DLTR - Earnings call transcript Q4 2017

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Operator

Good day and welcome to the Dollar Tree Inc. Fourth 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. sir. ahead, go Please

Randy Guiler

today’s morning performance to fourth for XX CFO, XXXX. for Good CEO, will discuss Philbin Gary quarter call Dollar the and On year fiscal Tree’s the Wampler. week with and you. me our be welcome Kevin to and call Thank XX week,

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

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

Executive to I'll and the President Dollar Chief Now Tree's turn Enterprise Philbin, Gary over call Officer.

Gary Philbin

we good Sales quarter announced and This week $X.XX XX.X% results morning, Randy, billion. XX everyone. to of for our Thanks, increased our XXXX. morning fourth fiscal

increased Our consolidated X.X%. Banner from same-store Tree sales increased Dollar X.X%. sales By segment, a comp

continue of quarter progress of for sales positive quarter years. Dollar Dollar sales on quarter represented represented it XX our the same-store comp increased XXth make Family we positive Family business. Banner at And third consecutive rebuilding the Dollar This That’s past as For Tree X%. for comps to the every Banner. straight also our

prepared of improved quarter margin to points discrete to share basis items the Operating XXX.X% gross including per increased during will impact XXX improved increased rate his points Reform, $X.XX. on our and to share which more Enterprise multiple Tax There Kevin XX.X% XX.X%. operating XX%. to earnings the basis remarks. detail margin rate GAAP Our $XXX.X million in income XX were

$X.XX, was and our year's EPS to quarter guidance. at proud the in prior fourth results adjusted XX% XXXX. of performance of $X.XX for end I’m the team's range our a of from $X.XX improvement our and Our quarter top

a have our drive deliver our segments dedicated team each across We the business of engagement of results. associates customer that following and

with Family margin, X.X% For XX positive with solid Xrd basis from of Dollar a sector the operating improvement delivered quarter along year. its its a comp, basis in The X.X% Tree, a point last XXX delivered Dollar banner consecutive point a leading operating along improvement banner sales same-store margin. QX

top improved banner Tree categories another And Our business holiday delivered candy, Dollar your of and Christmas both Dollar our household were sales our fourth quarter, In Tree sales double-digit Canada in snacks, sites. expenses. our and team a terrific coupled strong which our assortment, visits Dollar Web performing with consumables, Tree season, the and margins for quarter sales delivered Direct eyewear. solid beauty comp leverage had beverage, just

concept comped them balanced strongest was X%. sales performance November slightly comped with more same-store up outperforming All in Dollar positive month, geographically positively strongest Dollar consistent be Tree's of West sales of with growth comps the consumables, and to was very months fixed continues discretionary strong, the Southwest, zones both three and Our Customers thrilled Tree's with than being unique growing. be all our and continue the Midwest, delivered and point than and to business greater X%. price

sector. positive consecutive continues same-store XXth mentioned, our lead quarter margin nearly of this is sales the of operating to and quarter value XX% for I've As the the

brand. strength Tree. the shopping value quarter at of performance Customers the the Tree fourth Dollar of Dollar love and Our validates again convenience

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

focus Family our as to banner other sections, and experience we continues In needs on refrigerated compared and get for performing is our it find wants bedding. to model compelling retailers. supplies, our and food Dollar customers school our frozen and office unique. business our included and the Customers shopping Our quarter, categories top fourth

by the improve Our cleaner consistent standards. stores, comp each the our comp table performance from indicate initiatives sales on for November customers greater come Geographically, to our was most strongest often, around business. positive continues January our Southwest our again and improved the and Mountain service consumables and The stakes shoppers all major value the our store in through of the geographic combination West, comps. quarter of stocks, month, was same-store that the values zones focus eight been positive the was sales has strongest at Feedback growth Dollar assortments, our months. driven seeing And quarter and our Since cadence and Dollar to importantly, Family they’re being items foundation in Mid-Atlantic, acquisition, is zones. Family stores. more much in for Dollar delivered convenience customer West, product better buy Family of

our across Our needs conveniently The for states basic customer XX stores for to stop nearly are list. work, live, and shop. located markets our in X,XXX customers many the neighborhoods, are Family shopping were primary fill-in and place of Dollar stores

items will Smart EDLP store. the our value circular Ways or the visit to Web are deliver in whether our value, Save Save shop to stores We see our value Way messaging. values throughout every Family and promotional store, marketing site, through price easy includes to our our Smart drops customers aisles. and meaningful consistent program, view reflect a that for a you everyday on you The pricing to Dollar Our message terrific provide check in value

price in well, Ways that receive was smart a our Save, to surprise and our wide after which Compare In million launched to opted Dollar and which we've which coupons. X.X Day Labor XXXX point our supporting have brands. and months is and just on chain stores. than of program, coupon drive Smart XX more on customers in Smart Our opening on values calls Save great And value private

prior Our customers and app app recently and mobile to doubled it we're customers private the than reviews systems. We’ve to national app upgrading quality receiving comparable progress makes and component Web support brand assortment strong year. very brands on the use brand Family android provide the coupons. easier of for have Save I’m program. These download the terrific from our to iOS Smart Dollar being values in about Save X Ways to the Visit the our pleased private seen to stores. more introduced and the million Compare with are developed Smart and

