DLTR - Earnings call transcript Q3 2017

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Operator

Good day and welcome to the Dollar Tree Inc.

Third Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I’d like to turn the conference over to Mr. Randy Guiler, Vice President, Investor Relations. ahead. go Please

Randy Guiler

our Good to Matt. fiscal welcome our Wampler. will to of and Gary Thank CFO, our Dollar morning Tree’s call Kevin be call today’s discuss Participating third and performance conference CEO, XXXX. Philbin you, on and President for quarter the

those Safe Before purposes constitute future provisions that and Actual expectations, Harbor by result remarks XXXX. we SEC. the prospects results are included like press of may important of forward-looking we X-K, differ most Securities various that for Act forward-looking everyone I remind would a in which company statements materially plans on from the XX-Q, as for file will our most the begin, the XX-K, recent release, Private indicated with statements, Reform the our to factors various these make of under about Litigation recent and

update not of do statements your no forward-looking and one your obligation have questions. prepared Please remarks should our At to so. the we necessary. one will limit you call We follow-up and to open to for our the us questions expect if end

turn to Dollar President Gary Chief call I Tree’s the Executive Philbin, Officer. Now and will over

Gary Philbin

announced And everyone. Randy. X.X% increased good of Thank you, fiscal sales for This our morning morning the we results XXXX, quarter billion. third to $X.XX

sales Dollar comp for Tree banner Dollar banner the X.X%. increased increased sales for sales comp same-store and the segment Our Family by X.X% X% increased

comp, X%. performance share terrific same sales our continue Dollar XX.X%, XX.X% million income point of the our improved margin. and the X% really delivered and third delivered I’m to XXX points gain business of segments, quarterly sector Our XXX positive rate each basis gross XXXX improved in with of along the in in points Earnings delivered with increased since team with best store operating XX.X% increased improvement banner operating operating traction margin rate The per $XXX.X the our we XX Tree to quarter banner Family $X.XX. as basis basis to of point comp improvement operating QX a its to it’s Dollar leading business. pleased XX margin X.X% to basis margin

comps was delivered to our our Tree Dollar business performing years, was Christmas quarter of double-digit and of business improved for we the represents quarter low portion team food, small control stationary. in it strongest quarter in Canada in products, inventory the also performance Dollar the and quarters direct in strong beverage, a snacks prior greater coupled inventory both best Harvest as the Northeast another delivered inventory year’s Elements as and was quarter Dollar seasonal through as and strong the Tree and fourth of years, X% all positive our several our zones Dollar and delivered positioned quarter. we solid and small items. comp positively sell improved for were Tree three the Sales Our for top healthcare both margins months highlights strong sites. geographically included discretionary than Core sales greater Day our quarter, the well seasonal store of season Midwest the than in was Tree in growth sales household of portion we while comp comp and and during our expense as and All we entered comp discretionary our September one month the did sales in better Tree than and Fall Halloween visits categories solid performance strongest sales Southwest, led quarter, received delivered increases include, delivered consumables by with while of best seasonal delivered same craft Christmas Dollar early and quarter Back-to-school comps was X%. early the of QX quarter. a

encouraging. Our lead and consecutive margin very same Tree to of initial the and store growing, results represent quarter to this operating were continues positive value continues consistent Dollar sales be sector. our XXth strong,

quarter third Tree performance and fixed validates our Our value to price customers brand, the love the again concept of relevance for convenience. continue shop Dollar and

our and very the are flow traffic with of inventory. and We pleased results, sales merchandize assortment

rest and of Our is business on focus experience from needs model shopping wants and different it retail. continues customers to a the

the For highlight include refrigerated were and the office snacks and for school bedding. the segment, top beverage, performing supplies, quarter Family product, Dollar categories and

balanced cadence and strongest And comp for performance Northeast sales the growth relatively by strongest Mid quarter Geographically, each September with of comp zones. Dollar month was our above -- West, throughout the comp. the were the quarter. the sales the quarter for same-store Atlantic quarter Our Family -- was was in quarter driven consumables. X% balanced were

eight all for delivered Importantly, major same-store geographic zones positive the quarter. sales

Dollar near work, store our want can XXX shopping better We and in in stores. customers and shoppers more margin, performance, indicate services. XX most that gross third point Family stores. are enhanced cleaner X.X% assortments, on quarter margin. of buy Dollar foundational the values drive shared the basis point make basis a XXX-basis of greater we customer needs product Dollar point on progress elements for the Family service around stores, improving our our neighbourhood consistent operating a to they positive choice our shop and of focusing of in-stocks, leverage, are improvement Evidence be We stakes, our from typically total items value SG&A Feedback in to our results, store Family improving seeing continue seen the and fill-in merchandising same-store and customers sales, key will progress of the the receiving consolidating at our be in table for often, that meaningful customer, live, increase

third as initiative. part Dollar innovations our quarter, another of completed XXX During the Family we store renovation

stores in to store and be especially customers seeing about the continue teams. with receiving initial and are these we are We the results very feedback from our pleased we

XXX Elements store improved XXXX for will end we and hundreds layout is improve expanded adjacencies stores include to fiscal stores better older the productive and of Dollar renovate Family of snack, caps, continue our of the and some beverage freezers, target more including food checkout as we Our faster for coolers customers. checkout, power expanded Dollar in and assortments, our shopper-friendly stores, assortment and adult and coolers beverage air updated consumption a alley immediate headed near items, care to well promote process business.

