporate, support and Other 565.5 464.5 481.8
Consolidated Total assets $ 21,390.0 $ 20,696.0 $ 20,652.2

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	13 Weeks Ended				26 Weeks Ended
	July 30,		July 31,		July 30,		July 31,
(in millions)	2022		2021		2022		2021
Condensed Consolidated Income Statement Data:
Gross profit:
Dollar Tree	$	1,334.9	$	1,057.7	$	2,869.6	$	2,176.0
Family Dollar	789.5		803.3		1,595.3		1,649.1
Consolidated Gross profit	$	2,124.4	$	1,861.0	$	4,464.9	$	3,825.1

Operating income (loss):
Dollar Tree	$	550.8	$	328.4	$	1,315.0	$	728.7
Family Dollar	55.0		156.3		144.5		367.7
Corporate, support and Other	(100.4)		(82.5)		(222.6)		(174.3)
Consolidated Operating income	505.4		402.2		1,236.9		922.1
Interest expense, net	30.6		33.0		64.6		66.0
Other expense, net	0.1		—		0.1		—
Income before income taxes	$	474.7	$	369.2	$	1,172.2	$	856.1


	As of
	July 30,		January 29,		July 31,
(in millions)	2022		2022		2021
Condensed Consolidated Balance Sheet Data:
Goodwill:
Dollar Tree	$	424.8	$	424.9	$	425.6
Family Dollar	1,559.5		1,559.5		1,559.5
Consolidated Goodwill	$	1,984.3	$	1,984.4	$	1,985.1

Total assets:
Dollar Tree	$	9,783.8	$	9,358.4	$	8,252.1
Family Dollar	12,359.1		11,871.8		11,700.2
Corporate, support and Other	533.4		491.6		492.9
Consolidated Total assets	$	22,676.3	$	21,721.8	$	20,445.2

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Disaggregated Revenue

The following table summarizes net sales by merchandise category for our segments:


		13 Weeks Ended								39 Weeks Ended									13 Weeks Ended								26 Weeks Ended
		October 30,				October 31,				October 30,				October 31,					July 30,				July 31,				July 30,				July 31,
(in millions)	(in millions)	2021				2020				2021				2020				(in millions)	2022				2021				2022				2021
Dollar Tree segment net sales by merchandise category:	Dollar Tree segment net sales by merchandise category:																	Dollar Tree segment net sales by merchandise category:
Consumable	Consumable	$	1,563.0	45.7	%	$	1,564.1	47.4	%	$	4,671.4	46.7	%	$	4,778.8	50.0	%	Consumable	$	1,671.9	46.8	%	$	1,524.1	46.7	%	$	3,419.1	46.5	%	$	3,108.4	47.2	%
Variety	Variety	1,596.3		46.7	%	1,520.9		46.0	%	4,961.5		49.6	%	4,473.0		46.8	%	Variety	1,892.9		53.0	%	1,737.8		53.2	%	3,757.3		51.1	%	3,365.2		51.1	%
Seasonal	Seasonal	258.1		7.6	%	218.2		6.6	%	370.1		3.7	%	305.8		3.2	%	Seasonal	6.3		0.2	%	2.4		0.1	%	176.5		2.4	%	112.0		1.7	%
Total Dollar Tree segment net sales	Total Dollar Tree segment net sales	$	3,417.4	100.0	%	$	3,303.2	100.0	%	$	10,003.0	100.0	%	$	9,557.6	100.0	%	Total Dollar Tree segment net sales	$	3,571.1	100.0	%	$	3,264.3	100.0	%	$	7,352.9	100.0	%	$	6,585.6	100.0	%

Family Dollar segment net sales by merchandise category:	Family Dollar segment net sales by merchandise category:																	Family Dollar segment net sales by merchandise category:
Consumable	Consumable	$	2,359.4	78.7	%	$	2,255.7	78.5	%	$	7,065.3	76.6	%	$	7,077.5	77.1	%	Consumable	$	2,467.0	77.3	%	$	2,332.4	75.8	%	$	4,902.1	77.7	%	$	4,705.9	75.5	%
Home products	Home products	228.7		7.6	%	240.1		8.3	%	777.0		8.4	%	802.7		8.7	%	Home products	234.1		7.3	%	247.3		8.0	%	482.2		7.6	%	548.3		8.8	%
Apparel and accessories	Apparel and accessories	178.3		6.0	%	157.4		5.5	%	592.4		6.4	%	517.8		5.6	%	Apparel and accessories	191.9		6.0	%	208.9		6.8	%	359.3		5.7	%	414.1		6.7	%
Seasonal and electronics	Seasonal and electronics	231.6		7.7	%	220.3		7.7	%	794.7		8.6	%	785.5		8.6	%	Seasonal and electronics	301.2		9.4	%	287.3		9.4	%	568.9		9.0	%	563.1		9.0	%
Total Family Dollar segment net sales	Total Family Dollar segment net sales	$	2,998.0	100.0	%	$	2,873.5	100.0	%	$	9,229.4	100.0	%	$	9,183.5	100.0	%	Total Family Dollar segment net sales	$	3,194.2	100.0	%	$	3,075.9	100.0	%	$	6,312.5	100.0	%	$	6,231.4	100.0	%

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Note Regarding Forward-Looking Statements: This document contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by or including words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “view,” “target” or “estimate,” “may,” “will,” “should,” “predict,” “possible,” “potential,” “continue,” “strategy,” and similar expressions. For example, our forward-looking statements include, without limitation, statements regarding:

•~~The~~Our expectations regarding the impact of ~~delays in receiving imported merchandise from Asia~~continued supply chain challenges on our product availability, product mix, sales and merchandise ~~margin;~~margin, including uncertainties associated with delays in receiving imported merchandise from Asia and the potential increase in our costs if inventory levels exceed the storage capacity of our distribution centers;

•Our expectations regarding higher oceanic shipping and domestic freight and fuel ~~costs, and our plans to manage those cost increases;~~

•~~The reliability of, and cost associated with, our sources of supply, particularly imported goods sourced from Asia and higher cost domestic goods;~~

•~~Our plans to address the labor shortages at our distribution centers and stores;~~costs;

•Our expectations regarding increased expenses for higher wages and bonuses paid to associates, including increases in the minimum wage by States and localities and potential federal legislation increasing the minimum wage;

•~~The potential~~Our expectations regarding the effect of general business or economic conditions on our business and results of operations, including the ~~direct~~effects of inflation and ~~indirect effects~~labor shortages in our markets;

•The uncertainty of the impact of the COVID-19 pandemic ~~inflation, labor shortages, consumer spending levels, unemployment, the physical~~ and ~~financial~~public health measures on our business, results of operations, customers and suppliers, including any future impact on our ~~customers, the effectiveness and duration~~supply chain or sources of ~~government assistance programs to individuals, households and businesses to support consumer spending, and proposals to raise federal corporate tax rates;~~supply;

•~~Our expectations regarding reductions~~The reliability of, and cost associated with, our sources of supply, particularly imported goods such as those sourced from China and higher cost domestic goods;

•The expected impact of labor disagreements and potential work disruptions or strikes, including at ports located in ~~COVID-19-related expenses~~California, Oregon, and Washington, on shipping delays and the ~~level~~availability and cost of ~~shrink in fiscal 2021;~~merchandise;

•The expected and possible outcome, costs, and impact of pending or potential litigation, arbitrations, other legal proceedings or governmental investigations (including U.S. Food and Drug Administration matters);

•Our plans to renovate existing Family Dollar stores and build new stores in the H2 store format, ~~including an increase in the number of stores with adult beverages,~~ and the performance of that format on our results of operations;

•Our plans and expectations relating to the introduction of additional price points above $1 in our Dollar Tree ~~stores;~~stores, including the impact on our gross margins;

•Our plans and expectations relating to new store openings and ~~the adoption, testing, implementation and performance of~~ new store concepts such as Dollar Tree Plus and our Combo Store format;

•Our plans and expectations regarding future strategic investments and the uncertainty with respect to the amount, timing and impact of those investments on our business and results of operations; and

•Our expectations regarding higher commodity and other costs associated with the build-out of new stores and the renovation of existing stores, and construction, permitting and inspection delays related to new store ~~openings; and~~

•The expected and possible outcome, costs, and impact of pending or potential litigation, arbitrations, other legal proceedings or governmental investigations (including the proceeding by the Food and Drug Administration).openings.

A forward-looking statement is neither a prediction nor a guarantee of future results, events or circumstances. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Our forward-looking statements are all based on currently available operating, financial and business information. The outcome of the events described in these forward-looking statements is subject to a variety of factors, including, but not limited to, the risks and uncertainties summarized below and the more detailed discussions in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and elsewhere in our Annual Report on Form 10-K for the fiscal year ended January ~~30, 2021,~~29, 2022, and in this Quarterly Report on Form 10-Q. The following risks could have a material adverse impact on our sales, costs, profitability, financial performance or implementation of strategic initiatives:

•We are experiencing disruptions in our supply chain, including shipping delays, port closings and congestion, that have had and could have an adverse impact on our product availability, product mix, sales and merchandise margin.

•Our profitability is vulnerable to increases in oceanic shipping costs, domestic freight and fuel costs, ~~higher wages, substitution of higher cost domestic goods~~wage and ~~increases in~~benefit costs and other operating costs.

•~~The labor shortages at~~We are experiencing higher costs and disruptions in our distribution ~~centers and stores has~~network, which have had and could have an adverse impact on ~~the operating efficiency of~~ our ~~distribution centers~~sales, margins and ~~our ability to transport merchandise to and operate our stores, and could result in lower sales.~~profitability.

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•~~If the COVID-19 pandemic in North America~~We may stop selling or ~~at our sources of supply overseas worsens or continues longer than expected, there could be a material adverse impact on our business and results of operations.~~

•~~Inflation~~recall certain products for safety-related or other ~~adverse change or downturn in economic conditions could adversely impact our sales or profitability.~~issues.

•Our business and results of operations could be materially harmed if we experience a decline in consumer confidence and spending as a result of ~~unfavorable~~consumer concerns about the quality and safety of our products.

•Inflation or other adverse change or downturn in economic conditions ~~for example because government assistance~~could impact our sales or profitability.

•If the COVID-19 pandemic and associated disruptions worsen or continue longer than expected, there could be a material adverse impact on our business and results of operations.

•Risks associated with our domestic and foreign suppliers could adversely affect our financial performance.

•Our supply chain may be disrupted by changes in United States trade policy with China.

•Our growth is dependent on our ability to ~~households~~increase sales in existing stores and ~~businesses terminate or are reduced.~~to expand our square footage profitably.

•Our profitability is affected by the mix of products we sell.

•Pressure from competitors may reduce our sales and profits.

•Our business could be adversely affected if we fail to attract and retain qualified associates and key personnel.

•We may not be successful in implementing or in anticipating the impact of important strategic initiatives, and our plans for implementing such initiatives may be altered or delayed due to various factors, including lack of customer acceptance, shipping delays, supply chain disruptions and other factors that could affect the timeliness, cost or availability of adequate levels of necessary domestic and imported merchandise, which may have an adverse impact on our business and financial results.

•~~Duties, tariffs or other restrictions on trade~~We could ~~adversely affect our financial performance.~~

•~~Our supply chain may be disrupted by changes in United States trade policy with China.~~incur losses due to impairment of long-lived assets, goodwill and intangible assets.

•We rely on computer and technology systems in our operations, and any material failure, inadequacy, interruption or security failure of those systems including because of a cyber-attack could harm our ability to effectively operate and grow our business and could adversely affect our financial results.

•The potential unauthorized access to customer information may violate privacy laws and could damage our business reputation, subject us to negative publicity, litigation and costs, and adversely affect our results of operations or business.