Hill Examples we've brand. phase also Family new with already brands. our Driver's count within aisles two hardware, Wellness, with Bench. changes We've the made quality HOMELIME and they Choice look And such redesigned beauty been Tool can the to We’ve auto [indiscernible] new added our satisfaction our for and our brands Family Catawba assortment, consumables, our with and as and such introduced we’ve in and customers health as of personal on prepared know and men's and Nature's home, Candy and snacks some next In new The Company, replaced frozen and products in the laundry, as discretionary focus and Our on Family cookies guarantee. XXXX, care. merchandise. paper brands and and will brand initiative and Vitamins, housewares household include brands brands we that’s food refrigerated eats general our XXX% Daxton private brand brand Gourmet has Measure customer of Dollar cleaning in grocery items. replaced such Chestnut some been salty retired

another the During XX renovations, completed store we fourth to XXX. our Dollar bringing quarter, Family XX total

customers these hard improved beverage seeing with all adult to air assortment be power stores, very faster care typically teams initial consumption pleased and near freezers, of renovation our continued shopper our live, the feedback of in items store and to of of shopping [technical checkout customers. Dollar and a the Dollar our working be about friendly near especially promote food work, stores, we're the Family updated store Besides from checkout, Elements needs shop the layout, of alley for We customers neighborhood our assortment, the added store a the store select newly and our include that caps, fill-in more receiving in results and beverage shopping Well are choice teams. productive for stores. stores, expanded and and coolers better to renovated expanded including snack, the difficulty] immediate coolers end we’re and

highlights For Canada, on include our our focus stores. running great

product. Our and merchants values do stores continue exceptional to

are continued brand Our in side standards stores. delivering operators perform to our discretionary business The in Canadian on of our well. particular

Our include and HPC, top toys performing categories crafts. candy,

for was experienced course of January, double-digit a store are stores devices a ever opportunity brands. December see the Tacky to retailer as online banner directly continue in half We our brand and our and increases drive the $X the just our price Tree Direct, as Tree Dollar to key operate promote Tree the first vision In At on launched time. customer garden and In enhance price highlighted at views for and $X. to over site million customers distributed associated of over base, another point decorations at our Easter, our of and as from quarter currently Tree profitable awareness, than Canada. We with dinnerware, a we videos in spring, our and store stores wearables to web in provinces incredible more XXXX by Direct to More touting our our leading recognized our of million new and Canadian Dollar was an for extend we in the sales stores opportunity of sales, we lawn Dollar videos goal earned products. Dollar selling Sweater focused the It during U.S. private single contest XXX to our thousand be our mobile cleaning productive spring X.X and our all and CAD$X.XX a Spring our visits. catalog which holiday quarter, than traffic site be Continue presence provides encourage incremental to dollartree.com traffic. dollar Canada we all

and can offers app. customers excitement familydollar.com seasonal find new new just dollartree.com values, Dollar with now Our the at Family and items them for more great even and

during we Now stores XXX the as Dollars. expanded Trees a stores the XX Dollar Trees, renovated projects and XX XX Family total We turning part of stores, Dollar for Family a quarter. XXX fourth to relocated of of in X for renovation real Dollar or quarter, Dollar. Family up initiative estate the new total We opened for

also now freezers Tree We Dollar of coolers and quarter, and XX of X,XXX into bring Tree during the coolers. to stores our freezers total have stores Dollar fourth

Family XX we the During XX Trees, X,XXX Dollar Dollars the stores, ended we closed XX,XXX Trees, stores, and Dollar. quarter, with X Dollar X,XXX Family year

real stores XXX approximately of Dollar expansions adding Family Family the from adult of XXX stores, XXX coolers and to XXX XXX [indiscernible] and and our XXXX, Dollar Tree. re-banners estate expansions Cooler plans to Family least stores and and relocations XXX freezer stores, Dollar Tree XXX freezers and Tree to at Dollar. addition existing XX Dollar or stores, Renovations Dollar Family For include new and new Dollar of in beverage stores. XXX approximately

We and are Kevin XXXX. Kevin? opportunities now to provide ahead results initial us. turn our fiscal QX pleased performance on the enthusiastic about call will over outlook quarter more and in to fourth detail with I the our our of for