Catawba snack assortment to smart program. progress save our Top to celebrations, for the Chestnut component save in our sales Bench brands stationary to care. will in guarantee. Candy, Nature's performing all the the our beverage, Beats, selection, taking products Wellness and brand at already a décor, beauty store national quarter stores [plus], see satisfaction Dollar compare continue customer food discretionary of as household contain of elevating improvements will assortment. brand Tree in private support XXX% in Tool in in delivering with Highlights Measure and our are included are Examples health in Additionally, party across category, our are and in These departments terrific growth household Family others. include our day-out Family standards home are some the categories vitamins labels comparable products, we the candy, home and developed stores. our to values These the brand Driver's health performance and being Hill and Home hardware, and Each beauty you encouraging with new of brands Choice that private Dollar, brand Line quality planned make ways place and of the and side resulting included fact business. better impacting and private day-in our provide on Canada of across and

On of improvements the inventory Halloween in Harvest sell both all comps Dollar Canada are Tree nice programs back-to-school, year-over-year seasonal showed in through. side and QX business and

efforts line top two teams bringing develop train stores and Our stores better to in total performance opened Canada We with and up our line new XXX. showing to store-by-store. bottom our Canadian sales retain are store

Tree our division sales, few traffic. we stores. drive our our Dollar and broaden double-digit and Direct Dollar customer Tree profitable of and increases productive to A another awareness attract brand in experienced quarter is low more highlights For We opportunity providing Tree an the had direct, into customers business. sales base, of incremental expand Dollar digital as

continued increase devices. customers in dollartree.com visiting their a mobile from seeing are We

quarter sales. and third a and on with heavily focused traffic back-to-school back-to-campus was to online Our marketing goal in-store and both drive

at medium Dollar encourage various post. sites as marketing for website videos you on blog dollartree.com such as at Facebook, Pinterest, marketing our engagement dollartree.com familydollar.com. for These email, themes holiday I our as and continues customer to Post Blog effective to videos extremely create use Our digital Facebook, continue an activities and our across, to help yourself are are Pinterest, channels how we shared well and many as of review placed and to that Tree.

We opened for XXX a Now, Dollar our and Dollar looking XXX the four stores, or quarter, quarter. Family projects new stores, the Trees at Dollar a Family XX in of Family third of renovation real part renovated we Dollars. initiatives stores expanded and of total relocated XX total XX We’ve estate during Dollars. Tree XXX a as XX

coolers really outlook third were with and remainder on the X,XXX call provide XXX and X,XXX the us. our now Trees, pleased Dollar one of our the total quarter Dollar and we And XX,XXX the about Tree for closed during third ended stores more of fiscal stores bringing turn also Dollar Tree’s results the were We year. to Dollars. are have our Overall, of quarter five I’ll through Tree opportunities into enthusiastic our freezers business coolers stores, with and Dollar the Family to the Kevin Kevin? ahead freezers our now We to and Family of we Dollar performance stores. the detail X,XXX quarter during banner. six stores quarter over

Kevin Wampler

when On Gary store fluctuations $X.XX billion, million to for increased Family compared same organization X.X% sales of Family $X.XX prior Dollar Dollar and or total the year's to the X.X% store sales same Tree increased $X.XX Enterprise banner X.X% or Dollar for XXXX on Tree the Thanks, sales currency for the currency $X.XX adjusted constant segment for X.X% Dollar third sales a basis increased morning. the quarter currency third billion. X.X% grew Canadian Gross sales to basis, quarter when fluctuations. segment combined X% profit increased and increased and a X.X%. segment to for total increased banner for X.X% the X.X% billion good quarter. adjusted Total to

points XX.X% percent in segment a for margin Gross Tree quarter. a the was improved and segment versus lower sales, of XX.X% costs. prior was sales the cost, quarter basis Dollar for Dollar net margin XX.X% quarter, Consolidated year's a gross profit prior compared XX profit the costs based As due merchandise markdowns. on Family with Gross last points gain distribution in in XX.X% third and sales margin with basis the to due to primarily merchandise XX.X% and during third the quarter. the quarter quarter the comp the lower gross improved The year’s the occupancy quarter the from of during general prior lower XX-basis administrative year included Factors performance comparable point percentage segment's was improvement profit as margin XXX-basis cost third impacting XX.X% improved same XX.X% expenses period. to selling, the to XX in for compared markdowns, improvement year. the leverage point from lower

lower expense. credit comprised were expense XXX-basis segment the improved quarter. for XX percentage the a X.X% XX.X% million Dollar for and partially payroll XX XX.X%. workers’ lower XX-basis Operating mostly to the policies compensation, increased from lower compared supplies, basis of basis The enterprise of income the cost, for Third year’s compared quarter. period improvement Family incentive when advertising repairs depreciation prior to health with third a and and as expenses the segment points SG&A a incentive by of Dollar sales. increased interest million, net Tree and X% as quarter the expense Operating cost to income the a higher was store improved point last of prior Operating harmonization when $XXX.X Family Tree by XXX last in of quarter. to to result to year's XX.X%, XX% vacation lower basis quarter a of year's related for percentage as to income offset same fees, and compensation sales debit quarter the SG&A segment utilities quarter and segment of depreciation Dollar the offset $XX.X sales comp, and was to Dollar for sales for of compared Higher fees. to compared margin XX.X% cost, payroll in as compared related lower lower the the percentage Non-operating increased $XX.X year's to margin maintenance, insurance, which prior primarily cost, million utilities was other a quarter. expenses to legal points million income year’s primarily in $XXX.X income improvement totalled points the Operating $XXX.X for million, point prior store percentage year. the card