•Litigation, arbitration and government proceedings may adversely affect our business, financial condition ~~and~~and/or results of operations.

•Changes in laws and government regulations, ~~including any increase in federal corporate tax rates,~~ or our failure to adequately estimate the impact of such changes, could increase our expenses, expose us to legal risks or otherwise adversely affect us.

•Our substantial indebtedness could adversely affect our financial condition, limit our ability to obtain additional financing, restrict our operations and make us more vulnerable to economic downturns and competitive pressures.

•The terms of the agreements governing our indebtedness may restrict our current and future operations, particularly our ability to respond to changes or to pursue our business strategies, and could adversely affect our capital resources, financial condition and liquidity.

•Our variable-rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.

•Our business or the value of our common stock could be negatively affected as a result of actions by shareholders.

•The price of our common stock is subject to market and other conditions and may be volatile.

•Certain provisions in our Articles of Incorporation and By-Laws could delay or discourage a change of control transaction that may be in a shareholder’s best interest.

We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. Moreover, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on our forward-looking statements.

We do not undertake to publicly update or revise any forward-looking statements after the date of this Form 10-Q, whether as a result of new information, future events, or otherwise.

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Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, it is against our policy to disclose to them any material, nonpublic information or other confidential commercial information. Accordingly, shareholders should not assume that we agree with any statement or report issued by any securities analyst regardless of the content of the statement or report. Furthermore, we have a policy against confirming projections, forecasts or opinions issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

~~The Impact of COVID-19~~

As an essential business, our stores and distribution centers have remained open during the pandemic; however, our business trends and financial results in 2020 were materially different than in prior years. During March 2020, our Dollar Tree and Family Dollar stores began to experience a significant increase in customer demand and sales of essential products and comparable store net sales increased significantly. However, beginning the last week of March 2020 and continuing into April during the peak of the 2020 Easter selling season, comparable store net sales at our Dollar Tree stores decreased. After the 2020 Easter selling season, in both banners, we experienced an increase in demand for and sales of discretionary products and our seasonal business for the other holidays throughout 2020 was strong. Easter sales were strong in both banners during 2021. Our results of operations through the third quarter of fiscal 2020 include approximately $254.3 million of COVID-19-related expenses; these expenses totaled $22.1 million through the third quarter of fiscal 2021.

The future impact of COVID-19 on our customers and our business is difficult to predict. The course of the pandemic, including the spread of the Delta variant, the effectiveness of health measures such as vaccines, and the impact of ongoing economic stabilization efforts is uncertain and government assistance payments may not provide enough funding to support future consumer

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spending at levels experienced during the first nine months of fiscal 2021. For example, although the American Rescue Plan Act of 2021 (“Rescue Act”), which was enacted on March 11, 2021, provided U.S. government funding to address the continuing impact of COVID-19 on the economy, public health, individuals and businesses, some of the enacted benefits, including $1,400 direct payments to individuals and supplemental unemployment benefits, were temporary and have been discontinued. Given the level of volatility and uncertainty surrounding the future impact of COVID-19 on our customers, suppliers and the broader economies in the locations that we operate as well as uncertainty around the future impact on our supply chain and the global supply chain, it is challenging to predict our future operations and financial results.

For further discussion of the impacts that COVID-19 had on our financial condition and results of operations during fiscal 2020, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended January 30, 2021.

Overview

We are a leading operator of more than ~~15,900~~16,200 retail discount stores and we conduct our operations in two reporting segments. Our Dollar Tree segment is the leading operator of discount variety stores offering merchandise predominantly at the fixed price ~~point~~ of ~~$1.00.~~$1.25. Our Family Dollar segment operates general merchandise retail discount stores providing consumers with a selection of competitively-priced merchandise in convenient neighborhood stores.

Our net sales are derived from the sale of merchandise. Two major factors tend to affect our net sales trends. First is our success at opening new stores. Second is the performance of stores once they are open. Sales vary at our existing stores from one year to the next. We refer to this as a change in comparable store net sales, because we include only those stores that are open throughout both of the periods being compared, beginning after the first fifteen months of operation. We include sales from stores expanded or remodeled during the period in the calculation of comparable store net sales, which has the effect of increasing our comparable store net sales. The term ‘expanded’ also includes stores that are relocated. Stores that have been re-bannered are considered to be new stores and are not included in the calculation of the comparable store net sales change until after the first fifteen months of operation under the new brand.

At ~~October~~July 30, ~~2021,~~2022, we operated stores in 48 states and the District of Columbia, as well as stores in five Canadian provinces. A breakdown of store counts and square footage by segment for the 3926 weeks ended ~~October~~July 30, ~~2021~~2022 and ~~October~~July 31, ~~2020~~2021 is as follows:


		39 Weeks Ended							26 Weeks Ended
		October 30, 2021			October 31, 2020				July 30, 2022			July 31, 2021
		Dollar Tree	Family Dollar	Total	Dollar Tree	Family Dollar	Total		Dollar Tree	Family Dollar	Total	Dollar Tree	Family Dollar	Total
Store Count:	Store Count:							Store Count:
Beginning	Beginning	7,805	7,880	15,685	7,505	7,783	15,288	Beginning	8,061	8,016	16,077	7,805	7,880	15,685
New stores	New stores	214	148	362	262	111	373	New stores	74	165	239	152	85	237
Re-bannered stores	Re-bannered stores	(1)	(1)	(2)	(3)	4	1	Re-bannered stores	(5)	7	2	—	(1)	(1)
Closings	Closings	(34)	(45)	(79)	(23)	(33)	(56)	Closings	(27)	(60)	(87)	(23)	(33)	(56)
Ending	Ending	7,984	7,982	15,966	7,741	7,865	15,606	Ending	8,103	8,128	16,231	7,934	7,931	15,865
Relocations	Relocations	45	55	100	46	31	77	Relocations	17	45	62	29	37	66

Selling Square Feet (in millions):	Selling Square Feet (in millions):							Selling Square Feet (in millions):
Beginning	Beginning	67.4	57.7	125.1	64.6	56.7	121.3	Beginning	69.7	59.2	128.9	67.4	57.7	125.1
New stores	New stores	1.9	1.3	3.2	2.3	0.9	3.2	New stores	0.6	1.5	2.1	1.3	0.7	2.0
Re-bannered stores	Re-bannered stores	—	—	—	(0.1)	0.1	—	Re-bannered stores	—	0.1	0.1	—	—	—
Closings	Closings	(0.3)	(0.3)	(0.6)	(0.2)	(0.2)	(0.4)	Closings	(0.2)	(0.4)	(0.6)	(0.2)	(0.2)	(0.4)
Relocations	Relocations	0.1	0.1	0.2	0.1	0.1	0.2	Relocations	0.1	0.1	0.2	—	0.1	0.1
Ending	Ending	69.1	58.8	127.9	66.7	57.6	124.3	Ending	70.2	60.5	130.7	68.5	58.3	126.8

Stores are included as re-banners when they close or open, respectively.

The average size of stores opened during the 3926 weeks ended ~~October~~July 30, ~~2021~~2022 was approximately ~~8,760~~8,540 selling square feet for the Dollar Tree segment and ~~8,960~~8,920 selling square feet for the Family Dollar segment. We believe that these size stores are in the

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ranges of our optimal sizes operationally and give our customers a shopping environment which invites them to shop longer, buy more and make return visits.

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The percentage change in comparable store net sales on a constant currency basis for the 13 and 3926 weeks ended ~~October~~July 30, ~~2021,~~2022, as compared with the preceding year, is as follows:


		13 Weeks Ended October 30, 2021						39 Weeks Ended October 30, 2021							13 Weeks Ended July 30, 2022						26 Weeks Ended July 30, 2022
		Sales Growth		Change in Customer Traffic		Change in Average Ticket		Sales Growth		Change in Customer Traffic		Change in Average Ticket			Sales Growth		Change in Customer Traffic		Change in Average Ticket		Sales Growth		Change in Customer Traffic		Change in Average Ticket
Consolidated	Consolidated	1.6	%	(1.8)	%	3.5	%	0.4	%	(3.6)	%	4.1	%	Consolidated	4.9	%	(4.0)	%	9.2	%	4.7	%	(3.8)	%	8.8	%
Dollar Tree Segment	Dollar Tree Segment	0.6	%	(1.1)	%	1.8	%	1.7	%	(1.4)	%	3.1	%	Dollar Tree Segment	7.5	%	(5.8)	%	14.2	%	9.4	%	(4.7)	%	14.8	%
Family Dollar Segment	Family Dollar Segment	2.7	%	(3.0)	%	5.8	%	(0.8)	%	(6.5)	%	6.1	%	Family Dollar Segment	2.0	%	(1.2)	%	3.3	%	(0.4)	%	(2.4)	%	2.1	%

Constant currency basis refers to the calculation excluding the impact of currency exchange rate fluctuations. We calculated the constant currency basis change by translating the current year’s comparable store net sales in Canada using the prior year’s currency exchange rates. We believe that the constant currency basis provides a more accurate measure of comparable store net sales performance. Comparable store net sales are positively affected by our expanded and relocated stores, which we include in the calculation, and are negatively affected when we open new stores, re-banner stores or expand stores near existing stores.

Dollar Tree Initiatives

~~Following the announcement of our new pricing initiative in~~In September 2021, we ~~increased~~announced our new $1.25 price point initiative and we completed the rollout of this initiative to all Dollar Tree stores during the first quarter of fiscal 2022, increasing the price point on a majority of our $1 merchandise to ~~$1.25~~$1.25. To date, the increase in the price point has more than ~~100 legacy Dollar Tree stores by October 30, 2021. We have continued~~offset the ~~rollout~~decline in ~~November to additional stores and plan to expand~~ the ~~$1.25 price point initiative to more than 2,000 additional Dollar Tree stores~~number of units sold. As expected, we saw a lift in ~~December 2021, and expect to complete the rollout of this initiative to all Dollar Tree stores by the end of~~gross margin in the first ~~quarter~~half of fiscal ~~2022. We believe that the new pricing strategy will enable us to introduce~~2022 as we sold through our existing inventory. During fiscal 2022, we have begun investing in new products and ~~expand our merchandise assortment in Dollar Tree stores while maintaining great~~modifying existing products to provide greater value for our ~~customers.~~customers and increase customer traffic and store productivity. While we expect our gross margin to be higher in the second half of fiscal 2022 compared with the second half of fiscal 2021, because of the investments in new products, we do not expect the increase to be as high as it was in the first half of fiscal 2022.

We are also continuing to implement our Dollar Tree Plus initiative which introduces products priced at the $3 and $5 price points and provides our customers with extraordinary value in discretionary categories. As of ~~October~~July 30, ~~2021,~~2022, we have approximately ~~460~~2,170 Dollar Tree Plus stores and we expect to ~~have nearly 600 stores by the end of fiscal 2021, exceeding our previous target of 500 stores. We also plan to accelerate the implementation of the Dollar Tree~~ ~~Plus~~ ~~initiative in fiscal 2022 by adding~~implement the concept ~~to an additional~~in a total of 1,500 ~~stores.~~

~~The roll-out of our Crafter’s Square initiative to all of our Dollar Tree~~ stores ~~was completed~~ during fiscal ~~2020. The Crafter’s Square assortment carries mark-ups which are higher than our average mark-up.~~2022.

After a successful launch of the Instacart platform in the Family Dollar segment, we began testing the online delivery service ~~delivery~~ at Dollar Tree stores in the third quarter of fiscal 2021. As of ~~October~~July 30, ~~2021,~~2022, the Instacart platform covers ~~almost~~nearly 7,000 Dollar Tree stores. This enables our customers to shop online and receive same-day delivery without having to visit a store.

We believe that our Dollar Tree initiatives have and will continue to positively affect our comparable store net sales and earnings.