Kevin Wampler

increased the and for X.X% for to segment for of profit sales the compared currency extra and and combined for sales to by the XX.X% of Tree adjusted increased of consistent the total approximately fourth same-store the or banner Enterprise week increased to banner the Tree fluctuations $X.XX Family X.X% increased to XX.X% total within million organization segment X.X% On sales $X.XX $X.XX impacted basis range increased $XXX.X basis, to Gary, retail or Sales X.X% and Dollar Total calendar. Canadian billion Dollar XX.X% morning. increased XXXX fourth to quarter. billion. a Thanks, with quarter fourth a adjusted grew sales XX.X% to share. for quarter, the billion, Family XX-week currency $X.X segment earnings the for when good constant guidance currency sales sales to The XX-week a and in billion. were favorably $X.XX on $X.XX same-store the prior fluctuations. earnings billion our when per Dollar Gross Dollar addition billion, X%. contributed $X.XX quarter year's

million to compared fourth the margin margin percentage XXX was improved expense sales in markdown As to gross markdowns quarter in a Tree improvement partially profit workers in expense higher in change included shrinking our and was profit XX related for improving fourth basis percent quarter. comp year. primarily offset versus continued the margin costs. points last point on cost and lower a basis focus a as period. Sycamore was of our of XX% expenses This a Gross reserves prior Consolidated includes Express week. during extra the margin to gain cost of same Family quarter reporting XX.X% basis and prior extra with a and $XX.X to Dollar from quarter, quarter. markdowns as million year's the for the point the to Partners a sales of occupancy an Tree XX.X% to segment sales XX% quarter XX.X% comparable sales, and sales quarter lower from week general, result gross during compensation clearance due impacting improvement profit occupancy XX.X% primarily These Dollar improved net to Dollar prior a year's the as points for in segment the percentage compared from due XX to basis were the of The sales XX related lower year Gross the lower performance basis. administrative a promotional freight the due Dollar and a undiscounted recovery Factors as with the prior includes of percent compared by our $XX quarter. of on selling, leverage settlement the year's strategies XX% the fourth segment's

at items sales the Fourth as sales XX.X%. Dollar for SG&A percentage two of the with the prior segment Excluding Tree a for basis noted, improved of expense year points consistent percent a SG&A the as was XX quarter quarter.

million The and result quarter. $XX.X expense of Excluding expense depreciation compared improved workers the related was payroll of to by previously, by lower week improvement compensation year. offset basis the was last percentage same Dollar with the segment year's from Operating impact higher by repair offset XX% the XXX last in $XXX.X million Operating XXX XX.X% for costs. depreciation margin enterprise the point basis increased from positive to partially quarter incentive sales. and was for $XXX.X XX.X% XX.X% to SG&A The million points partially recovery, compensation plan to lower the and advertising noted year's XX.X% a in prior basis in to XXX period from income impairment improvement for costs the lower million points driven maintenance the and leverage sales store quarter. receivable SG&A of from income retirement contributions, a higher of Family costs. as $XX and a increased compared the improved fourth cost, sales XXth

adjusted Excluding Dollar the million, margin compared percentage million, Family to previously operating mentioned improved of XX.X% prior $XXX.X the Operating margin increased was when net Dollar to Operating improvement quarter. basis the points quarter. income of sales a segment million for when benefit basis XXX the XX.X%. XX compared year segment income for to prior $XX.X as a $XX.X to point the year's Tree

Non-operating net totaled offset $XX.X expenses $XX.X of which points primarily by comprised increased X.X%. of the to Connecticut of was recognition Excluding interest recovery, income requirements by the completion partially million for $X.X the basis center XXXX. expense for Connecticut million, the operating impairment for receivable our Dollar Windsor, of construction Express forgivable XXX State million of all of promissory the note distribution for the income in of quarter issued

in XX.X% The and result to XX.X% as expense Jobs other the of the and quarter Our Tax January rate corporate XXXX. law rate made for the was a to benefit is the of federal Act, numerous the X, tax XX% of an compared year current which period. year Cuts effective benefit XX% from lowered tax prior of changes

the from $XXX rate XX calendar the Therefore calendar tax of re-measurement and the million. from the quarter overall a effective The include XXXX. statutory benefit deferred statutory rate. year included was fourth XX.X%. non-cash for days also XXXX rate benefit million resulting XXXX fiscal a the year to in The reflect Our our to was Tax lower the net tax Jobs Cuts liability, Act total $XXX.X

financing share the the For per or fourth the of for billion non-cash prior on represented adjustments. net included $X.XX the the XXrd the the estimates year's week that $X.XX diluted per in company year's write-off share per $X.XX or XXXX $X.XX. $X.XX in Today's amortizable share income expense quarter, for to of of EPS financial diluted per income incurred million QX net of the reconciliation share. The deferred QX costs fiscal diluted was includes measures non-GAAP earnings a XXXX. approximately quarter. company during release press of of benefit of the Adjusted $X.XX reported details for of a quarter $X.XX compared $XXX.X had Last reported

equivalents combined at the of million sheet, billion and balance fiscal totaled to compared cash end the year-end $XXX.X cash at at XXXX. Looking $X.X

year year, end quarter. Easter from footage appropriate Dollar increased inventory new last support are basis. included Our sales of X, selling year-end. for XXXX, X.X% of square the Family a billion, X, segment quarter prepayment February and outstanding X.X%.Inventory expense store the $XXX On the Inventory openings Inventory prepaid segment decrease from increased for selling fourth its current the The for approximately of selling same million as the scheduled increased company $X.X end Tree initiatives the We $XXX XX.X% the Notes. and which levels quarter. for at square square increased period a quarter while at in $X.X debt prior season, believe increased foot a selling our was earlier XXXX million the the million, on redemption premium March from in time first the of Dollar foot interest X.X% to last X%. was same XXXX included