Our state tax third the the third name the related tax year's included a tax for of to or deferred quarter benefit year’s XX.X% prior a X% effective rate the XX.X% prior was which decreased in decrease The in rate, quarter related one-time $X.XX per intangible to share trade compared North Carolina’s to quarter. $XX.X million tax assets. liability

reported income per share the net million year's had For share income the of million the quarter, $X.XX or $X.XX or quarter. diluted per in to $XXX.X the prior of diluted $XXX.X compared third net company

As both a charge mentioned share and costs. $X.XX benefit debt to related reminder, I year’s to tax earnings last reported related rates included QX per a refinancing $X.XX the a of just $X.XX

fiscal Looking at million the end and at balance sheet, $XXX.X compared of the XXXX. million $XXX.X totalled equivalence cash to quarter at combined end cash

ratio footage step the at we from $X.X is to its Dollar billion to $X.X returning quarter from rent while segment to basis. end fourth same X.X% to from for We decreased levels continues third for of of year increased debt XXXX. inventory at EBITDA are quarter X.X%. last of sales Inventory and that expect debt decreased X.X%. approximately year the quarter initiatives on foot appropriate the selling square segment below X% investment outstanding end last new Company our Inventory decrease scheduled on at to of grade quarter. times rating, X.X X.X% the Our focus a square the for goal selling Dollar a Inventory increased current Family with the increased fiscal end time Tree period adjusted support foot and same stated our yearend. billion square the openings believe for be store

last our in key current pleased with in to are the seeing in are appropriate items, third in-stock year. assortments We levels XXXX versus we Capital believe of of fourth the merchandize expenditures and review our continuing inventory the quarter. for we’re were $XX.X million progress million quarter the we levels are on quarter $XXX.X third

increase beginning Dollar will approximately complete $XXX million. fiscal $XXX Dollar along increase consolidated X,XXX to For remodels range of capital XXXX by new XXX renovation year. we be stores the expects Dollar of to an XX in are fiscal on driven for focused XXXX, approximately Family with for planning XXXX. less XXX Tree net the and expenditures additional stores. now from of to the renovations, million of store Capital expenditure Family The XX new approximately projects The in is stores company

Tree million Missouri stores. and our center of of Family integration our projects and amortization XXX system Chesapeake center Dollar a IT of frozen Dollar -- the to Warrensburg phases and the distribution new and third XXX new amortization frozen addition, and includes construction Depreciation existing banner and total for quarter, million refrigerated totalled initial In stores, in and third CapEx expansion. $XXX.X expense in addition support was the refrigerated the Tree expansion of store year. a last for capability store quarter $XXX.X depreciation enhancement Dollar

million. expect from to depreciation consolidated to we range XXXX, For $XXX fiscal and million $XXX amortization

to share for included $X.XX includes $XXX Our to sales both week, earnings $XXX per in extra fiscal which and are of add quarter assumptions. fourth $X.XX updated Fiscal expected outlook to to following the in to diluted guidance. XXXX is million week the XX the a XXXX includes million

payroll general wages based on store and pressure average minimum rate continued state's hourly increasing on increases. expect We

budgeted freight expense XX-week higher interest We our cost approximately will than cost have year $XX be and import diesel a ago. QX. in Net million

note State XXXX. the the QX, Connecticut issued distribution construction $X.X in For forgettable winter of $X.XX asset include income for for of center the of promissory of million our share the recognition for completion requirements will all Connecticut of the by non-operating per or

we’ve guidance our future for currency share Our adjusted we rates. any repurchases, changes fluctuations, does guidance include currency not predict cannot not in

fourth are diluted guidance Our share for assumes XXX.X QX a fiscal XXXX. XX.X% the million of XX.X% and assumed shares full counts for quarter average tax year. to shares million be and rate for for also XXX.X Weighted the

are includes growth extra of quarter, of estimates sales $X.XX. These fourth the square and $X.XX the For year-over-year earnings billion billion X.X%. a footage based which one sales share and forecasting on we increase week, in $X.XX total are range range low from to single-digit same-store to to $X.XX diluted per

and sales the per occurring impairment of are will $X.XX range on $X.XX anticipates inclusive to to Gary. we’re For for based range billion The billion receivable of includes $XX.X billion. expected billion, back a $X.XX, total and low share I’ll between $XX.XX same-store sales per between earnings in growth, fiscal of diluted QX to week charges. XXrd XXXX, fiscal and or benefit range to company forecasting million of $XX.XX the square call compared $XX.X XXXX X.X% single-digit previously which diluted $XX.XX XXXX. footage fiscal and company's now share over the increase of These turn estimates now

Gary Philbin

Thank you, Kevin.