Family Dollar Initiatives

We are executing several initiatives in our Family Dollar stores to increase sales. In March 2021, we announced the development of a new combination store format, which we refer to as a Combo Store, that leverages the strengths of the Dollar Tree and Family Dollar brands under one ~~roof.~~roof to serve small towns across the country. We ~~have taken~~are taking Family Dollar’s great value and assortment and ~~blended~~blending in select Dollar Tree merchandise categories, ~~to create~~creating a new store format targeted for small towns and rural ~~communities. The Combo store provides another way~~communities with populations of 3,000 to ~~introduce the multi-price assortment to Dollar Tree customers and the one-dollar assortment to Family Dollar customers.~~4,000 residents. As of ~~October~~July 30, ~~2021,~~2022, we ~~had 155~~operated more than 540 Combo Stores in operation. Due to the success of the initiative, we plan to accelerate expansion of the program in fiscal 2022, and anticipate adding 400 new, renovated, or relocated Combo Stores in fiscal 2022.

After a successful pilot program in 2020, we entered into a partnership with Instacart, an online merchandise delivery platform, in February 2021 that enables our Family Dollar customers to shop online and receive same-day delivery of merchandise without having to visit a store. The Instacart platform covers approximately 6,000 Family Dollar stores across the United States.Stores.

We are also continuing to execute our store optimization programs. Our H2 stores have significantly improved merchandise offerings throughout the store, including the addition of ~~approximately 20~~ Dollar Tree ~~$1.00~~$1.25 merchandise ~~sections~~items and establishing a minimum number of freezer and cooler doors. These stores have higher customer traffic and provide a higher average comparable store net sales lift, when compared to non-renovated stores, in the first year following renovation. H2 stores perform well in a variety

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of locations and especially in locations where our Family Dollar stores have been most challenged in the past. As of ~~October~~July 30, ~~2021,~~2022, we have approximately ~~3,750~~4,095 H2 stores. ~~We have renovated~~

Based on the success of the Combo Store and H2 store formats, in fiscal 2022, we anticipate adding 400 new or relocated Combo Stores in total and completing a total of 700 renovations into either the Combo Store format or the H2 store format.

After a successful pilot program in 2020, we entered into a partnership with Instacart in February 2021, which covers more than ~~1,250~~6,000 Family Dollar stores ~~to this format in fiscal 2021 and have also built new stores in this format.~~ across the United States as of July 30, 2022.

In addition, we ~~plan to add~~added adult beverage to ~~185~~approximately 270 stores in the first half of fiscal ~~2021.~~2022. We believe the addition of adult beverage to our assortment will drive traffic to our stores.

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Additional Considerations

The following trends or uncertainties have already impacted or could impact our business or results of operations during ~~2021~~2022 or in the future:

•~~Shipping Delays.~~Anticipated Pressures on Margins. Our financial performance is impacted by numerous factors, including changes in consumer spending behavior and increased costs due to inflation. We are currently experiencing a material shift in consumer purchasing from higher-margin discretionary merchandise to lower-margin consumable goods which has negatively impacted our product mix and margins. We also are experiencing inflationary price pressures relating to, among other things, merchandise costs, freight costs, wages, utility costs, and repair and maintenance expenses. In addition, we have begun making our planned competitive pricing investments at Family Dollar to improve its value proposition and drive store traffic and productivity. We expect that the consumer’s shift to lower-margin consumable goods and any inflation-related cost increases, coupled with our planned investments in product pricing and our value proposition, will pressure gross margins in the second half of fiscal 2022.

•Supply Chain and Inventory. We rely heavily on Trans-Pacific shipping and domestic trucking and rail freight to acquire and distribute merchandise ~~for~~to our ~~stores,~~distribution centers and ~~we are experiencing significant~~retail stores. Significant disruptions in our supply chain, such as the shipping delays ~~as a result of~~resulting from the ~~shipping capacity shortage which~~COVID-19 pandemic, have negatively impacted our sales and the cost and availability of product in the stores. ~~We are also experiencing issues with~~Although we may continue to experience oceanic shipping delays in the future as a result of shipping capacity shortages, port congestion ~~and pandemic-related port~~or closings, and the imposition of lockdowns in certain Chinese localities to address COVID-19 outbreaks, our ability to ship ~~diversions.~~products from overseas on a timely basis has improved in recent months. This improvement has led to an increase in inventory that is in route to or being held in our distribution centers. To the extent that increased inventory levels exceed the storage capacity of our distribution centers, we will need to arrange for temporary offsite warehouse storage facilities and we may incur detention costs and incremental drayage costs, which will increase our cost of goods sold. In addition, the union collective bargaining agreement that governs the wages and benefits of a large number of longshoremen at ports in California, Oregon, and Washington expired on July 1, 2022. If the ~~shipping~~parties are unable to agree on a new or extended collective bargaining agreement, there could be work slowdowns or strikes that result in additional delays ~~do not improve they would continue to have~~and disruptions in our supply chain which could adversely affect the availability of merchandise and increase our costs. We could also experience higher markdowns as a ~~material adverse impact on product availability and product mix, and on our sales and merchandise margin.~~result of these supply chain challenges. Sales could be negatively impacted if ~~imported goods do~~we are not ~~arrive in time~~able to deliver inventory timely to stock our stores, including the timely delivery of adequate levels of seasonal merchandise for the important Christmas holidays. If higher cost domestic goods are substituted for delayed imports, our merchandise margin could be adversely impacted. To address delays in shipments, we are prioritizing product categories for shipment in an effort to obtain seasonal assortments in advance of holiday seasons, adding and evaluating the use of long-term and short-term chartered vessels, and adding alternative sources of supply from North American factories.stores.

•Freight ~~Costs.~~Costs. We are experiencing significantly higher international and domestic freight costs as a result of disruptions in the global supply chain. This trend, ~~is likely to continue.~~which accelerated in the second half of fiscal 2021, has continued during fiscal 2022. The combination of increased demand and limited availability of Trans-Pacific shipping capacity ~~has~~ caused spot market prices to increase substantially. Although Trans-Pacific shipping continues to be pressured, spot market prices have moderated recently as availability of containers and shipping capacity has improved. Domestically, diesel fuel prices are and are expected to remain significantly higher in fiscal 2022 and may increase further because of international tensions. We are a large importer of merchandise from Asia and rely heavily on domestic freight to transport goods to our distribution centers and stores, which makes us particularly sensitive to freight costs. ~~Freight costs for~~Due to these trends, in the first half of fiscal ~~2021 are now expected to be $2.00 per diluted share higher than fiscal year 2020. We are working to reduce our~~2022, import and domestic freight costs ~~by using chartered vessels, evaluating and securing long-term contracts with our carriers for vessels dedicated in large part~~were higher compared to ~~our needs, and adding alternative sources~~the first half of ~~supply that do not rely on Trans-Pacific shipping.~~fiscal 2021.

•Labor ~~Shortage.~~Shortage and Wage Increases. We are experiencing a shortage of associates and applicants to fill staffing requirements at our stores and distribution centers ~~and stores~~ due to the current labor shortage affecting businesses. This has adversely affected our stores operations, the operating efficiency of our distribution centers and our ability to transport merchandise from our distribution centers to our stores. The steps we have taken to address the labor shortage ~~at our distribution centers~~ include hosting national hiring events, paying sign-on bonuses in our distribution centers, offering enhanced wages in select competitive markets, and paying tuition reimbursement.

•~~Minimum Wage Increases.~~ In ~~2021,~~2022, the minimum wage has increased in certain States and localities, and ~~we expect additional minimum wage increases by States and localities in 2022. In addition,~~proposals to increase the federal minimum wage ~~may increase depending on the outcome of legislation proposed~~have been introduced in Congress. Minimum wage increases in States and localities and wage investments in certain markets are expected to increase our costs by ~~$45.0 to $50.0~~more than $195.0 million in ~~2021.~~2022.

•Build-out and Construction Costs and Delays. We have experienced higher commodity and other costs associated with the build-out of new stores and the renovation of existing stores. In addition, we have experienced delays in new store openings due to inspection, permitting and contractor delays. We anticipate these increased costs and delays may continue for the foreseeable future. Sales will be negatively impacted if we are not able to complete these projects on time.

•~~COVID-19 Costs.~~Impact of COVID-19. The ~~amount~~future course of ~~COVID-19-related~~the COVID-19 pandemic, the timing and impact of any governmental responses to future outbreaks and the effectiveness of health measures such as vaccines remains uncertain. As a result, it is challenging for us to predict the future impact of COVID-19 on our business, financial results, customers, suppliers and the broader economies in the locations that we operate as well as the future impact on our supply chain and the global supply chain.

Table of Contents

•West Memphis Distribution Center. On February 11, 2022, the Food and Drug Administration issued Form 483 observations primarily regarding rodent infestation at our West Memphis, Arkansas distribution center (“DC 202”), as well as other items that require remediation. During the first half of fiscal 2022, we incurred costs ~~for premium pay including bonuses, supplies, protective equipment,~~related to the product recall, remediation efforts and ~~similar items was $279.0 million in fiscal 2020.~~asset impairment. We expect ~~these~~to incur additional costs ~~to be approximately $30.0 million~~ in the second half of fiscal ~~2021.~~2022 for freight, merchandise disposal, payroll and legal costs associated with the remediation.

•~~Shrink Costs.~~Strategic Investments. Building on our current initiatives, we are currently developing plans to make additional multi-year strategic investments across both banners to further position the company for long-term sustained growth. We ~~expect shrink at cost as a percentage~~anticipate that these investments will relate to four key areas of ~~net sales~~our business: our associates, our distribution center network and supply chain, our product pricing and value proposition, and our technology infrastructure. Within these areas, the focus of these investments is expected to be ~~significantly lower in fiscal 2021 than fiscal 2020.~~

~~For additional information~~on associate wages, improved store execution, enhanced safety and working conditions, increased supply chain efficiencies, competitive pricing at Family Dollar, and enhancements to our systems infrastructure. However, our plans have not been finalized at this time, and there is uncertainty regarding the ~~risks related to~~amount and timing of these investments and the impact of such investments on our future business and ~~operations, including risks relating to the implementation~~results of ~~our Dollar Tree and Family Dollar initiatives, see Item 1A. Risk Factors in this Form 10-Q.~~operations.

Results of Operations

Our results of operations and period-over-period changes are discussed in the following section. Note that gross profit margin is calculated as gross profit (i.e., net sales less cost of sales) divided by net sales. The selling, general and administrative expense rate and operating income margin are calculated by dividing the applicable amount by total revenue.

~~Table of Contents~~

Net Sales


		13 Weeks Ended									39 Weeks Ended												13 Weeks Ended										26 Weeks Ended
		October 30,			October 31,			Percentage Change			October 30,				October 31,				Percentage Change				July 30,				July 31,				Percentage Change		July 30,		July 31,			Percentage Change
(dollars in millions)	(dollars in millions)	2021			2020				2021				2020				(dollars in millions)			2022				2021					2022				2021
Net sales	Net sales	$	6,415.4		$	6,176.7			3.9	%			$	19,232.4			$	18,741.1			2.6	%	Net sales			$	6,765.3			$		6,340.2	6.7	%	$	13,665.4		$	12,817.0	6.6	%
Comparable store net sales change, on a constant currency basis	Comparable store net sales change, on a constant currency basis	1.6		%	5.1		%				0.4	%			6.5	%				Comparable store net sales change, on a constant currency basis			4.9		%		(1.2)	%					4.7	%	(0.2)		%

The increase in net sales in the 13 weeks ended ~~October~~July 30, ~~2021~~2022 was a result of sales of ~~$177.5~~$178.8 million at new stores and comparable store net sales increases in the Dollar Tree and Family Dollar ~~and Dollar Tree~~ segments.