We progress with the in-stock on are items. levels on key pleased seeing we're

the $XXX.X year. of current fourth quarter in were our the believe $XXX.X inventory fourth the quarter in XXXX quarter. and assortments last versus million merchandise review appropriate to levels for expenditures million of continuing Capital are first We are

of Missouri, refrigerated expansion XXX planning new and the to IT addition of consolidated we're renovation Capital to XXX distribution and and support projects, total XXXX, XX, of to Depreciation $XXX.X from automation fiscal frozen LED DC beverage XXX stores, capital of million Family existing quarter. our Family Tree a start and adult expense and capability stores, X,XXX Tree in quarter on system additional Tree remodels banner Dollar lighting million completion to of with million of the amortization and Dollar XXX along new construction the integration the Depreciation and Warrensburg, and $XXX fourth approximately $XXX frozen totaled expansion. of a to of refrigerated capability be completion addition projects, well Dollar The will million. Chesapeake installation stores, enhancements was fourth on for Dollar in in focused store center XXX the as For stores, range last center XXX construction stores. for expenditures the and the amortization the year. $XXX.X of expenditures as new Dollar stores

valuation we $XX the from XXXX, to compared to expect $XX million The to $XXX Tax year. lease the fiscal in company Jobs and with of the amortization million range to for respect fiscal basis $XXX million. and amortization the prior the of fourth Dollar For favorable depreciation XXXX million fiscal includes accounting Cuts for rights XXXX leases Family Act. quarter consolidated in purchase and benefited for This

in-stores, contributions included leave million Dollar We fiscal continue and increased in to in to invest estimate in million with Add Invest Plan Contribution Family approximately investment the Defined $XXX in including our for to plan outlook. eligible associates approximately in associates. expect our our associates. invest for Establish average the business to company starting hours, stores forward $XXX $XXX maternity XXXX. benefit with as fiscal increase for follows: paid fiscal more XXXX. is in hourly of training million XXXX, our The benefit going We people an rates. to be eligible

XXXX Before wanted I our XXXX. speak outline to results our fiscal assumptions outlook, for adjusted to included in I earnings

As the non-GAAP the release, year for $X.XX. was measures financial shown adjusted of in the earnings in reconciliation EPS

QX $X.XX we in promissory related of to XXXX, $X.XX $X.XX share per following. an the benefit Connecticut QX item, note. for This in Additionally, XXXX a a adjusted fiscal from XXrd the per tax benefited share for result the forgivable per Windsor, week, $X.XX. DC in share for EPS and

QX. of be to for the XX-week XXXX $XX million for weeks Calendar X Our year fiscal the initial in year, million year, XXrd XXXX to shifts Halloween sales. outlook the representing a from following: considerations Easter estimated include earlier QX week and $XXX.X XXXX sales. included the includes QX this And headwind again an is added following into will assumptions. QX

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

costs diesel than year-ago. We a have costs and higher budgeted freight

approximately share per headwind Our million $XX $X.XX to outlook currently a in related or includes these of costs. earnings

increases million in for redemption Included expense $X.XX continue the expense the in to of partners million related of $X.X I will transportation as non-cash to mitigate We to $XX share earlier. through go forward. $XX for approximately Net these QX which we interest interest diluted be our million QX financing per Notes, with is approximately QX deferred to work or acceleration will costs and spoke the XXXX QX.

repurchases. share benefit. future in for million Again, any include adjusted not investment guidance $XXX does into our business the does included guidance our fluctuations, guidance our million currency not of $XXX we've rates. XXXX We tax cannot projected changes the of Our currency predict

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

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

increase per earnings estimates same-store single-digit With between I These footage a the of turn sales in XXXX, and square a to fiscal $X.XX. forecasting growth. sales back that, $X.XX billion billion XX-week year, to to are will and based and call $XX.XX total X.X% range For Gary. on the share we're range over diluted $XX.X low

Gary Philbin

combined of teams. XXXX. Family Dollar with Tree I’m pleased for fourth our quarter I'm proud Again, and Dollar our Kevin. you, extremely throughout performance Thank and the

meaningful and improve We business. to continue grow our make to progress

retail are shareholders. for to attractive of the and long-term continued sector most well-positioned growth deliver We increased our in value

a of neighborhood types X,XXX Our unique company diversified Dollar effectively to each Family point its is Trees customers more combination and ability Dollar X,XXX now all single with through stores, price This in that brands describe our great detailed to flexibility business line of investment growth. in markets. great the his combination two comments. of Kevin managing like in by provides our item serve I'd