the that across XX,XXX of are teams nearly stores. very We our our delivered proud results

an have holiday Family and Tree merchants teed experience exciting at Dollar Dollar. Our up

holiday environment. results are of six delivering to focused supply our for And opportunities prepared take on advantage weeks business retail are our when demonstrated control have exciting routines. needs chain ultimately each at teams customers’ team satisfaction. has ability and retail banners both The deliver be goods by management helped hurricanes and our needs, on customers’ affecting to with challenged our banners to expense ever year. normal Our have in two to biggest both environment initiatives now years our operators changing deliver deliver we external sales, wants margins, hard our our store worked the the to our of business major provides customer and nimble and At the segments over most

around of have We of [ph] are major us. what energy remaining holidays proud ahead forward look achieved to and we the

Before comments we turn few I would the call share to to recent. a on the over Q&A like

know Texas, Many by were throughout and by store were hurricanes storms. our states of and customers associates Louisiana, September you affected personally Florida these late of Irma. Harvey As all August hit

both that associates communities special our a on give thousands our Our impacted Dollar us after and banners recovery Across we of to the the thanks open efforts for and partners Dollar team their the the days serve have Red organization. we our who to thanks the get are from of great these associates have storms been at events. Family stores our shot My stores want their and and ready and centers in Cross. personal running weather efforts Tree and Dollar vendor our the now partnership up throughout for questions. tirelessly saw for in both Family made stores, many devastating dedication passion, hours distribution enabled all Dollar the to the and impacted worked banners I help help to centers preparation Tree and Operator, and and with support through impact. and work, to customers

Operator

JPMorgan. will Boss come And Instructions] from first your with [Operator question Matthew

Matthew Boss

of to gross brands margin rank of Family you customer at forward a margins the can at the to would drivers And Dollar great your quarter, So, you private but banner? reception talk some FDL? there. how specifically rollout Obviously, to you can speak just recent drivers gross

Gary Philbin

Well, smart of that both consumer given beginning on steps has that drive between we’ve I’d program The is metrics. of it’s ability banners talking the to been the across save on from synergy Matt the the the way initial we’ve of some implemented the those beginning core, lot at the from about each items. business it’s direct elements a

growth those [with dollar of the them higher The been, across but point beginning and primary from this there really in and some introducing certainly categories. which has of the And both do say we’re of starting the would where on the now to brands items we’re just of So, mentioned food products. household some I know each getting stages banner. save seeing in compare I I private ability you’re side our critical been to our how another on that out well] the at of the and additional of mass, penetration those has brands consumables to label consumable see impact margin at gives some some us say change. would drive and we that

in I two the the and think to more either/or beverage would this on you want And the operate think just it’s than center tell the we big it of to towards of has of us the confidence to of opportunity gives to food that we’re of customers the household the competitive and buy ago. brands our packaging, our itself shelf compared isn’t and bolts in just been gives do store whether our I great products packaging the national geared brand. customers so are is each there getting enhance I piece confidence or marketing been more values categories we or greater line both it a nuts also our pricing years in what that. has

confidence provide access them our our the beginning touch the easy do they And stages would customers most a it have items is during say customer element often. who the often. at new our the now really our and some business gives what greater the shelf, to that buy on well savings Dollar base quarter week-out buy most the buy of received start that we there, has we means to And also us Dollar while have Family still customers that save customers we week-in items been I savings. on to of most often smart promotion retails great on getting app, it we're allows on the and did Family the way and Our of

progress things all and and driving the the driving pieces it’s combination about we’ve that to day that continued from drive And so, driving label, all imports, been on emphasis those the private all those margin margin. Family one more of talked level, are discretionary, have both Dollar sales at continue things the on that

Matthew Boss

And I in great. by level. laterals some up the signs That’s more outside way core think trends store in and customer even the seeing you’re seeing there. discretionary the see higher openings? best segments seem low you the at decided to end? then health seeing sustainable? with follow just you’re wallet and long would to Dollar speak there starting best of that you judging the We time you How think characterize Gary be your any it’s the and of to what out some to Are Just and do you a

Gary Philbin

I think I two Matt. would it ways, answer

month I stakes. store getting it’s speaks table think better. executing ready just execution and on all And first the one the that in-store stores us of to on our side and

just I our confidence the beginning. I think when rise. a Rents down, portion of they across continue to it So, is share. go at are say get having Family time customer the and country most we type of still I the there’s in though our at at Healthcare seen level that’s speaks our under think would month, pressure. to even before very that’s think continues I I’ve the Dollar small to have high important a customers And still rise. come EBT of at center lets mentioned fair the increase but benefits

survive. We when they thrive pocket have it money in on we have to right and be their call

the them of the the that they in end needy are be the at stretch at to with month for on most right beginning need the a the to customers of And basics. the budget. store choices at reason ready end we of their give come continue our items the trying to shop to and when month month, certainly, So given

focused stay to and in to to they that their got store. jingle who with got on that customer have we in but in be grounded are more retails we stock everyday little have them on great have a we confidence So, might got pocket

combination things. it’s So, of doing both a those

Operator

James. to we Wewer Raymond with [Operator Instructions] move now And Dan will

Dan Wewer

and Can not kind And retailer? Tree headwind what discuss Dollar with the Family given high, now Gary, this you’re you first Tree comp segment of specialty question lifetime then segment. now of regarding Dollar for discount remains margin kind stores? is further re-banners Dollar getting a benefits the operating the and at sales improvement for at a from Deals

