FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: October 25, 2001
Date of Earliest Event Reported: October 23, 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 9. Regulation FD Disclosure
The following summarizes information discussed in Dollar Tree Stores, Inc.'s
(the Company) publicly available telephone conference call on October 23, 2001
regarding its third quarter earnings results. In addition, the Company's third
quarter earnings press release dated October 23, 2001 is attached as Exhibit
99.1. The Company is filing this Form 8-K pursuant to the Securities and
Exchange Commission's Regulation FD.
Sales
Our comparable store net sales in the third quarter were affected by a slight
decrease in traffic; however, we believe our average ticket was consistent with
the third quarter of 2000 at comparable stores.
Gross Margin
Approximately one-half of the decrease in our gross margin was caused by an
increase in merchandise costs, including freight. As noted in the attached press
release, this increase in merchandise costs was primarily caused by a higher mix
of domestic merchandise, including consumables, as compared to the third quarter
of 2000. The remaining decrease in gross margin was due to almost equal
increases in occupancy and distribution costs due to the loss of leverage and an
increase in shrink.
Operating Expenses
Our operating expenses included approximately $1.7 million related to the lease
loss charge recorded in connection with closing our Philadelphia distribution
facilities. The lease loss charge includes future rent and pass-through costs
for the Philadelphia facilities through December 31, 2002, and the write off of
abandoned fixed assets at those facilities. In addition to the lease loss charge
we incurred some additional expenses in connection with the move to our new
Briar Creek distribution center. In total we estimate that the lease loss charge
and additional expenses related to the move decreased our earnings per common
share approximately $0.01 to $0.02 during the third quarter.
Inventories
Inventory at retail in the stores and distribution centers at September 30, 2001
increased approximately 18% compared to September 30, 2000, which is in-line
with our sales increase. The additional increase in inventories at September 30,
2001 is due to an increase in inventory in-transit this year compared to
September 30, 2000. This in-transit inventory includes seasonal merchandise that
we planned to receive closer to the selling season compared to 2000.
Supply Chain
We are currently operating point-of-sale (POS) in approximately 140 stores with
plans to have POS installed in a total of approximately 160 stores by the end of
2001. We plan to install POS in all new stores and relocated or expanded stores
in 2002.
Outlook
Fourth Quarter
Inventory is planned to support a comparable store net sales increase of 2.0%,
which we estimate will result in gross margin of 38.0% in the fourth quarter.
Comparable store net sales for the first half of October 2001 were flat.
In addition, we expect selling, general and administrative expenses (excluding
depreciation and amortization) to increase approximately 20% compared to the
fourth quarter of 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 our future merchandise mix;
o the effect of our Briar Creek distribution center on our current
and future operations in the Northeast;
o our POS initiative;
o comparable store net sales results in future periods; and
o future gross margins and selling, general and
administrative expenses (excluding depreciation and amortization).
These forward-looking statements are subject to numerous risks and uncertainties
that may affect us including:
o adverse weather and economic conditions, such as declining consumer
confidence, recession and unemployment;
o possible difficulties in meeting our sales and other expansion goals
and anticipated comparable store net sales results, which may result
in loss of leverage of selling, general and administrative expenses;
o the seasonality of our sales and the importance of our fourth
quarter operating results;
o increase in the cost of or disruption of the flow of our imported
goods, especially from China;
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 competition and possible increases in merchandise costs, shipping
rates, freight costs, or other operating costs such as wage levels; 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
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" sections in our Annual Report on Form 10-K filed
March 30, 2001. Also, carefully review "Risk Factors" in our most recent
prospectuses filed November 15, 2000 and August 3, 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.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit # Description
99.1 Dollar Tree Stores, Inc.'s press release regarding earnings
results for the third quarter ended September 30, 2001.
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: October 25, 2001
DOLLAR TREE STORES, INC.
By: /s/ Frederick C. Coble
--------------------------------
Frederick C. Coble
Chief Financial Officer