Our bottom-line a is tax the at when invest will customers Tree while will opportunity portion of the the earnings view Dollar greatest our the see unique impact positively drive drop is take savings and shop our to of in to savings business, majority earnings they store. or where This invest a per to Dollar the Family share.

to our believe at are will people. I create driving level, going associates in experience. more shopping hours our We stores more better store into a hiring invest

who us be a As before, higher describe bonuses. business link their to the store can best for you’ve managers rewarded direct heard drive our stores and with

we seasons and managers, like this the will our right primarily We in have project into to such great same and influence on the put Also, measure we do at store our any their weeks success. teams discipline we months stores. for specific they training hours approach invest will associates level, for will and and store as the with other

of in drive pay. Investing of our led unemployment Dollar Both have important provides on pressure Dollar our will make Our serve. proud in we've communities best geographies stores, Investing some line we rates Dollar without drive productivity managers Investing by our current by bottom in employer service best believe be attract profit-sharing a The families store the Family the Tree, soon to to and the business we and including store into that keep to exception benefits, centers veterans can our that program but success. in and leave right wages. great team distribution the people run members details full-time our on in we smaller to levels that Associates, managers. choice almost just their neighborhoods maternity The store in in the to our are of levels scale, as our our families the teams put delivers and associate been at establishing to Family experienced find program. our report. with results associates to call announced

Our our and to program shareholder value our engagement. to associates directly goals to customer profit-sharing contributes teams links company drive the that full-time drive

standard. create a of will we Family that will be better opportunity drive stores areas be in they and investing and perform our to teams in customer business of brand up a need these investing better be We're stores our that business for counting specific because I'm to also the stores believe able We brought to certain store spectrum our to engagement on shopping our more standard. drive to across experience brand reflect our Dollar sales.

and buying our Dollar Finally, planned on their overseas with global successful I is goals. recently important Family met our holiday joined teams trip post margin trip we sourcing both Tree and Dollar a merchants,

direct and and retailer. and our as market and partnerships, our successful shop procure growth is develop great Tree to effectively control quality values standards. a chain to well-recognized continue improve the teams factory supply well-respected overseas Our Dollar

banners and needs. changing across of opportunities Our and we're wants environment to all company has leveraging developed experience and expertise both customers sourcing provides advantage banners. ever our The take retail these in assets

nimble Our be demonstrated the external the team has management challenged and ability results years deliver over by to environment. the when

Our margins, initiatives customer at both banners sales, helped to ultimately and expense have control on deliver satisfaction.

ahead the of opportunities ready the made us. progress proud we’re about questions. Operator, and are for we enthusiastic of have now We

Operator

sir. Bank Thank Lynch. Instructions] go America Robby to you, Ohmes of of Merrill first We [Operator will

Robert Ohmes

you being and maybe wages where your about maybe markets see in into of are seeing the some aren't versus -- that, could prices where my happening? do versus are last with that up taking some going up of customer hoping labor Has for you maybe actually I in of what in question. down isn't in categories? tighter then, May be you kind And trade is any sales was up, on your color gas Gary, momentum Thanks even seeing you're morning. whether the Thanks. same-store your customer? markets or differences your about work thinking there momentum Good talk a been year. bit slow any

Gary Philbin

Thanks, some a of Robby. to the categories. you were QX, take If saw at look I

year seasons Tree excitement and season, more Dollar we always seasons. really Christmas that laid for holiday, to assortment, could certainly our by pleased hurdle jump the the we And want want we team have the a And to, the the but the punctuated bit smaller holiday impact with did was we come into Dollar stores, the of not to in the On really little a Valentines, sell-through there. we every terrific. over have, jump Credit down fourth just the biggest Tree, season in we side, of been the that with have every just quarter. and to continued sort showed great up great and its is, it

-- other And say continued has that that consumables I quarter, discretionary, into a of and the would saw race the mix sort fourth for at the that comping mix each beginning you this so of in our year. we're great,

overcome you Dollar to with to there I So, our we reinvention of store, redos responded toys of favorably. storm brands think momentum. our you if saw hitting and customer same an of off our Tree a Dollar, and we’re a did around holiday, does but coasts, lot this saw Dollar year. work tail what went more Easter At Easter not Family -- some We the we customers of both and to kind business early on thrilled the still March going the on what with winter see Family

business of consumables that business the The to a at we the driving was trade is so around holiday. some So Dollar. our refine continue Family up,

magic bringing the it's the can always, whatever we do seasons, of there. Wow!, the in As

up They driven beginning tax that that. days customers beginning the so another lot if year at our backed few we're the really Now, get. the into this of of we’re we year, by and go a credits this

customer our as with how pocket see we'll March few dollars So more respond in through March. go a her through we

by As wage value see difference more that we no tend I community as a far stores, lift it’s driven say, neighborhood, and hard what our in get that to if comps. in in to for pressure, -- a us deliver great we stores. matter it's would

banners to continue I we we up our in by shopping well-trained, So I to a together, place. think our for drive our think good that experience. having drive the business speaks in And both really put links folks investment people to those staffed I our when end in-store, opportunity outlined,