Enterprise comparable store net sales increased ~~1.6%~~4.9% on a constant currency basis in the 13 weeks ended ~~October~~July 30, ~~2021,~~2022, as a result of a ~~3.5%~~9.2% increase in average ticket, partially offset by a ~~1.8%~~4.0% decrease in customer traffic. Comparable store net sales increased ~~the same 1.6%~~4.8% when including the impact of Canadian currency fluctuations. On a constant currency basis, comparable store net sales increased ~~2.7%~~7.5% in the Dollar Tree segment and increased 2.0% in the Family Dollar ~~segment and 0.6% in the Dollar Tree~~ segment.

The increase in net sales in the 3926 weeks ended ~~October~~July 30, ~~2021~~2022 was a result of sales of ~~$514.9~~$364.3 million at new stores and a comparable store net sales increase in the Dollar Tree segment, partially offset by a comparable store net sales decrease in the Family Dollar segment.

Enterprise comparable store net sales increased ~~0.4%~~4.7% on a constant currency basis in the 3926 weeks ended ~~October~~July 30, ~~2021,~~2022, as a result of ~~a 4.1%~~an 8.8% increase in average ticket, partially offset by a ~~3.6%~~3.8% decrease in customer traffic. Comparable store net sales increased ~~0.5%~~4.6% when including the impact of Canadian currency fluctuations. On a constant currency basis, comparable store net sales increased ~~1.7%~~9.4% in the Dollar Tree segment and decreased ~~0.8%~~0.4% in the Family Dollar segment. ~~In the same period last year, the Family Dollar segment had a comparable store net sales increase~~

Table of 11.2% as we saw an increase in demand for essential products in the early stages of the COVID-19 pandemic. The Dollar Tree segment had a comparable store net sales increase of 2.1% in the same period last year, as the higher average ticket was partially offset by lower traffic resulting from the COVID-19 pandemic which negatively affected Easter sales.Contents

Gross Profit


		13 Weeks Ended										39 Weeks Ended													13 Weeks Ended											26 Weeks Ended
		October 30,			October 31,			Percentage Change				October 30,				October 31,				Percentage Change					July 30,				July 31,				Percentage Change			July 30,		July 31,			Percentage Change
(dollars in millions)	(dollars in millions)	2021			2020					2021				2020				(dollars in millions)				2022				2021					2022					2021
Gross profit	Gross profit	$	1,763.7		$	1,924.1				(8.3)	%			$	5,588.8			$	5,635.2				(0.8)	%	Gross profit			$	2,124.4			$		1,861.0		14.2	%	$	4,464.9		$	3,825.1		16.7	%
Gross profit margin	Gross profit margin	27.5		%	31.2		%	(3.7)	%			29.1	%			30.1	%			(1.0)	%	Gross profit margin			31.4		%		29.4	%			2.0		%	32.7	%	29.8		%	2.9		%

The ~~decrease~~increase in gross profit margin in the 13 weeks ended ~~October~~July 30, ~~2021~~2022 was a result of the net of the following:

•Merchandise cost, ~~including~~which includes freight, ~~increased 360~~decreased 245 basis points resulting primarily from higher ~~freight costs on both segments~~initial mark-on, partially offset by higher freight costs and increased sales of ~~higher~~lower margin ~~discretionary merchandise on~~consumable merchandise.

•Occupancy costs decreased 20 basis points due to leverage from the ~~Dollar Tree segment.~~comparable store net sales increase.

•Distribution costs increased 15 basis points resulting from higher distribution center payroll costs, resulting primarily from hourly wage increases on both segments, and higher depreciation costs on the Dollar Tree segment resulting from the two new distribution centers, partially offset by lower COVID-19-related costs. The 13 weeks ended October 30, 2021 and October 31, 2020 included COVID-19 costs of approximately $2.8 million and $10.9 million, respectively. The prior year amount included a per hour premium for all hourly associates.

•~~Occupancy costs increased~~decreased 10 basis points ~~primarily~~ due to ~~the loss of~~ leverage from the ~~low~~ comparable store net sales increase ~~for the quarter~~ and higher ~~real estate tax expenses.~~capitalized amounts due to increases in inventory levels, partially offset by higher hourly wages and higher maintenance and compliance costs in our distribution centers.

•Shrink costs increased 30 basis points in the current year quarter resulting from more favorable inventory results in relation to accruals in the prior year quarter.

•Markdown costs increased 1040 basis points primarily due to higher promotional and clearance markdowns on the Family Dollar segment and higher ~~dated product~~clearance markdowns resulting from a move to a higher value assortment at the $1.25 price point on the Dollar Tree segment.

•Shrink costs decreased 30 basis points resulting from favorable inventory results in relation to accruals and decreases in the shrink accrual rates in both the Family Dollar and Dollar Tree segments in the current quarter.

~~Table of Contents~~

The ~~decrease~~increase in gross profit margin in the 3926 weeks ended ~~October~~July 30, ~~2021~~2022 was a result of the net of the following:

•Merchandise cost, ~~including~~which includes freight, ~~increased 140~~decreased 305 basis points resulting primarily from higher ~~freight costs on both segments,~~initial mark-on, partially offset by higher freight costs and increased sales of ~~higher~~lower margin ~~discretionary~~consumable merchandise ~~including higher Easter sales in both segments and improved initial mark-on in both segments.~~

•~~Occupancy costs increased 10 basis points primarily due to the loss of leverage from the comparable store net sales decrease~~ on the Family Dollar segment.

•Distribution costs ~~were flat as a percentage of~~decreased 20 basis points due to leverage from the comparable store net sales ~~compared to the prior year~~increase and higher capitalized amounts resulting from ~~COVID-19 expenses~~increases in the prior year of $28.7 million, including COVID-19 premium pay of $2 per hour for all hourly associates for hours worked beginning March 8, 2020, offset by hourly wage increases at the distribution centers and higher depreciation costs in the Dollar Tree segment resulting from the two new distribution centers. COVID-19-related costs for the 39 weeks ended October 30, 2021 were $6.1 million.

•Markdown costs decreased 5 basis points primarily due to lower seasonal markdowns in the Dollar Tree segment resulting from the improved sell-through of Easter merchandise in the current year and $10.4 million of uninsured markdown costs for stores affected by civil unrest in the prior year,inventory levels, partially offset by higher ~~clearance markdowns on~~hourly wages and higher maintenance and compliance costs in our distribution centers.

•Occupancy costs decreased 20 basis points due to leverage from the ~~Family Dollar segment.~~comparable store net sales increase.

•Shrink costs ~~decreased 45~~increased 20 basis points in the current year resulting from more favorable inventory results in relation to accruals ~~and decreases~~ in the ~~shrink accrual rates in both~~prior year.

•Markdown costs increased 45 basis points primarily due to higher promotional and clearance markdowns on the Family Dollar segment and higher clearance markdowns resulting from a move to a higher value assortment at the $1.25 price point on the Dollar Tree ~~segments in the current year.~~segment.

Table of Contents

Selling, General and Administrative Expenses


		13 Weeks Ended										39 Weeks Ended													13 Weeks Ended											26 Weeks Ended
		October 30,			October 31,			Percentage Change				October 30,				October 31,				Percentage Change					July 30,				July 31,				Percentage Change			July 30,		July 31,			Percentage Change
(dollars in millions)	(dollars in millions)	2021			2020					2021				2020				(dollars in millions)				2022				2021					2022					2021
Selling, general and administrative expenses	Selling, general and administrative expenses	$	1,455.5		$	1,458.9				(0.2)	%			$	4,364.4			$	4,429.2				(1.5)	%	Selling, general and administrative expenses			$	1,622.2			$		1,461.8		11.0	%	$	3,233.7		$	2,908.9		11.2	%
Selling, general and administrative expense rate	Selling, general and administrative expense rate	22.7		%	23.7		%	(1.0)	%			22.7	%			23.7	%			(1.0)	%	Selling, general and administrative expense rate			24.0		%		23.0	%			1.0		%	23.7	%	22.7		%	1.0		%

The ~~decrease~~increase in the selling, general and administrative expense rate in the 13 weeks ended ~~October~~July 30, ~~2021~~2022 was the result of the ~~net of the~~ following:

•Payroll expenses decreased 80 basis points primarily due to lower incentive compensation expenses and lower COVID-19-related store payroll costs, partially offset by minimum wage increases in the current year. The 13 weeks ended October 30, 2021 and October 31, 2020 included $6.8 million and $28.9 million, respectively, of COVID-19-related payroll costs. The COVID-19 expenses in the current quarter were primarily for quarantine and sick pay as well as the related payroll taxes. In the prior year quarter, COVID-19-related payroll expenses included store payroll costs for a $1 per hour premium paid to all store hourly associates for all hours worked during the quarter through September 26, 2020, bonuses for certain field management associates, quarantine pay and sick pay as well as the related payroll taxes.

•~~Store facility costs decreased 15 basis points primarily due to lower repairs and maintenance costs and utility costs.~~

•Other selling, general and administrative expenses ~~were flat~~increased 45 basis points primarily due to unfavorable development of general liability insurance claims, higher legal fees, higher debit and credit fees and inflationary pressure across several expense categories.

•Store facility costs increased 30 basis points primarily due to higher utility costs and an increase in repairs and maintenance expenses as ~~a percentage of total revenue. Travel~~we focus on store conditions for our customers and ~~advertising costs were~~associates.

•Payroll expenses increased 5 basis points primarily due to minimum wage increases and other investments in store payroll and higher instock compensation expenses, partially offset by leverage from the ~~current quarter as~~comparable store net sales increase.

•Depreciation and amortization expense increased 10 basis points primarily due to capital expenditures related to store renovations and improvements, partially offset by leverage from the ~~prior year levels were unusually low as a result of the COVID-19 pandemic. The current quarter also includes the benefit associated with the settlement of a contractual dispute.~~comparable store net sales increase.

The ~~decrease~~increase in the selling, general and administrative expense rate in the 3926 weeks ended ~~October~~July 30, ~~2021~~2022 was ~~primarily~~ the result of ~~a 95~~the following:

•Other selling, general and administrative expenses increased 60 basis ~~point decrease in payroll expenses~~points primarily due to ~~lower COVID-19-related~~long-lived asset impairments at the Family Dollar West Memphis, Arkansas distribution center, higher legal fees, including costs related to the reconstitution of the Board of Directors and higher store supplies expense.

•Store facility costs increased 20 basis points primarily due to costs associated with the removal of product from certain Family Dollar stores in connection with the voluntary retail-level product recall, higher utility costs and higher repairs and maintenance expenses as we focus on store conditions for our customers and associates.

•Payroll expenses increased 5 basis points primarily due to minimum wage increases and other investments in store payroll ~~costs~~ and ~~lower~~higher stock ~~and incentive~~ compensation expenses, partially offset by ~~minimum wage increases~~leverage from the comparable store net sales increase.

•Depreciation and ~~higher health insurance costs. The 39 weeks ended October 30, 2021~~amortization expense increased 10 basis points primarily due to capital expenditures related to store renovations and ~~October 31, 2020 included $10.2 million and $201.0 million, respectively, of COVID-19-related payroll costs. The COVID-19 expenses in 2021 were primarily for quarantine and sick pay as well as~~improvements, partially offset by leverage from the ~~related payroll taxes. The prior year expenses were for~~comparable store payroll costs for a per hour premium paid to all store hourly associates for all hours worked from March 8, 2020 to September 26, 2020, bonuses for certain field management associates, guaranteed bonus payouts and Thank You bonuses for store managers, quarantine pay and sick pay as well as the related payroll taxes.

net sales increase.