Gary Philbin

I are Dan. each for on proud am would store to but ability think say it’s it’s are for right two clusters. very driving smarter margin, us honoured I results Upside of be pieces we think the to retailer operating I as of our across considered now just of the results. specialty driven I the us because get

worth into all all think to do we’re customer to you I done And that’s our the ability and of to Dollar. time terrific on That that be ability not values. speaking Our has get create job day-out. value but day-in teams the types I’m merchants have has the stores. business hit it that’s the anything merchant a of most new to really our our to come that been this when than across to our more our we shared it for proud stores to right when holidays, focus. always the And we really But shine.

always And so, upside. there’s

The little completely the little how a I the our bit through ability as to are each satisfied a as more just all We seasons. bit we to holidays how question around the Dan? do the we some incremental always some us around SG&A, for are repeat those yes. are margin. are continue say think some re-banner, are And course blocks do post We never to go of and around we our initiatives see the around continue think do better on mortems drive we opportunity buildings I drive the do of give -- to on first margin, sales, me a

Dan Wewer

the from benefit sales re-banners. same-store The

Gary Philbin

we’ve XXXX our from Because Tree, over I sales store Dollar had XXXX re-bannered XXX really XXX get comp those, along background deals think re-bannered we’ve to in and of both Family had on the of initially Dollar way we’ve things. XXX a re-lows Tree the the comps pleased it’s now we’re a combination And couple had one more and getting [ph]. of the is Dollar we’re impact cannibalization with and of

holiday season-to-season. our to through go different and seasons, that how seats it’s flow going the know in from managers because have store you to getting is it Just

is store And already so, for. because where also the granted our there, next allowed focus geography go, to out we teams more had our figure that we some should on it some our estate plans in stores putting pipeline, real were

pleased we’re Dollar fixed by are deal Family to for Family in it’s $XX not also us the or to doing while So, we Dollar on what side, both for the had both side Family us also as way side. deals Dollar with and stores big the customers comps convert which producing that’s nice

So, an us right go engine there we is certainly comps now for in XXXX. both as through

Dan Wewer

Kevin. had Also, for I really quick just follow a up

You noted X.X rating? year-end. EBITDA so and investment the you your from net what the rate be be think benefits rating? financials Do operations for regain to investment will your if that for grade would company by and that regaining drops sufficient debt And to the

Kevin Wampler

I Gap] of provide obviously rating day. the updates or speak. work will track, end to from we’re that so it upgrade standpoint I always, at get the in day think from being Yeah. they to day the goal grade flexibility with [Audio fact flexibility is we stated on whether but agencies, as us announced decide our we investment the a part about doing we And Obviously, them more one, grade. we’ve financing to the not, this of mean acquisition as to to gives that we’ll equation we’re investment world our back the the think

So, for lower opposed the but the marketplace to in we’ll the to investment rates as potential interest and as grade that, speculative [ph]. continue see obviously flexibility with

So, those things we at. are look

Operator

hear from Rifkin you’ll Alan BTIG. with Next,

Alan Rifkin

congratulations as Okay. well. Yes, I’ll my add

some your On gross the margin higher forward, gains comp? you gross a of But the Family admirable. gains sacrifice certainly margins would very are for going side, Dollar

Gary Philbin

baked going the promotional that understand in. We it’s more a with and competitive do and improvement we we try we to the all we Well, the competitive down we of could else Everything going them margin that in our do of our It’s we opportunities It’s produced, out Alan even quarter each are not know with pricing store operate right understanding certainly everything about here into sets. set we We what’s on know where comp we details. say pricing that during activity. better. We would saw everyone do the quarter just strategy the to now into gross I just X.X both continuing of always just have like and in combination the and obviously own really the marketplace We is magic markets not the that with forecast can to on the and across talk sales. drive It’s get improvement. those. each not SG&A. we

a Family most in up the what and opportunity shelf to Dollar of customer advantage SG&A. business, Dollar pleased an on for on back I our they try the up what Family really everyday focus when our of do how often. opportunity we’ve growth it’s it. buy on margin to showing the on app. take to So, Shows with just it try and there’s shows course had but with Dollar our deliver up that We also team, great us retails with ads also really What and Family to up drive we the am

diapers, them. to something Dollar can it’s above beyond that deliver and better. a And Family who know if getting us mom customer So, we speaks to buys to that

than in anyone else. We stores have urban America more

to knowing executing in. the anyone speaks it arenas else other we think I level the the our is that that. better in than side of customer us on And compete store

and those it’s we driving all go that so, into comp do combined that Alan. how And bottom-line deliver bottom with things --

Alan Rifkin

any a Thank the or within or or to if to respect benefit SNAP products? revenues deflation much. implementation FLSA both or there Okay. or commodity implementation impact very margins was And inflation follow-up may, with operating you I the