Robert Ohmes

pump gas you on related the Have to higher prices seen just And changes momentum any prices? year-over-year? in

Gary Philbin

end certainly Well, are gas up most markets. in customer. lower puts pressure rents it on prices, It's

take terms You than banners. I traffic, can't your but its seen that know always because that us both Dollar all you little tend Dollar in flatter you -- Tree. never grow we’ve are of tell basket affecting to on on under a that when things, pressure you those Family customers

mass still we’re urban rural probably customer transit a walk-in and more So between that versus is does into to car. split more an have get that

on the we're So define it's more few know gas affect few of of rent. I what It's seeing on prices a it's their this, right do bucks I out out hard say pocket. would pocket a to customer now. more their bucks

So store we're the and values very focused down shelves. on the up

Robert Ohmes

Thanks very Great. much.

Operator

Securities. Guggenheim of Heinbockel John to next go will We

John Heinbockel

what And to of about is it get can't changed? do trajectory benefit you your then, and can't kind but you something with on those if benefit million, over really ROI it's wage happening the $XXX view think one, on Does that your the to the those particularly, turnaround an a So is think to rates, you questions. if around arms bit -- Can secondly, you a two the pressures? -- adding right directionally, out or pushed tax hours, what’s the about your it's competition? Family lot margin the because of right just freight, adding thing raising investments Number the is you reinvestment tell related do. the get clearly Dollar of know thing of little retailers, of relative

Gary Philbin

Thanks, John.

heard the are out think food on you're stores CapEx side first think on or mean, spot or I you on. that all I piece, very initiatives and all disciplined at put we those on ROIs. either every adult measured dollar I beverage, frozen CapEx we’re the with

back to going with go invest people the going always It $XXX into and if where Now in sort $X.XX that of to doesn't same work $X. invest a we’re with that says we’re a do way. business we quite get savvy we million,

better run needs. around around that customer I think up stock, are what people have to stores the ought our seasons, first show with stores our in stores, our that in of and investment month, better

our So, that down our to quickly while sector in And in trajectory. of more think everybody to a in it. some the is we us stroke are we I get some this chance respond help is stores my value of doing to mind this, best the have our have customer

sometimes as think by stores to it. holidays, additional drive down just we’re to going month, So to of be we the to specific going the can be measure key weeks around be to said. that It's I we’re targeted we business. to It’s targeted going going

It's a Diesel of some is are clean we will we're going thing as it's we through The fuel attract not to and of so, a back our diesel sort freight it. of to shortages XXXX. of projects right side go lasts we as that that really driver the is capital the real and component And how the now, future long on fuel. see maybe just where we track year. as

We the out, are service. of partners. almost complicated leveled some what to we'll year. price starting in have piece think folks little They've this see happens follow We maybe find commitments The the is more I'd for like of half to all our certainly gallon. It there's got back third-party to relief year. them. enough to driver same per to

this to allows we’re work that a overcome we growth put to folks as at think that. folks quantity have. going that build the to customer place known But us can growing. give they lot future to I serving a us for pitch our to we're have in wagon of their that And leverage piece. great near-term and is rate to we’re a think engine least I and a arena we’re can to We

So from deck. on on we do it's we’re hands the looking the when make in all of we force team external more these I bumps asking inside, productive. mean hit and an DCs our outside, road part transportation, logistics its how

our we've you best in, so our work off given going And to baked overcome and forecast we’re and tails it. what now know to we

John Heinbockel

you. Thank Okay.

Operator

[Operator go JPMorgan. Instructions] Boss of to We Matthew next will

Matthew Boss

Thanks.

really low the asking Family in profit think per is what at gross how about quarters. here the recent we Family couple your to single-digit guess, comps opportunity gross in from last with square margin outsized of in sales strategy progression line we I'm guess that Dollar? margin how history. dollars more best is Is So we've versus of foot should I date the XX%, at so Dollar, and I comps what gross about going performance think seen far forward so and up should

Gary Philbin

the frankly in Thank by you, a do always Family Matt. quite No, to plans up we are the we do sort off the comp for more. with are going it things listen, I And can down say It will one Dollar at would merchandise. business. Family the start that and backed Dollar, of But what for we went to saying comp drive better. quarter comes

those our import, heard heard you’ve talk back on marketing on us getting is Smart things, all in have talk confidence everything brands, the plans the about So more to and us EDLP. Save. us pricing, customers back you’ve about merchandising that to Winning private Ways under it's

stores burn that the that’s piece a see. is change to we’ve other customers the The some of got slower

on One year new renovations stores. a really new there, stores that last it's with we this we year, will stores out XXX generation two-pronged So another so pieces that pleased are The is be get next attack. accelerated.