~~Table of Contents~~

Operating Income


		13 Weeks Ended										39 Weeks Ended													13 Weeks Ended											26 Weeks Ended
		October 30,			October 31,			Percentage Change				October 30,				October 31,				Percentage Change					July 30,				July 31,				Percentage Change			July 30,		July 31,			Percentage Change
(dollars in millions)	(dollars in millions)	2021			2020					2021				2020				(dollars in millions)				2022				2021					2022					2021
Operating income	Operating income	$	310.5		$	465.5				(33.3)	%			$	1,232.6			$	1,206.3				2.2	%	Operating income			$	505.4			$		402.2		25.7	%	$	1,236.9		$	922.1		34.1	%
Operating income margin	Operating income margin	4.8		%	7.5		%	(2.7)	%			6.4	%			6.4	%			—	%	Operating income margin			7.5		%		6.3	%			1.2		%	9.0	%	7.2		%	1.8		%

Operating income margin ~~decreased~~increased to ~~4.8%~~7.5% for the 13 weeks ended ~~October~~July 30, ~~2021~~2022 compared to ~~7.5%~~6.3% for the same period last year resulting from the ~~decrease~~increase in gross profit margin, partially offset by the ~~decrease~~increase in the selling, general and administrative expense rate, as described above. ~~Operating income in the 13 weeks ended October 30, 2021 and October 31, 2020 included $11.6 million and $46.3 million, respectively, of COVID-19-related expenses.~~

Operating income margin ~~was 6.4%~~increased to 9.0% for the 3926 weeks ended ~~October~~July 30, ~~2021 and October 31, 2020. In~~2022 compared to 7.2% for the ~~current~~same period last year resulting from the ~~decrease~~increase in gross profit margin, ~~was~~partially offset by the ~~decrease~~increase in the selling, general and administrative expense rate, as described above. ~~Operating income in the 39 weeks ended October 30, 2021 included $22.1 million~~

Table of ~~COVID-19-related expenses. Operating income in the 39 weeks ended October 31, 2020 included $254.3 million of COVID-19-related expenses and $17.6 million of uninsured expenses related to civil unrest.~~Contents

Interest Expense, Net


		13 Weeks Ended							39 Weeks Ended										13 Weeks Ended								26 Weeks Ended
		October 30,		October 31,		Percentage Change			October 30,			October 31,			Percentage Change				July 30,			July 31,			Percentage Change		July 30,		July 31,		Percentage Change
(dollars in millions)	(dollars in millions)	2021		2020			2021			2020			(dollars in millions)			2022				2021			2022				2021
Interest expense, net	Interest expense, net	$	33.4	$	38.1		(12.3)	%		$	99.4		$	113.1			(12.1)	%	Interest expense, net		$	30.6		$		33.0	(7.3)	%	$	64.6	$	66.0	(2.1)	%

Interest expense, net decreased ~~$4.7 million and $13.7~~$2.4 million in the 13 weeks ~~and 39 weeks~~ ended ~~October~~July 30, ~~2021, respectively,~~2022 compared to the same ~~periods~~period last year, resulting from ~~lower average debt outstanding~~higher interest income on investments.

Interest expense, net decreased $1.4 million in the ~~current year.~~26 weeks ended July 30, 2022 compared to the same period last year, resulting from higher interest income on investments.

Provision for Income Taxes


		13 Weeks Ended										39 Weeks Ended													13 Weeks Ended											26 Weeks Ended
		October 30,			October 31,			Percentage Change				October 30,				October 31,				Percentage Change					July 30,				July 31,				Percentage Change			July 30,		July 31,			Percentage Change
(dollars in millions)	(dollars in millions)	2021			2020					2021				2020				(dollars in millions)				2022				2021					2022					2021
Provision for income taxes	Provision for income taxes	$	60.1		$	97.3				(38.2)	%			$	259.3			$	253.3				2.4	%	Provision for income taxes			$	114.8			$		86.8		32.3	%	$	275.9		$	199.2		38.5	%
Effective tax rate	Effective tax rate	21.7		%	22.8		%	(1.1)	%			22.9	%			23.2	%			(0.3)	%	Effective tax rate			24.2		%		23.5	%			0.7		%	23.5	%	23.3		%	0.2		%

The effective tax rate was 24.2% for the 13 weeks ended ~~October~~July 30, ~~2021 was 21.7%~~2022 compared to ~~22.8%~~23.5% for the comparable prior year period, resulting ~~primarily~~ from higher state tax rates and lower Work Opportunity Tax ~~Credits~~credits as a percentage of pre-tax income in the current year quarter.

The effective tax rate was 23.5% for the 3926 weeks ended ~~October~~July 30, ~~2021 was 22.9%~~2022 compared to ~~23.2%~~23.3% for the ~~same period last~~comparable prior year ~~resulting from additional~~period. Higher state tax ~~deductions~~rates and lower Work Opportunity Tax credits as a percentage of pre-tax income in the current year were offset by higher tax deductions related to restricted stock ~~vesting while last year the restricted stock vesting resulted in an increase in tax expense. This benefit was partially offset by higher state tax rates in the current year.~~vesting.

Segment Information

Our operating results for the Dollar Tree and Family Dollar segments and period-over-period changes are discussed in the following sections.

~~Table of Contents~~

Dollar Tree

The following table summarizes the operating results of the Dollar Tree segment:


		13 Weeks Ended										39 Weeks Ended															13 Weeks Ended												26 Weeks Ended
		October 30,			October 31,			Percentage Change				October 30,					October 31,					Percentage Change					July 30,				July 31,					Percentage Change			July 30,			July 31,			Percentage Change
(dollars in millions)	(dollars in millions)	2021			2020					2021					2020					(dollars in millions)				2022				2021						2022					2021
Net sales	Net sales	$	3,417.4		$	3,303.2				3.5	%				$	10,003.0				$	9,557.6				4.7	%	Net sales			$	3,571.1				$		3,264.3		9.4		%	$	7,352.9		$	6,585.6		11.7	%
Gross profit	Gross profit	1,031.1			1,154.2			(10.7)	%			$	3,207.1				$	3,206.8				—	%	Gross profit			$	1,334.9			$	1,057.7				26.2		%	$	2,869.6		$	2,176.0		31.9		%
Gross profit margin	Gross profit margin	30.2		%	34.9		%	(4.7)	%			32.1		%			33.6		%			(1.5)	%	Gross profit margin			37.4		%		32.4		%			5.0		%	39.0		%	33.0		%	6.0		%
Operating income	Operating income	$	290.5		$	417.9		(30.5)	%			$	1,019.2				$	1,006.5				1.3	%	Operating income			$	550.8			$	328.4				67.7		%	$	1,315.0		$	728.7		80.5		%
Operating income margin	Operating income margin	8.5		%	12.7		%	(4.2)	%			10.2		%			10.5		%			(0.3)	%	Operating income margin			15.4		%		10.1		%			5.3		%	17.9		%	11.1		%	6.8		%

Net sales for the Dollar Tree segment increased ~~$114.2~~$306.8 million, or ~~3.5%~~9.4%, for the 13 weeks ended ~~October~~July 30, ~~2021~~2022 compared to the same period last year. The increase was due to ~~sales from new stores of $108.5 million and a 0.6%~~an increase in comparable store net sales of 7.5% and $91.8 million of new store sales. Average ticket increased ~~1.8%~~14.2% and customer traffic decreased ~~1.1%~~5.8%. The 13 weeks ended July 30, 2022 includes the impact of our $1.25 price point initiative which increased the selling price of the majority of our $1 merchandise to $1.25. The rollout of this initiative was completed during the first quarter of fiscal 2022. The increase in price point more than offset the decline in the number of units sold during the second quarter of fiscal 2022.

Net sales for the Dollar Tree segment increased ~~$445.4~~$767.3 million, or ~~4.7%~~11.7%, for the 3926 weeks ended ~~October~~July 30, ~~2021~~2022 compared to the same period last year. The increase was due to ~~sales from new stores of $326.5 million and a 1.7%~~an increase in comparable store net sales of 9.4% and $202.9 million of new store sales.

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Average ticket increased ~~3.1%~~14.8% and customer traffic ~~declined 1.4%~~decreased 4.7%. The 26 weeks ended July 30, 2022 was impacted by our $1.25 price point initiative. The increase in price point more than offset the decline in the number of units sold during the first half of fiscal 2022.

Gross profit margin for the Dollar Tree segment ~~decreased~~increased to ~~30.2%~~37.4% for the 13 weeks ended ~~October~~July 30, ~~2021~~2022 compared to ~~34.9%~~32.4% for the same period last year as a result of the net of the following:

•Merchandise cost, ~~including~~which includes freight, ~~increased 475~~decreased 455 basis points primarily due to higher ~~freight costs and lower~~ initial mark-on, partially offset by ~~increased sales of~~ higher ~~margin discretionary merchandise.~~freight costs.

•Occupancy costs ~~increased 10~~decreased 50 basis points ~~as a result of the loss of leverage~~primarily due to leverage from the ~~low~~comparable store net sales increase.

•Distribution costs decreased 20 basis points due to leverage from the comparable store net sales increase and higher capitalized balances resulting from increases in inventory levels in the ~~quarter and higher real estate tax expenses.~~

•~~Distribution costs increased 10 basis points resulting primarily from higher depreciation costs related to two new distribution centers and~~current year, partially offset by higher hourly wages ~~partially offset by lower COVID-19-related expenses. Total distribution-related COVID-19 expenses were $1.9 million~~ and ~~$6.6 million for the 13 weeks ended October 30, 2021~~higher maintenance and ~~October 31, 2020, respectively. COVID-19-related expenses~~compliance costs in ~~the prior year included a per hour premium paid to all~~our distribution ~~center hourly associates for all hours worked during the quarter.~~centers.

•Markdown costs increased 5 basis points resulting primarily from markdowns for clearance items as we move to a higher ~~dated product markdowns.~~value assortment at the $1.25 price point.

•Shrink costs ~~decreased 25~~increased 20 basis points in the current year resulting from more favorable inventory results in relation to accruals in the ~~current quarter and a decrease in the shrink accrual rate.~~prior year quarter.

Gross profit margin for the Dollar Tree segment ~~decreased~~increased to ~~32.1%~~39.0% for the 3926 weeks ended ~~October~~July 30, ~~2021~~2022 compared to ~~33.6%~~33.0% for the same period last year as a result of the net of the following:

•Merchandise cost, ~~including~~which includes freight, ~~increased 195~~decreased 525 basis points primarily due ~~primarily~~ to higher ~~freight costs and lower~~ initial mark-on ~~partially offset by higher~~and increased sales of higher margin discretionary merchandise, ~~including a~~partially offset by higher ~~Easter sell-through. Easter~~freight costs.

•Occupancy costs decreased 65 basis points primarily due to leverage from the comparable store net sales ~~were significantly lower last year as a result of the COVID-19 pandemic.~~increase.

•Distribution costs ~~increased 5~~decreased 35 basis points ~~resulting primarily~~due to leverage from ~~higher depreciation costs related to two new distribution centers~~the comparable store net sales increase and higher hourly wages in the current year, partially offset by lower COVID-19-related expenses. Total distribution center COVID-19-related expenses were approximately $4.1 million and $16.9 million for the 39 weeks ended October 30, 2021 and October 31, 2020, respectively. COVID-19-related expenses in the prior year included a per hour premium paid to all distribution center hourly associates for all hours worked from March 8, 2020.

•~~Markdown costs decreased 5 basis points~~capitalized balances resulting from ~~lower seasonal markdowns due to the higher Easter sell-through~~increases in ~~the current year,~~inventory levels, partially offset by higher ~~dated product markdowns.~~hourly wages.

•Shrink costs ~~decreased 40~~increased 10 basis points in the current year resulting from more favorable inventory results in relation to accruals in the ~~current year and~~prior year.

•Markdown costs increased 20 basis points resulting primarily from markdowns for clearance items as we move to a ~~decrease in~~higher value assortment at the ~~shrink accrual rate.~~$1.25 price point.