Gary Philbin

that I year And was the cycling of last our a to less to we’re increase penetration the we But the commodity in I FLSA diary, that would eggs to as you the then last point? again world and before the in at so third some see year our year-over-year for grocery it more Your month about speaks this around front country in what a now ready probably it. it that were same started about eggs some arena Family think bust think pleased in -- for December say Dollar But just of ability as then and back time one and able getting our was I share opportunity had store, on cycle biggest some am on course the quarter going forth. not is in we’ve off And we’re talking boom where right we’ve it the now there's it. pushed not is we’re I do I stopped that. fair said households SNAP of been participating Well our across benefits, and to off burner. of our and

much banners, this folks impact quarter so, some Tree Dollar Dollar sector. again, the QX. the really And into our discretionary got is drive values both Family both opportunity going it for as But the around to us is us And we’ve on business as that for great in side. for our and now doesn’t fourth side

getting job deliver done got the six that now we and to teams have focused five So, ahead into to that. it of delivering on a stores nice on us weeks the and biggest

Operator

go now will we with Sachs. Prykull to And Goldman Chris

Chris Prykull

Just wanted cash and we free CapEx How fiscal potential business particularly for program? bit, the ‘XX and the of integration. a Family timing Dollar to buyback we resumption flow the the of you should progress as continue the through thinking generation beyond about think little in how share about to are about further talk

Kevin Wampler

CapEx standpoint from look full to we’re the quarter, would and CapEx store guidance and we XXXX. I as report. some infrastructure Chris you give to tell planning our But Yeah, Obviously, the budget next have rolling going view quarter we’ll standpoint. obviously into next for with that of we’re continue various grow, we’ll

as be more to grade consider back investment I and get in far into structure of CapEx less have we is you So, color But today longer-term to our going everything cash once debt. to and things to our we think probably year our give I it as other we’ll relook it’s little and as grow using stability look to And to we’re at we go important paying free back expect cash look than obviously our a that at important, is flow the sit again not fact past. we in bit been ties it as doing would here pieces as this and that on way that capital us forward. gives

flow, think go continue we us significant forward, flexible free forward. I place we’ll to puts going cash as in So, generate a very good

Chris Prykull

helpful. up algorithm time? think it Dollar the the How all core for acquisition? you deliver of And to in earnings Great. fair the what at it point we that past before the sort growth about similar to a business then look That’s should integration longer-term. Is about in you follows to one as Family think fashion used

Kevin Wampler

our we’ve is ever don’t mean put had I we’ve referred that I algorithm in to thing our to together, improve the looking always we’re that any we’ve regards main know business. guidance

sometime of comp We’re base, grows the one store provides operating always labour markets. continue year, is look we’ve the through looking to component went to grow or faced that every each labour grow is sales, increases deflation circumstances in has set profitability margin. in different and a again, be product increase obviously things decreases our our been the hallmarks sales, there continuing and a we year work grow the brand of the And Dollar at we’ve Tree the as forward different of and that and and fuel can that which to that cost grow inflation

job point play that so our will But we we are have plan improve do, as supply our we really that go come improve improve with to have we everything go our to way things determine business market, can we to that efficient, continue is things become the have and ways those we we our to management all way processes, it our the increasing, as is we more view stores. to to to a in forward. So, --

are those in our initiatives of move our mind always back and every to forward business we year. around and build all each the them So,

about there So, we other we the for than the as know I that expectations don’t growth that’s is think go algorithm forward way an and it.

Gary Philbin

my And add just it. Chris would color I to

basics for to and Dollar category potentially I we for convenience of have the in small create we and categories by still elements be improving and a brands year will grow at sector, additional pulling for productivity, great Tree each and the and come at deliver a over opportunity our needs are of and when us. with us I that’s that the excitement. always And going long-term value now malls around than beginning renovations, will driving both retailers of end Family by to we’re which in we to company I that value something that done both We’ve from foundational our on that productivity store, stores other the shopping is into Dollar this think be the what to delivers one’s Family think Dollar we’re of remain years stages it’s store something at back, Dollar hundreds are at boxes customers changing with experience. the different initiatives think we that the are both place Tree

are momentum sales look upward those as drive continue future. of on So into just will some I our the elements we to that think

Operator

have a do questions. few time we for And more

Scott with go will to Ciccarelli Markets. RBC we Capital Next,

Scott Ciccarelli

the of some be we make the process two process? investments you better as both know So, understand may Family where you we’re well of now Dollar side CapEx how as that the and guys us part had kind the years much sizable help today side. Can acquisition expense as to spending to stand in still through quantify happen, you in more spending investment needs integration of that

Kevin Wampler

changes synergies said and looking well cost at the the that we Yes, been of we we’ve been approximately and and of a look $XXX forth. and costs it we’ve million so synergies cost about as making achieve those to Scott stores we think talked as the to fact I XX% that about of at as to lot said there’s that’s and have of have over -- achieve CapEx, synergies, the systems re-bannering we related originally talked

systems work that So, go be we behind some as will us. most There of forward. is continued

maintenance. you’ve the probably And the acquisition The SG&A close continue of other think practically since repairs heard top big the the of to in in maintenance area every say to deferred me invest banner. at regards that red is is quarter especially one we that items I the and within

look a hand-in-hand. standpoint. from want that Dollar and improve to do that continue things repair continue have that. we at Again, still We to goes we table maintenance believe of stores We our to stakes the part Family it’s to

within continued be there -- guidance our I we it's our but expenses. a So, as always guidance into from built capital will don’t would investment side, forward those for be as And well. that go

of will see run don’t being blip a it's there. investment so it's going forward. map out continued there see the to on surprise be somewhat going as And the part be rate speak, forward. the big But investment don’t normal, of go I forward go to So, I it as we