per mix as going start foot the over year. a We mix to productivity margin to both sell get think and to of will I time enhancement product. that's that And and the continue stores better we what’s do more this help on square change sales the

merchandise So X,XXX across older we on many combination and format customers. some our get it's the do store of how marketing, right -- it's across than have what you touching also them call. stores about we of tactically of a on to the Strategically, can network

it's those so be and we get over on that time change going change neighborhood by And a our neighborhood customer. to

team. still excitement I we as Dollar mix, and the merchandising, that's the solve the well. need comps. and drive costs, what we the see over on the to the starts Sales that work value in need That's you vision all of start think off and the merchandising the on margin change time focus create changing Family get piece, issues, so Keep with.

than all. is But It maybe changed see what -- haven't the new we of store we Family would they our than we I exclamation renovations, We stores, small put like, slower combination on rural, new it's know thinking that. town at sometime sales on stores square populated many per a maybe the areas, and into foot. densely last how It's different urban distinctly Dollar. also because react

do in new on in And year. coin the both given working them, drive are so, sides how of to out any stores of we of come productivity say on mix that both we that

Matthew Boss

Great. And expense on the then follow-up front. just a

think what both Tree should $XXX So investments going underlying some to Meaning, using SG&A to year the tax model flow-through you of forward? this and that the has other way reinvestment, that leverage what's about the tax the I million -- Dollar on year? fixed than we hurdle Dollar, reinvent at guess, savings changed think and about this cost Family anything both or

Gary Philbin

over improved anything profit see flow-through gross I this I we a on continue the anything think to from improve significantly. think side. tell flow-through you, I’d if don’t has changed perspective, we Obviously, time Matt, saw quarter Dollar Yes. would Family

continuing some and it's into basically year. consideration outlook Our level takes improve next to to

the think is fine. I flow-through So

leverage So, varies our and basis. range think we always probably again, in think more to that and costs I again, X% about it as And to what think to it still about those, on that I roughly. fixed we're so it overall an takes quarter-to-quarter, want X%

investment we’re making on you large So would the without this that a -- to X% in basis that range normal year. I tell X%

Kevin Wampler

improve talking magic and going to about investment for to changed is the flow-through improving to coming the the just banners be be shopping And what's we I the we're that down affect as continue EPS. the sauce is stroke would But going is add, both. think experience both can with us op the income I obviously maybe to experience on what for shopping really down

Matthew Boss

great. Best luck. That’s of

Operator

go will Karen We next of to Barclays. Short

Karen Short

Hi. I guidance. to of clarify in into EBIT just backing something terms margin Thanks. wanted your

I fiscal to Is if kind And the fiscal I then, margin I of 'XX, look your of that an the EBIT. for kind ballpark? get of kind investment, X.X% X.X% 'XX, at X.X% range. guidance if So at get range excluding extra look million of excluding week, $XXX I

Gary Philbin

would that’s tell million around improved basically, week. We'd the that on correct we directionally right then showing XXXX the you’re And year, the probably adjusted. margin. you yes, excluding Yes, be $XXX excluding operating XXrd X.XX%

we've So, made. part of the investment that's

increased that’s So margin the as year-over-year. well frieght, operating pressure be without the that yes, but would point the million $XXX as

Karen Short

it’s And with the basis Right. XX about points million. $XXX

okay. So,

Gary Philbin

Yes.

Karen Short

flow-through. when to like you as 'XX your as at investing basis a Garry, versus CapEx just rest to $XXX of second in the And CapEx, I percent I about then dollars going that 'XX, XXX, clarify, point. a want I percent comment clarify and a million are wanted the to the increasing of made just terms in it's But you question sales does your out it look by sales your of of look CapEx XXX dollars in is

Is CapEx? additional is to $XXX a to million seems that that -- actually -- it? at that me is that not it into the going of So way lot to look that

Gary Philbin

and to did I’d make Tax CapEx or our changes in in did basically No, that number we to were change related our stages, any flight prior to planning not, were Reform. how in of our basically. was board there CapEx investing Tax in on These decisions not Reform. not Reform tell projects We the Tax -- Karen, -- you already whether the

have not to an decisions that. related our impact on did it So

Karen Short

then million what right, Defined is? to us just of just question, the dollar -- Dollar the clarification $XXX 'X, could last Okay. Do those you you Plan. retroactive And some of for did say give Family Contribution amount that you was

Gary Philbin

Karen. that’s million, $X approximately Yes,

Karen Short

[indiscernible]. That was

very you Thank Okay. much.