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Operating income margin for the Dollar Tree segment ~~decreased~~increased to ~~8.5%~~15.4% for the 13 weeks ended ~~October~~July 30, ~~2021~~2022 from 12.7% for the same period last year. The decrease in operating income margin in the 13 weeks ended October 30, 2021 was the result of the gross profit margin decrease noted above, partially offset by a lower selling, general and administrative expense rate. The selling, general and administrative expense rate decreased to 21.7% in the 13 weeks ended October 30, 2021 compared to 22.2%10.1% for the same period last year as a result of the ~~following:~~

•Payroll expenses decreased 30 basis points primarily due to lower COVID-19-related store payroll costs and lower incentive compensation expenses, partially offset by minimum wage increases and higher health insurance expenses. The 13 weeks ended October 30, 2021 and October 31, 2020 included $3.3 million and $17.3 million, respectively, of COVID-19-related payroll expenses. The amounts in the current quarter were primarily for quarantine and sick pay as well as the related payroll taxes. In the prior year quarter, COVID-19-related payroll expenses included store payroll costs for a $1 per hour premium paid to all store hourly associates for all hours worked during the quarter through September 26, 2020, bonuses for certain field management associates, quarantine pay and sick pay as well as the related payroll taxes.

•Other selling, general and administrative expenses decreased 25 basis points due to the current year including the benefit associated with the settlement of a contractual dispute and the realization of certain tax credits. The prior year also included higher costs for masks, gloves and cleaning supplies due to the COVID-19 pandemic.

~~Operating income in the 13 weeks ended October 30, 2021 and October 31, 2020 included $6.2 million and $28.6 million, respectively, of COVID-19-related expenses.~~

Operating income margin for the Dollar Tree segment decreased to 10.2% for the 39 weeks ended October 30, 2021 from 10.5% for the same period last year. The decrease in operating income margin in the 39 weeks ended October 30, 2021 was the result of the gross profit margin ~~decrease~~increase noted above and a decrease in the selling, general and administrative expense rate. The selling, general and administrative expense rate decreased to ~~21.9%~~22.0% in the 3913 weeks ended ~~October~~July 30, ~~2021~~2022 compared to ~~23.1%~~22.3% for the same period last year as a result of the net of the following:

•Payroll expenses decreased 90 basis points primarily due to leverage from the comparable store net sales increase and favorable development of workers’ compensation claims, partially offset by minimum wage increases and other investments in store payroll.

•Other selling, general and administrative expenses increased 40 basis points primarily due to unfavorable development of general liability insurance claims and inflationary pressure across several expense categories.

•Store facility costs increased 10 basis points primarily due to higher utility costs and an increase in repairs and maintenance expenses as we focus on store conditions for our customers and associates.

•Depreciation and amortization expense was flat as capital expenditures related to store renovations and improvements were offset by leverage from the comparable store net sales increase.

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Operating income margin for the Dollar Tree segment increased to 17.9% for the 26 weeks ended July 30, 2022 from 11.1% for the same period last year as a result of the gross profit margin increase noted above and a decrease in the selling, general and administrative expense rate. The selling, general and administrative expense rate decreased to 21.1% in the 26 weeks ended July 30, 2022 compared to 21.9% for the same period last year as a result of the net of the following:

•Payroll expenses decreased 95 basis points primarily due to ~~lower COVID-19-related~~leverage from the comparable store ~~payroll costs~~net sales increase and ~~lower incentive~~favorable development of workers’ compensation ~~expenses,~~claims, partially offset by minimum wage increases and ~~higher health insurance costs. The 39 weeks ended October 30, 2021~~other investments in store payroll.

•Store facility costs decreased 10 basis points primarily due to leverage from the comparable store net sales increase, partially offset by an increase in repairs and ~~October 31, 2020 included $5.0 million~~maintenance expenses as we focus on store conditions for our customers and ~~$117.0 million, respectively, of COVID-19-related payroll expenses. COVID-19 expenses in~~associates.

•Depreciation and amortization expense decreased 5 basis points primarily due to leverage from the ~~current year were primarily for quarantine~~comparable store net sales increase, partially offset by capital expenditures related to store renovations and sick pay as well as the related payroll taxes. In the prior year, COVID-19-related payroll expenses included store payroll costs for a $1 per hour premium paid to all store hourly associates for all hours worked from March 8, 2020 to September 26, 2020, bonuses for certain field management associates, quarantine pay and sick pay as well as the related payroll taxes.improvements.

•Other selling, general and administrative expenses ~~decreased 15~~increased 25 basis points primarily due to ~~the current year including the benefit associated with the settlement~~unfavorable development of ~~a contractual dispute, the realization of certain tax credits and lower~~general liability claims, higher store supplies expense ~~partially offset by higher debit~~in connection with the $1.25 price point initiative, and credit fees resulting from higher debit and credit card penetration. The prior year included costs for the installation of plexiglass sneeze guards at all registers in our stores and higher costs for masks, gloves and cleaning supplies due to the COVID-19 pandemic.inflationary pressure across several expense categories.

Operating income in the 39 weeks ended October 30, 2021 included $12.4 million of COVID-19-related expenses. Operating income in the 39 weeks ended October 31, 2020 included $147.4 million of COVID-19-related expenses and $5.2 million of uninsured expenses related to civil unrest.

Family Dollar

The following table summarizes the operating results of the Family Dollar segment:


		13 Weeks Ended										39 Weeks Ended											13 Weeks Ended												26 Weeks Ended
		October 30,			October 31,			Percentage Change				October 30,			October 31,			Percentage Change					July 30,				July 31,					Percentage Change			July 30,			July 31,			Percentage Change
(dollars in millions)	(dollars in millions)	2021			2020					2021				2020			(dollars in millions)			2022				2021						2022					2021
Net sales	Net sales	$	2,998.0		$	2,873.5				4.3	%			9,229.4			9,183.5				0.5	%	Net sales			$	3,194.2				$		3,075.9		3.8		%	$	6,312.5		$	6,231.4		1.3	%
Gross profit	Gross profit	732.6			769.9			(4.8)	%			2,381.7			2,428.4			(1.9)	%	Gross profit			$	789.5			$	803.3				(1.7)		%	$	1,595.3		$	1,649.1		(3.3)		%
Gross profit margin	Gross profit margin	24.4		%	26.8		%	(2.4)	%			25.8	%		26.4	%		(0.6)	%	Gross profit margin			24.7		%		26.1		%			(1.4)		%	25.3		%	26.5		%	(1.2)		%
Operating income	Operating income	$	88.6		$	131.4		(32.6)	%			456.3			472.0			(3.3)	%	Operating income			$	55.0			$	156.3				(64.8)		%	$	144.5		$	367.7		(60.7)		%
Operating income margin	Operating income margin	3.0		%	4.6		%	(1.6)	%			4.9	%		5.1	%		(0.2)	%	Operating income margin			1.7		%		5.1		%			(3.4)		%	2.3		%	5.9		%	(3.6)		%

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Net sales for the Family Dollar segment increased ~~$124.5~~$118.3 million, or ~~4.3%~~3.8%, for the 13 weeks ended ~~October~~July 30, ~~2021~~2022 compared to the same period last year. The increase was due to a comparable store net sales increase of ~~2.7%~~2.0% and ~~$69.0~~ $87.0 million of new store sales. For the 13 weeks ended ~~October~~July 30, ~~2021,~~2022, average ticket increased ~~5.8%~~3.3% and customer traffic declined ~~3.0%~~1.2%.

Net sales for the Family Dollar segment increased ~~$45.9~~$81.1 million, or ~~0.5%~~1.3%, for the 3926 weeks ended ~~October~~July 30, ~~2021~~2022 compared to the same period last year. The increase was due to ~~$188.4~~$161.4 million of new store sales, partially offset ~~partially~~ by a comparable store net sales decrease of ~~0.8%~~0.4%. For the 3926 weeks ended ~~October~~July 30, ~~2021,~~2022, average ticket increased ~~6.1%~~2.1% and customer traffic declined ~~6.5%~~2.4%. Customers received significant government stimulus dollars in the prior year period. In addition, during the 13 weeks ended April 30, 2022, approximately 400 stores serviced by the West Memphis, Arkansas distribution center were temporarily closed in connection with the voluntary retail-level product recall. The Family Dollar comparable store net sales increased 0.5% when excluding the effect of the store closures.

Gross profit margin for the Family Dollar segment decreased to ~~24.4%~~24.7% for the 13 weeks ended ~~October~~July 30, ~~2021~~2022 compared to ~~26.8%~~26.1% for the same period last year. The decrease is due to the following:

•Markdown costs increased 80 basis points primarily due to higher clearance and promotional markdowns.

•Shrink expense increased 45 basis points in the current year quarter resulting from more favorable inventory results in relation to accruals in the prior year quarter.

•Merchandise cost, which includes freight, increased 15 basis points primarily due to higher freight costs and higher sales of lower margin consumable merchandise, partially offset by higher initial mark-on.

•Distribution costs were flat compared with the prior year quarter as higher capitalized balances resulting from increases in inventory levels in the current year offset higher hourly wages and higher maintenance and compliance costs in our distribution centers.

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Gross profit margin for the Family Dollar segment decreased to 25.3% for the 26 weeks ended July 30, 2022 compared to 26.5% for the same period last year. The decrease is due to the net of the following:

•~~Merchandise cost, including freight, increased 220 basis points primarily due to higher freight costs.~~

•Distribution costs increased 20 basis points primarily due to higher hourly wages, partially offset by lower COVID-19-related expenses. Total distribution-related COVID-19 expenses were $0.9 million and $4.3 million for the 13 weeks ended October 30, 2021 and October 31, 2020, respectively. The prior year COVID-19-related expenses included a per hour premium for all distribution center hourly associates for all hours worked during the quarter.

•Markdown costs increased 2075 basis points primarily due to higher clearance and promotional markdowns.

•Occupancy costs increased 525 basis points primarily due to ~~higher real estate tax expenses.~~

•~~Shrink expense decreased 30 basis points resulting from favorable physical inventory results in relation to accruals in the current year quarter and a decrease in the shrink accrual rate.~~

Gross profit margin for the Family Dollar segment decreased to 25.8% for the 39 weeks ended October 30, 2021 compared to 26.4% for the same period last year. The decrease is due to the net of the following:

•~~Merchandise cost, including freight, increased 100 basis points primarily due to higher freight costs, partially offset by higher initial mark-on.~~

•~~Occupancy costs increased 20 basis points as a result of the~~ loss of leverage from the comparable store net sales decrease and higher real estate tax expenses.

•~~Markdown costs were unchanged as a percentage of net sales compared~~Shrink expense increased 35 basis points in the current year resulting from more favorable inventory results in relation to accruals in the prior year. ~~Current year results included higher clearance markdowns while the prior year included $7.5 million of uninsured markdowns for stores affected by civil unrest.~~

•Distribution costs decreased 510 basis points due to higher capitalized balances resulting from increases in inventory levels in the current year, partially offset by higher hourly wages and higher maintenance and compliance costs in our distribution centers.

•Merchandise cost, which includes freight, decreased 10 basis points primarily due to ~~lower COVID-19-related costs~~higher initial mark-on, partially offset by higher ~~hourly wages. Total distribution center COVID-19-related expenses were $2.0 million~~freight costs and $11.8 million for the 39 weeks ended October 30, 2021 and October 31, 2020, respectively. COVID-19-related expenses in the prior year included a per hour premium for all distribution center hourly associates for all hours worked beginning March 8, 2020.

•~~Shrink expense decreased 50 basis points resulting from favorable physical inventory results in relation to accruals and a decrease in the shrink accrual rate.~~higher sales of lower margin consumable merchandise.

