UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: March 16, 2001
Date of Earliest Event Reported: March 14, 2001
DOLLAR TREE STORES, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER: 0-25464
VIRGINIA 54-1387365
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Volvo Parkway
Chesapeake, VA 23320
(Address of principal executive offices)
Registrant's telephone number, including area code: (757) 321-5000
Item 5. OTHER EVENTS.
As discussed in a press release distributed on March 14, 2001 and in a publicly
available telephone conference call on March 15, 2001, Dollar Tree issued the
following sales information and earnings outlook for the first quarter of 2001.
Net Sales
We expect net sales to be approximately $385 million in the first quarter of
2001 with a slight decrease in comparable store net sales. This estimate is
below our previous expectations as we experienced lower than expected sales in
February and the first half of March. We believe this decrease in net sales is
primarily the result of decreased traffic and a slight decline in the average
transaction. We believe traffic patterns are due to declining consumer
confidence and the impact of store closings resulting from inclement weather.
Comparable store net sales may be categorized based on the anchor tenant at the
store location:
o Strip center stores anchored by grocery stores experienced a
comparable store net sales increase.
o Stores anchored by department stores (including mall and strip
centers) experienced the largest comparable store net sales decrease.
o Strip center stores anchored by Wal Mart, Kmart or Target experienced
only a slight comparable store net sales decrease.
In addition, our stores in the West have experienced comparable store net sales
increases during the quarter. We believe this is the result of the West coast
stores being larger, on average, and offering more consumable merchandise than
our eastern stores. Also, these stores were less impacted by inclement weather
than our eastern stores.
Based on current sales levels, we believe comparable store net sales during the
second quarter could decrease by more than 10%. We experienced a 14.3%
comparable store net sales increase in the second quarter of 2000. In addition,
Easter is one week earlier in the second quarter of 2001 as compared to 2000.
However, we continue to plan for comparable store net sales increases of 3% to
4%in the second half of 2001.
Gross Margin
As a result of comparable store net sales being lower than expected, we
experienced a loss of leverage in gross margin, primarily related to store
occupancy costs. We believe that gross margin will be approximately 33.5% for
the first quarter. In addition, for the second quarter of 2001, we believe gross
margin could decrease by at least 1.1 percentage points compared to the same
period in 2000.
Selling, General and Administrative Expenses
We expect selling, general and administrative expenses to be approximately $112
to $113 million for the first quarter, which is approximately 25% higher than
the first quarter of 2000. We expect that selling, general and administrative
expenses in the second quarter of 2001 will also be approximately 25% higher
than the second quarter of 2000, excluding merger-related expenses in 2000.
Earnings
Due to lower than expected quarterly sales and the resulting loss of leverage,
we estimate that diluted earnings per share will be approximately $0.09 for the
first quarter of 2001.
Dollar Express Stores
Through March 14, 2001, we have converted 12 of the Dollar Express stores to the
Dollar Tree format and changed the names of those stores to Dollar Tree. The
early results of these remodels are similar to our experience with conversions
of other acquired stores. Also, we have experienced increases in gross margin at
the Dollar Express stores as a result of our operating procedures and
merchandise mix.
As previously stated, during the first three quarters of 2001 we intend to
convert 65 to 70 of the Dollar Express stores. We expect capital expenditures
for these conversions to be approximately $3 million.
Store Opening Plans
Through March 14, 2001, we have opened 46 stores, closed 8 stores and remodeled
27 stores during the first quarter. We expect to open approximately 60 stores
total during the first quarter.
We intend to continue with our original store opening and relocation and
expansion plans for 2001. These plans include adding 250 to 260 stores and
relocating or expanding approximately 100 stores.
We estimate that our capital expenditures in 2001 will be approximately $115
million. The majority of these expenditures are allocated for new stores,
relocations and expansions, and remodeling of existing stores.
Inventory
We are actively managing our merchandise receipts to balance the loss of sales
we have experienced in the fourth quarter of 2000 and the first quarter of 2001.
We are primarily adjusting domestic receipts because of their shorter lead times
in comparison to our import merchandise. If the current sales trends continue,
we expect that our inventories at June 30, 2001 will be approximately 30% higher
than inventory levels at June 30, 2000.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS:
This filing contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
address future events, developments or results and typically use words such as
believe, anticipate, expect, intend, plan or estimate. For example, our
forward-looking statements include statements regarding:
o net sales for the first quarter of 2001;
o comparable store net sales increases or decreases in the first and
second quarters of 2001 and the full year 2001;
o gross margin for the first and second quarters of 2001;
o selling, general and administrative expenses for the first and second
quarters of 2001;
o diluted earnings per share for the first quarter of 2001;
o plans to convert the Dollar Express stores, including the cost and the
timing of these conversions;
o store opening plans, including relocations and expansions, for the
first quarter and full year 2001;
o capital expenditures in 2001; and
o future inventory levels.
These forward-looking statements are subject to numerous risks and uncertainties
that may affect us including:
o adverse weather and economic conditions, such as consumer confidence;
o possible difficulties in meeting our sales and other expansion goals
and anticipated comparable store net sales increases;
o the difficulties and uncertainties in adding and operating larger
stores, with which we have less experience;
o the seasonality of our sales and the importance of our fourth quarter
operating results;
o the difficulties in managing our aggressive growth plans, including
opening stores on a timely basis;
o possible delays, costs and other difficulties in integrating Dollar
Express with our business;
o possible increases in merchandise costs, shipping rates, freight
costs, wage levels, inflation, competition and other adverse economic
factors; and
o the capacity and performance of our distribution system and our
ability to expand its capacity in time to support our sales growth.
For a discussion of the risks, uncertainties and assumptions that could affect
our future events, developments or results, you should carefully review the
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" sections in our prospectus filed August 3,
2000 and our Annual Report on Form 10-K filed March 17, 2000 and the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our Quarterly Report on Form 10-Q filed November 14, 2000. Also,
carefully review "Risk Factors" in our most recent prospectus filed November 15,
2000. In light of these risks and uncertainties, the future events, developments
or results described by our forward-looking statements in this document could
turn out to be materially and adversely different from those we discuss or
imply.
We are not obligated to release publicly any revisions to any forward-looking
statements contained in this filing to reflect events or circumstances occurring
after the date of this report or to reflect the occurrence of future events and
you should not expect us to do so.
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, hereunto duly authorized.
DATE: March 16, 2001
DOLLAR TREE STORES, INC.
By: /s/ Frederick C. Coble
--------------------------------
Frederick C. Coble
Senior Vice President, Chief Financial Officer