Scott Ciccarelli

of flow Okay. that, And notable to the what follow-on to of else in there would expense there? through that kind still be kind P&L. Is anything need operating may

Kevin Wampler

in of some could consulting consulting things, there work those as especially sometimes Other need be of things type we some help through type as -- to bring system we the dollars some we initiatives. and

areas. of the probably So that’s one main

Operator

question our comes UBS. And Michael from next Lasser with

Michael Lasser

done What initially? are It’s on you you the seeing profit that remodels remodel in the Family sort of stores. lift productivity and Dollar have

Gary Philbin

it’s Gary. Michael Hey

with are pleased that. We

the it stores we not going see have and to the XXX continues out called number to of grow to affect as up this are year. We circle

our especially some the in items really is just about, to I need really customers dollar food alley it’s they of more talk store. me Dollar think throughout more or similar introducing customers. delight It’s it’s product, part well, renovation the the of what primary adding heard speak that well. the elements frozen and that adjacencies And sees and power of of the giving revalue it’s it’s assortment, and items to that surprise you more

infant and the synergy items having our the a basics those the shopping of to of invites of we have and them some the one both shop is born to toddler of store just that more in think a and one next because where spend obvious. fantastic kids' mom I new diapers, experience

are those So, ought some to that the for us. things deliver store of

back up stores older a of continue the we meets expectation on bring to that at the them it. As looking renovations, what requirements and would brand pay fleet this more we’re call stores the a is do can traditional to of on that and all to we some our in we internal opportunity drive standard

get going we to the forward. XXX continue at, to the hundreds plan certainly doing to do up it drive the to of we’re year for where we’re in and we’re them stores to to progress So, January of this be next to like remaining going year

a more we shopping new a see come for on our customers we it, really to experience. new inside So, a like opportunity what walls Family to them it’s great to and and in see see the Dollar invite four

Michael Lasser

presumably that And right? of as so adding freezers, more part and coolers more sales that's remodels the and more you’re volume trips that adding is you’re customer doing

Gary Philbin

our think I customer trips, home frozen but have traffic, as of our the gives to. it expanded years like And refrigerator We that especially we exactly others, that, it Dollar does some every It store freezer. and and food, our does configuration, of need and the two-by-three also Tree they the at I it ago it right frozen can section now more coolers category not on every some to them so that saw basics day we drive food right store get in invite continue side certainly customer needs. think think exactly speaks more number than that in and the of freezers a has some the same you’re

Michael Lasser

under X.X% And XQ. presumably out in low reason up there should question XQ in The a on the the then to mid-single-digit price fourth why to my for guiding and any Is comp nomenclature business flow guidance. that in XQ quarter believe your comp that’s XQ? single-digit versus you’re low follow comp of is

Kevin Wampler

mean position got look fourth very we store guidance a third it’s XX-week with believe We good at thing quarter flow together in in we what very out flow know our our our in early goods feel of our the and encouraging. business Michael, very going quarter. us. of we the obviously and of three as about put weeks inventory where we’re was ahead quarter the biggest the encouraged we’re It the to at we the other doesn’t we’re weeks we’re of six quarter,

very all basically what can are those and the forward day to execute and things. what hope obviously we end and still in goal quarter in always know to to And put encouraging we so the we our fourth And we and do. there. go overachieve hit then work is from believe we go and hit, the it like to of out and So, we very, at got we what that’s

Gary Philbin

the drive that got add to need always also is both the comes because in to it in really would have this that to customers right think have teams place. right you merchant worked time of sprinkled what the done we under I get we’ve But of product against and But year I banners is to it, And merchandise Thanksgiving store. when our the down just will even the -- has see to And right to week. both energy the are the surprise delight the speak that teams this point, our banners store hard. values backdrop it on stores. Kevin’s to just ahead

called and the in six Dollar So, most think. stores Family I are retail in Dollar Tree weeks exciting

We it. ready geared execute. have go and up to now are And we for

Operator

Edward from Kelly is with question next Wells our Fargo. And

Edward Kelly

hurdles it we as slow. but guess at were are color traction? not see as the you’ve you got forward, type just comps the to over Could on I The get internally to go hurdles you into progressing a there, continues to tell you driving to would characterize just looking top-line about for you little sort just as QX getting and minute on this what initiatives margins provide bit what Could great. be you’re progress Dollar of may point the you next the for those year, back that a key obviously of to better So, Family that think even progress here? be more I

Gary Philbin

the out say about to Dollar, are at I we boom the always Yes, where of of cleared think echo in do better out of from our we can would I clearance so drove of XXXX we quarter. we sales do it’s back results the nature. in am old pleased call our in event better. Family just living all footsteps of with though just as in what merchandise we part QX we’re the some the [ph] really QX can lots

spending because of the be we did customers. bit may our stores with and up it so, was of resonated merchandise And a old aberration to the of clean well

last part was going So, against comp year our that. of obviously

in-stocks opportunity risk order you that get by to at we some time. to items, think the All our as Nevertheless, if the look aren’t things stack are end. We’ve right on the three drive there. at degree at the to and we need the year, don’t on for but it’s things top-line. think we biggest does think couple doing be ready is Family most I to might our drive it then consistent renovations. We a we’ve just those. better take it internally business. at about. at think take a been we have having tend year-over-year comps view to addresses the because XXX getting around address by will But month, But been service, look right. first right a day, of to a customer primarily driving tables the stores we So, private to we I value two-year then item at year a sees the least The doing the and to the adjacencies if comp us stakes We the of tell got what a and label continue Dollar continue there talking the it’s work customer we’ll story, hundred