Operating income margin for the Family Dollar segment decreased to ~~3.0%~~1.7% for the 13 weeks ended ~~October~~July 30, 2021 from 4.6% for the same period last year resulting from the gross profit margin decrease noted above, offset partially by a decrease in the selling, general and administrative expense rate. The selling, general and administrative expense rate was 21.4% in the 13 weeks ended October 30, 2021 compared to 22.2% for the same period last year. The current quarter decrease in the selling, general and administrative expense rate was due to the net of the following:

•Payroll expenses decreased 65 basis points primarily due to lower COVID-19-related store payroll costs and lower incentive compensation expenses, partially offset by minimum wage increases. The 13 weeks ended October 30, 2021 and October 31, 2020 included $3.5 million and $11.4 million, respectively, of COVID-19-related payroll expenses. The amounts in the current quarter were primarily for quarantine and sick pay as well as the related payroll taxes. The prior year quarter included a $1 per hour premium paid to all store hourly associates for all hours worked through September 26, 2020, quarantine pay and sick pay as well as the related payroll taxes.

•~~Store facility costs decreased 30 basis points primarily due to lower repairs and maintenance expenses and lower telecommunication expenses.~~

•~~Depreciation and amortization expense increased 5 basis points primarily due to expenditures associated with the store optimization program.~~

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•Other selling, general and administrative expenses increased 20 basis points primarily due to increases in advertising and travel expenses, an increase in insurance costs related to general liability claims and increases in tax reserves. Promotional advertising and travel were lower in the prior year quarter due to the COVID-19 pandemic.

~~Operating income in the 13 weeks ended October 30, 2021 and October 31, 2020 included $5.4 million and $17.4 million, respectively, of COVID-19-related expenses.~~

~~Operating income margin for the Family Dollar segment decreased to 4.9% for the 39 weeks ended October 30, 2021~~2022 from 5.1% for the same period last year resulting from the gross profit margin decrease noted above ~~offset partially by a decrease~~and an increase in the selling, general and administrative expense rate. The selling, general and administrative expense rate was ~~20.9%~~23.0% in the 3913 weeks ended ~~October~~July 30, ~~2021~~2022 compared to ~~21.3%~~21.0% for the same period last year. The current ~~year decrease~~quarter increase in the selling, general and administrative expense rate was due to the ~~net of the~~ following:

•Payroll expenses ~~decreased 60~~increased 70 basis points primarily due to ~~lower COVID-19-related store payroll costs and lower incentive compensation expenses, partially offset by~~ minimum wage increases and ~~the loss of leverage from the comparable~~other investments in store ~~net sales decrease. The 39 weeks ended October 30, 2021~~payroll and ~~October 31, 2020 included $5.1 million and $83.4 million, respectively, of COVID-19-related payroll expenses. COVID-19 expenses~~an increase in workers’ compensation expense due to favorable accrual adjustments in the ~~current year were primarily for quarantine and sick pay as well as the related payroll taxes. The~~ prior year, included a per hour premium paid to all store hourly associates for all hours worked from March 8, 2020 to September 26, 2020, bonuses for certain field management associates, guaranteed bonus payouts and Thank You bonuses for store managers, quarantine pay and sick pay as well as the related payroll taxes.partially offset by lower incentive compensation expenses.

•Store facility costs ~~decreased 10~~increased 50 basis points primarily due to ~~lower~~higher utility costs and an increase in repairs and maintenance expenses as we focus on store conditions for our customers and ~~lower telecommunication expenses. The 39 weeks ended October 31, 2020 included $2.5 million of incremental repairs and maintenance expenses for stores damaged by civil unrest.~~

•Depreciation and amortization expense increased 10 basis points primarily due to the loss of leverage from the comparable store net sales decrease and expenditures associated with the store optimization program.associates.

•Other selling, general and administrative expenses increased 2545 basis points primarily due to higher legal fees, higher debit and credit fees, higher store supplies expense related to store projects and inflationary pressure across several expense categories.

•Depreciation and amortization expense increased 30 basis points primarily due to capital expenditures related to store renovations and improvements.

Operating income margin for the Family Dollar segment decreased to 2.3% for the 26 weeks ended July 30, 2022 from 5.9% for the same period last year resulting from the gross profit margin decrease noted above and an increase in ~~advertising~~the selling, general and administrative expense rate. The selling, general and administrative expense rate was 23.0% in the 26 weeks ended July 30, 2022 compared to 20.6% for the same period last year. The current year increase in the selling, general and administrative expense rate was due to the following:

•Payroll expenses increased 80 basis points primarily due to minimum wage increases and other investments in ~~tax reserves~~store payroll, an increase in workers’ compensation expense due to favorable accrual adjustments in the prior year and ~~the~~ loss of leverage from the decrease in comparable store net sales.

•Other selling, general and administrative expenses increased 65 basis points primarily due to long-lived asset impairments at the West Memphis, Arkansas distribution center, higher legal fees, higher debit and credit fees, higher store supplies expense related to store projects, loss of leverage from the decrease in comparable store net sales ~~decrease. Promotional advertising was lower in the prior year~~and inflationary pressure across several expense categories.

•Store facility costs increased 60 basis points primarily due to costs associated with the ~~COVID-19 pandemic.~~removal of product from certain stores in connection with the voluntary retail-level product recall, higher utility costs, higher repairs and maintenance expenses as we focus on store conditions for our customers and associates and loss of leverage from the decrease in comparable store net sales.

~~Operating income in the 39 weeks ended October~~•Depreciation and amortization expense increased 30 ~~2021 included $9.5 million of COVID-19-related expenses. The 39 weeks ended October 31, 2020 included $104.9 million of COVID-19-related expenses and $12.4 million of uninsured costs~~basis points primarily due to capital expenditures related to ~~civil unrest.~~store renovations and improvements and loss of leverage from the decrease in comparable store net sales.

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Liquidity and Capital Resources

Our business requires capital to build and open new stores, expand and renovate existing stores, expand our distribution network and operate our existing stores. Our working capital requirements for existing stores are seasonal in nature and typically reach their peak in the months of September and October. Historically, we have satisfied our seasonal working capital requirements for existing stores and have funded our store opening and distribution network expansion programs from internally generated funds and borrowings under our credit facilities.

The following table compares ~~cash-flow related~~cash flow-related information for the 3926 weeks ended ~~October~~July 30, ~~2021~~2022 and ~~October~~July 31, ~~2020:~~2021:


		39 Weeks Ended					26 Weeks Ended
		October 30,		October 31,			July 30,		July 31,
(in millions)	(in millions)	2021		2020		(in millions)	2022		2021
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	$	1,018.7	$	1,733.7	Operating activities	$	520.6	$	736.1
Investing activities	Investing activities	(746.3)		(707.5)		Investing activities	(533.4)		(451.5)
Financing activities	Financing activities	(981.6)		(446.7)		Financing activities	(283.3)		(980.8)

Net cash provided by operating activities decreased ~~$715.0~~$215.5 million primarily due to higher inventory levels, ~~in the~~partially offset by higher current ~~year.~~year earnings, net of non-cash items and higher accrued liability balances.

Net cash used in investing activities increased ~~$38.8~~$81.9 million primarily due to higher capital expenditures in the current year.

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Net cash used in financing activities ~~increased $534.9~~decreased $697.5 million primarily due to ~~$950.0~~$250.0 million of cash paid for stock repurchases in the current year compared to ~~nearly $200.0~~$947.5 million ~~in the prior year, partially offset by the final $250.0 million payment on the Senior Floating Rate Notes~~ in the prior year.

At ~~October~~July 30, ~~2021,~~2022, our long-term borrowings were ~~$3.25~~$3.45 billion and we had ~~$1.18~~$1.5 billion available under our Revolving Credit ~~Facility.~~Facility, less amounts outstanding for standby letters of credit totaling $45.3 million. We also have $425.0 million in Letter of Credit Reimbursement and Security Agreements with various financial institutions, under which ~~$311.5~~$324.3 million was committed to letters of credit issued for routine purchases of imported merchandise as of ~~October~~July 30, ~~2021.~~2022.

We repurchased 1,754,496 and 9,156,898 shares of common stock on the open market during the 26 weeks ended July 30, 2022 and July 31, 2021, respectively, for $250.0 million and $950.0 million, respectively. Of the shares repurchased during the 3926 weeks ended ~~October 30, 2021. We repurchased 2,154,304 shares of common stock on the open market for $200.0~~July 31, 2021, approximately $2.5 million ~~during the 39 weeks ended October 31, 2020. Approximately $5.8 million in share repurchases~~ had not settled as of ~~October~~July 31, ~~2020~~2021 and this amount was accrued in the accompanying unaudited condensed consolidated balance sheet as of ~~October~~July 31, ~~2020. During the 13 weeks ended October~~2021. At July 30, ~~2021, the~~2022, we had $2.25 billion remaining under Board ~~increased our share~~ repurchase authorization by $1.05 billion to an aggregate amount of $2.5 billion, including $1.45 billion available for repurchases under the Board’s previous repurchase authorization approved on March 2, 2021.authorization.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to various types of market risk in the normal course of our business, including the impact of interest rate changes and diesel fuel cost changes. We may enter into interest rate or diesel fuel swaps to manage exposure to interest rate and diesel fuel price changes. We do not enter into derivative instruments for any purpose other than cash flow hedging and we do not hold derivative instruments for trading purposes.

Interest Rate Risk

Our exposure to interest rate risk relates to our Revolving Credit Facility, as borrowings under the Revolving Credit Facility bear interest at ~~LIBOR,~~SOFR, reset periodically, plus ~~1.00%~~0.10%, plus 0.875% to 1.50% as determined by our credit ratings and leverage ratio. At ~~October~~July 30, ~~2021,~~2022, there were no borrowings outstanding under the Revolving Credit Facility.

Item 4. Controls and Procedures.

Our management has carried out, with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this report. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of ~~October~~July 30, ~~2021,~~2022, our disclosure controls and procedures were designed and functioning effectively to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.

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There have been no changes in our internal control over financial reporting during the fiscal quarter ended ~~October~~July 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we are defendants in ordinary, routine litigation or proceedings incidental to our business, including allegations regarding:

•employment-related matters;

•infringement of intellectual property rights;

•personal injury/wrongful death claims;

•real estate matters;

•environmental and safety issues; and

•product safety matters, which may include regulatory matters.

In addition, we are currently defendants in national and state proceedings and responding to the regulatory matters described in Note 2 ~~- Commitments and Contingencies~~ to our unaudited condensed consolidated financial statements. These include several putative class action complaints that have been filed against, as well as regulatory requests issued to, Family Dollar related to issues associated with our West Memphis, Arkansas distribution center as well as talc litigation.

We will vigorously defend ourselves in these matters. We do not believe that any of these matters will, individually or in the aggregate, have a material effect on our business or financial condition. We cannot give assurance, however, that one or more of these matters will not have a material effect on our results of operations for the ~~period~~quarter or year in which they are reserved or resolved. Based on the information available, including the amount of time remaining before trial, the results of discovery and the judgment of internal and external counsel, we may be unable to express an opinion as to the outcome of those matters which are not close to being resolved and may be unable to estimate a loss or potential range of loss.

Item 1A. Risk Factors.

There have been no material changes to the risk factors described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended January ~~30, 2021,~~29, 2022, other than as set forth ~~below and in the discussion of risk factors in the “Cautionary Note Regarding Forward-Looking Statements” section and~~ in the discussion of certain items that have impacted or could impact our business or results of operations during ~~2021~~2022 or in the future as ~~set forth~~disclosed in the “Additional Considerations” section within ~~“Item~~“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations”~~Operations” of this Form 10-Q.

~~We are experiencing higher costs and disruptions in our distribution network, which have had and could have an adverse impact on our sales, margins and profitability.~~

Our success is dependent on our ability to import or transport merchandise to our distribution centers and then truck merchandise to our stores in a timely and cost-effective manner. We rely heavily on third parties including ocean carriers and truckers in that process. We may not anticipate, respond to or control all of the challenges of operating our distribution network. Additionally, when a shipping or trucking line fails to deliver on its commitments or our distribution centers fail to operate effectively, we could experience increased freight costs or merchandise shortages that could lead to lost sales. We are experiencing ocean shipping disruptions, trucking shortages, increased ocean shipping rates and increased trucking and fuel costs. In the last several years, we have incurred higher distribution costs due to a variety of factors. Some of the factors that have had and could have an adverse effect on our distribution network or costs in 2021 are:

•~~Shipping disruptions~~. There is currently a shortage of shipping capacity from China and other parts of Asia, and as a result we are experiencing significant delays in importing our goods. We are also experiencing issues with port congestion and pandemic-related port closings and ship diversions. Our receipt of imported merchandise has been and may be further disrupted or delayed as a result of these or other factors. Delays could potentially have a material adverse impact on future product availability, product mix and sales, especially at Dollar Tree, if the delays do not improve. These and other disruptions related to the global COVID-19 pandemic have adversely impacted Trans-Pacific shipping in 2021 and are expected to continue to affect shipping from China, where we buy a significant portion of our merchandise, and we cannot predict when the disruptions will end. In addition, our supply chain may be disrupted as a result of other international events such as war or acts of terrorism.

•~~Shipping costs~~. We are experiencing unprecedented increases in shipping rates from the Trans-Pacific ocean carriers due to various factors, including a continued increase in spot market rates and the limited availability of shipping capacity. As a result of the inability or unwillingness of the ocean carriers with whom we have carriage contracts to execute annual contracts for all of our shipping needs or to completely fulfill their contractual commitments to us, we have found it necessary to rely on an increasingly expensive spot market and other alternative sources to make up the shortfall in our

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shipping needs during fiscal 2021. Freight costs for fiscal 2021 are now expected to be $2.00 per diluted share higher than fiscal year 2020. Changes in import duties, import quotas and other trade sanctions could also increase our costs.

•~~Efficient operations and management~~. Distribution centers and other aspects of our distribution network are difficult to operate efficiently, and we have experienced and could continue to experience a reduction in operating efficiency resulting in delayed shipments of merchandise to our stores as a result of high turnover and challenges in attracting and retaining an adequate and reliable workforce. Although we have offered sign-on bonuses, enhanced wages and other inducements in certain markets to address the shortage of labor at our distribution centers, such measures have increased our costs and are expected to continue to increase our costs, which could have an adverse effect on our margins and profitability. There can be no assurances that such measures will be adequate to attract and retain the workforce necessary for the efficient operation of our distribution centers.

•~~Trucking costs. We have experienced significant increases in trucking costs due to the truck driver shortage and other factors, and our trucking costs are expected to increase in the future.~~

•~~Diesel fuel costs. We have experienced volatility in diesel fuel costs and are expecting increases to continue this fiscal year.~~

•~~Vulnerability to natural or man-made disasters, including climate change~~. A fire, explosion or natural disaster at a port or any of our distribution facilities could result in a loss of merchandise and impair our ability to adequately stock our stores. Some facilities are vulnerable to earthquakes, hurricanes, tornadoes or floods, and an increase in the severity and frequency of extreme weather events may increase our operating costs or disrupt our supply chain.

•~~Labor disagreement. Labor disagreements, disruptions or strikes, for example at ports, may result in delays in the delivery of merchandise to our distribution centers or stores and increase costs.~~

•~~Direct-to-store deliveries~~. In fiscal 2020, we purchased and delivered approximately 13% of our merchandise for our Family Dollar segment through our relationship with McLane Company, Inc., which distributes consumable merchandise from multiple manufacturers. We also rely on third parties to deliver frozen and refrigerated product, as well as chocolate in the summer, to our Dollar Tree stores. To the extent that supply chain disruptions and higher costs affect McLane Company, Inc. or our other suppliers, we may be subject to delays or reductions in deliveries and higher costs for merchandise. A substantial disruption in our relationship with or in service levels from McLane Company, Inc. or other suppliers could have a significant near-term impact on our operations.

~~We may not be successful in implementing important strategic initiatives, which may have an adverse impact on our business and financial results, or in anticipating the impact of these initiatives.~~

~~We have adopted important strategic initiatives that are designed to create growth, improve our results of operations and drive long-term shareholder value, including:~~

•~~the addition of price points above $1 (such as $1.25) in all Dollar Tree stores;~~

•~~the expansion of a multi-price initiative in Dollar Tree stores referred to as Dollar Tree~~ ~~Plus~~;

•~~the introduction of selected Dollar Tree merchandise into Family Dollar stores;~~

•~~the roll-out of the Combo Store format that combines a Dollar Tree store and Family Dollar store in a single location;~~

•~~the renovation of Family Dollar stores to the H2 format;~~

•~~our plans relating to new store openings for Dollar Tree and Family Dollar generally; and~~

•~~the continued integration of the operations of Family Dollar with Dollar Tree.~~

The implementation and timing of these strategic initiatives are subject to various risks and uncertainties, including the acceptance of the amount of price increases by customers and others as justified or reasonable; customer acceptance of new store concepts and merchandise offerings; construction and permitting delays relating to new and renovated stores; the success of our integration strategies; the availability of desirable real estate locations for lease at reasonable rates; the impact of the COVID-19 pandemic; and other factors beyond our control. In addition, several of these initiatives depend on the timeliness, cost and availability of adequate levels of the appropriate domestic and imported merchandise, our ability to execute on our plans and expectations with respect to those initiatives and the continued success of our integration of Family Dollar merchandising, supply chain and operations with those of Dollar Tree. To the extent that shipping delays, supply chain disruptions and other distribution logistics adversely affect the availability of merchandise necessary to implement our strategic initiatives, we may delay or reduce our planned rate of implementation of one or more of those initiatives.

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The rollout of our initiative to add price points above $1 in Dollar Tree stores is subject to additional risks and uncertainties relating to, among other things, operational changes such as signage, advertising, and employee training, provisions in our leases and/or third-party waivers tied to single or $1 price points, and compliance with the terms of our leases and state and local consumer laws.

There can be no assurance that we will be able to implement important strategic initiatives in accordance with our expectations or that they will generate expected returns, which may result in an adverse impact on our business and financial results.

~~Our business or the value of our common stock could be negatively affected as a result of actions by activist shareholders.~~

We value constructive input from investors and regularly engage in dialogue with our shareholders regarding strategy and performance. The Board of Directors and management team are committed to acting in the best interests of all of our shareholders. There is no assurance that the actions taken by the Board of Directors and management in seeking to maintain constructive engagement with our shareholders will be successful. Activist shareholders who disagree with our strategy or the way we are managed have sought to effect change, and may seek to effect change in the future, through various strategies that range from private engagement to publicity campaigns, proxy contests, efforts to force transactions not supported by the Board of Directors and litigation. Responding to these actions may be costly and time-consuming, disrupt our operations, divert the attention of our Board of Directors, management and employees, and interfere with our ability to execute our strategic plan and attract and retain qualified executive leadership. A contested election, for example, could also require us to incur substantial legal and public relations fees and proxy solicitation expenses. The perceived uncertainty as to our future direction resulting from activist strategies could also affect the market price and volatility of our common stock.

On November 12, 2021, one of our investors filed a Schedule 13D with the SEC, reporting that it was the owner of approximately 5.7% of our outstanding common stock (in addition to other economic exposure through derivative instruments), and that it intended to have communications with members of our management, our Board of Directors, shareholders and other persons regarding our business, operations, strategies, governance and the composition of our executive suite and our Board of Directors and possibilities for changes thereto. Although we may engage in discussions with this investor as we do others, there can be no assurance as to the outcome of any conversations that may take place. In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~During the 13 weeks ended October 30, 2021, the Board increased~~The following table presents our share repurchase ~~authorization by $1.05~~activity during the second quarter of 2022:


Fiscal Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions)
May 1, 2022 - May 28, 2022	1,664,717	$	141.67	1,664,717	$	2,250.0
May 29, 2022 - July 2, 2022	—	—		—	2,250.0
July 3, 2022 - July 30, 2022	—	—		—	2,250.0
Total	1,664,717	$	141.67	1,664,717	$	2,250.0

As of July 30, 2022, we had $2.25 billion ~~to an aggregate amount of $2.5 billion, including $1.45 billion available for repurchases~~remaining under ~~the Board’s previous~~Board repurchase ~~authorization approved on March 2, 2021. The repurchase authorization does not have an expiration date.~~

~~We did not repurchase any shares of common stock on the open market in the 13 weeks ended October 30, 2021.~~authorization.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

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Item 5. Other Information.

None.

Item 6. Exhibits.

Incorporated by Reference
Exhibit Exhibit Description Form Exhibit Filing Date Filed Herewith
3.1
Amended Articles of Incorporation of Dollar Tree, Inc., effective June 20, 2013
8-K 3.1 6/21/2013
3.2
Amended By-Laws of Dollar Tree, Inc., effective June 10, 2021
8-K 3.1 6/11/2021
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X

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~~Incorporated by Reference~~

~~Exhibit~~

~~Exhibit Description~~

~~Form~~

~~Exhibit~~

~~Filing Date~~

~~Filed Herewith~~

~~32.1~~

~~Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~32.2~~

~~Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~101~~

The following financial statements from our Form 10-Q for the fiscal quarter ended October 30, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Income Statements, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Shareholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) Notes to Unaudited Condensed Consolidated Financial Statements

~~104~~

~~The cover page from our Form 10-Q for the fiscal quarter ended October 30, 2021, formatted in Inline XBRL and contained in Exhibit 101~~

Incorporated by Reference

Exhibit

Exhibit Description

Form

Exhibit

Filing Date

Filed Herewith

3.1

Amended Articles of Incorporation of Dollar Tree, Inc., effective June 20, 2013

8-K

3.1

6/21/2013

3.1.1

Articles of Amendment to Articles of Incorporation of Dollar Tree, Inc., effective July 1, 2022

3.2

Amended and Restated By-Laws of Dollar Tree, Inc., effective July 1, 2022

8-K

3.1

7/1/2022

10.1

R evised Form of Executive Agreement for Executive Offic ers at the level of Chiefs (portions of the exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K)

10.2

Employment Agreement between Dollar Tree Distribution, Inc. and John Flanigan, effective May 9, 2022 (portions of the exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K)

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

The following financial statements from our Form 10-Q for the fiscal quarter ended July 30, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Income Statements, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Shareholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) Notes to Unaudited Condensed Consolidated Financial Statements

104

The cover page from our Form 10-Q for the fiscal quarter ended July 30, 2022, formatted in Inline XBRL and contained in Exhibit 101

*Management contract or compensatory plan or arrangement

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			DOLLAR TREE, INC.

Date:	~~November 23, 2021~~August 25, 2022	By:	/s/ Kevin S. Wampler
			Kevin S. Wampler
			Chief Financial Officer
			(principal financial officer)


	As of
	October 30,		January 30,		October 31,
(in millions)	2021		2021		2020
Condensed Consolidated Balance Sheet Data:
Goodwill:
Dollar Tree	$	425.8	$	424.9	$	423.6
Family Dollar	1,559.5		1,559.5		1,559.5
Consolidated Goodwill	$	1,985.3	$	1,984.4	$	1,983.1

Total assets:
Dollar Tree	$	8,954.7	$	8,669.3	$	8,467.4
Family Dollar	11,869.8		11,562.2		11,703.0
Corporate, support and Other	565.5		464.5		481.8
Consolidated Total assets	$	21,390.0	$	20,696.0	$	20,652.2