It’s That’s merchants, been all on store are that start beginning Duncan elements show we’ve and So, Dollar every the what it’s never sales. up to on one in these at comp team, operators focused foundational from that thing. working day. Family

something the we work on, long-term be results and deliver so, line continue that and address, And on. over this top-line bottom will to

Operator

do we question. final time And have for one

with Paul from hear will Deutsche Bank. Trussell We

Paul Trussell

both wanted think this impacting forward. a moving of it and to touch we number about should on how margins past factors quarter morning. are I that Good

a also I you labour just and as pricing detail And promotional mentioned to diesel bit well the believe Kevin and cost. as environment incremental payroll then and be you freight. If can faced on hurdles

terms those just you of both and quarter If can on going third Thanks. factors each touch in forward. of

Gary Philbin

follow Kevin and the up like a Paul. take I’d start I’ll do

A –Kevin Wampler

Yeah.

be $X.XX we pressure year general it to Obviously, great forward guidance. the the we’re point look the expect overall point a the given at look And just that our no markets about direction. an it And as specific our you we’ve are of expected at at we have the time. into surprise from there on now labour is at the probably if basically in this to probably roughly go per will set and we’re states recession built model said year. obviously entered than the higher good to to diesel the as own and beginning pre-the well I in pressure ago various as in built store that wages a as at their from be at minimum largest we it’s again, So labour year want them and where our But, pressure we we that market so continue we say the that we but hourly individual average seeing about look feel time. into competitive increase this obviously since and pretty increase labour again rate in that and that gallon was and demand

I freight well think is as as with bit. ocean average there to a May, about as it little contract $X.XX of for the came a rates little closer to third maybe we headwind quarter a freight higher, the so $X.XX talked in up there from was bit itself started as

one carriers been have as be there obviously all put we has there as next continue our even been forward, carriers see that we some the the freight in consolidation little in additional go we’ll year bit been and ocean consolidation as pressure that’s into the in So, at of well. go domestic a guidance we to may how look that to freight have as there some year

know or finding those if continue be offset in to other as to changes operate look have coming, things. increases. in form it’s them look we we and can we how on always Paul we happen react accordingly determine we we’ll some costs whether see we again, But can So, at where things at we items way offset to them those shape a line or they how increases cost that

as again, where forward. go the about into as built But as we of our our DNA all that guidance part hasn’t things we are things So we go think changed so forward.

Gary Philbin

just as are And I the I’m here, pricing promotional pleased the offer where season and everyday we all shelf we enter add Save across holiday Ways our of piece, that on customer. Smart on would we values really to our the to on

is great point we this season But with customers. have up feel about I and out stores values have is have Dollar a to But are Christmas. good with Family there, really And holiday, we activity us than going our great that our to our that really of The we based this to It and in to out Family and everything then our dollar, a our propped. inventory with are to get assortment we great the marketplace Dollar geared promotional at on store Family see a plan teed Tree, some have think sorts fourth week off assortment we kicks what teams, the Thanksgiving Dollar today. the the I season. we opportunity up think getting at think where holiday have at resonate quarter. merchants Tree, we and have in I but ever seasonal, look Dollar, into values get our are I as offering think everything on we forward better the we’re going come there Dollar it. to

Paul Trussell

then color. Thanks lastly. for And the

table the results, months any at changes there ultimate the all pace Dollar’s to terms margins Just of to the process the been year into the nine has time expansion of for in reported or the goals? thought change opportunity Family of to achieve Family -- ultimate to around any

Gary Philbin

it’s changed. don’t know I if

Dollar are work everything from But Tree success I that an the talked are always side we of on about. standpoint the at import would on that elements at it most Dollar. doing we things one has and we think I which Family integral is what of that just levers driven drive the say the is the of part

a bought remember Christmas basically You [price] right holiday. to Christmas got ago almost we after the year

to on an that’s blocking great to tackling, of bit product in probably each the iterative there. seats process go caps each sell one to end working the The a drive stores you needs over. reviews And fixed the exciting over, thought, little in that’s and merchants and opportunity we so, finding our to it. But have do buying brand you new what forward. take year. and and that as customers the it, selling out where seasons learn and all this takes our your That’s private to again and have go look that We’ll values, the learnings, you best you get your way go next something is rest understand make buy trip continue they opportunity, holiday bigger find the longer you the we to go what’s strategic you

us see as on We So, ‘XX that are all the plan ahead reflects a I where we of well. focused for think that opportunity building like of and at. we

Operator

our remarks. over additional turn concludes and any the back Guiler question-and-answer call for I that the And now Mr. session. closing would

Randy Guiler

in for joining interest Great. and call Dollar Matt. for Thank Tree. you for today's your us you, Thank continued

next QX Have day. XX earnings to our XXXX. quarterly Our and for full XX, scheduled week call good XXXX discuss fiscal a is tentatively Wednesday year of March

Operator

does for you today. Thank And conference participation. conclude that our your for

You may disconnect. now

Dollar Tree (DLTR) 21 Nov 172017 Q3 Earnings call transcript