Operator

We will Capital Ciccarelli of RBC Scott next Markets. go to

Scot Ciccarelli

trying pieces investment whereas incremental XXXX? diesel But the the talked you the you for investments Family Dollar on provide these and of way about what to are for still to think what’s the Can moving color incremental investments. lots Obviously should community more right margin about that? balance synergy guys. morning, Obviously, upgrade benefit? be you Good with any

Gary Philbin

Thanks, Yes. Scot.

better a our as job, we our said, about go this way We've margin. controlling operating of done continued we’ve improvement see continue half expect the much margin as we we business, Family to a year do markdowns in the for that. we overall forward, good our think look As Dollar to product in last

that's Tree. I if That obviously look And increase gross SG&A Dollar help, to of more profit Dollar, aspect than then, the an in at think $XXX slanted our we of reinvestment. will hopefully, important XXXX. would is for under our Family pressure actually offset, fact look banners it. Dollar little in about bit it's a So the overall the XX% you reinvestment of And from the of about about XX% million, Family

that would So to into take we consideration. have

to I So at operating flat probably an Family the to on Dollar margin up think our basis, little overall business. in we a would bit look

Scot Ciccarelli

end that, And, the trends spending Kevin, you towards are getting mean, those, the in of it. that? Any still of either obviously synergies I the to and piece we related have change investment the against and guys about of talked of that kind of

Kevin Wampler

it but there Dollar announce to on this Tree, to from It's -- CapEx did year Dollar, The the track. CapEx the of will no up more run we we out down. of of that a minimal million the we’ve as We achievement $XXX will OpEx. rate by it's flow-through, should that. end Yes, be XXXX. million yes, down and again than the are cost was And bit spend winding synergies, continue is And in major the of additional to be called side to three to July reinvestment, $XXX again, changes pretty but, -- years which much again, little stated of fairly XX roughly Family expectation amount. spoke re-banners which we so

Scot Ciccarelli

Got it. guys. right. Thanks, All

Operator

Dan We to Instructions] of next go will Binder [Operator Jefferies.

Dan Binder

morning. Good Binder. It’s Dan

led was etcetera, Dollar. combination Family of side margin gross division Tree The fair of to question tremendously on around my Sourcing also and sourcing benefited has So has from Dollar amount Global expansion. the the which a

on rate? some you get the bit margin comp that price you you opportunity just than know, an gross aggressive equation about been a as bit probably the help sales forward, you However, as curious higher the a store the sales, little more tracking going comps there's feel do like I’m take be think expected. to a it's to of -- side to lighter or

Gary Philbin

is mean, think a made us you’re we’ve right. merchandising the with piece. the out efforts job Hey, This and Well, of did the I both Dan. Gary. really on getting that quickly side teams great I items, blocks on like synergy

more us. they I You help import there's had piece, to which down, suppliers, referenced right there the view, the factory we’ve a opportunity cycles buying still couple find direct, but an

product, are energy secondly, going find side. two-pronged is that So on of you it's the types can help both for One, want merchandising working and and think we the sort I you to part get exciting of on better things keep will of a really which Family the effect. comps. Those some get drive banners Dollar costs

more work we’re started than going read vacuum. journey going and future, can't we’re were -- to the when to competitive checks, in Our this -- we we I not a we going are price not

on want Family the we I we we right side, think in as as year, the noise side. be And shelf we that activity, our on the see the when at the of I most to on items the environment promotional. a on right saw now, certainly beginning grocery heard we customer to not often Dollar mainly same it's both for of the then that buys values the are our think that and want lots she to present

to it's the information, now, give cycles and run exactly over part with what X gets up, the the giving of folks a because she us on shelf. do of in gives another customer that above they that, add think when So, is in need with it its million and on customers it's app also purchase the partially our long what's savings quiver our a signed her drop, what I on on on. they’re arrow And beyond we on it price part customer invest

to So great a we’re going marketing plan. have year, go we into this

thoughts put with want what reflect side, both private imports. on on vendor brands we to We pricing what gets want every into drive have and the day around partners on we our and both our cycles how shelf the with to along

we're and business into it's our of more we go that drive really to think of 'XX. we The doing saying way a way appropriate it's long as the by market. we than So segment way one got going of that

Dan Binder

clarify could also $X.X the income was? in just other Then what you million

Kevin Wampler

note forgivable State it became the we certain Yes, had again were comments, of things our as once a noted Connecticut related to we met, that in promissory forgivable.

So and basically it as instrument through books it forgiven, that so our basically, been other was has a comes on income debt non-operating.

Dan Binder

Yes, Okay. Thanks. great.

Operator

from of We will Grom question take Chuck Haskett. Gordon final our

Chuck Grom

guys. morning, good Hey,

trying to your the Just connect dots guidance. here on

going So the if investments I basis margins million include be the diesel, it XX $XXX million to points. of operating freight in looks are and $XX like down in

guess, be the How also Family that could to if flat down could XX in company? that we on It margins like gross just do see some that? color to you to but to stable, sounds SG&A? how XXXX are groceries out relatively playing be relative going wanted see you if provide my expected then, just with And question I Kevin, back Dollars So, total into year-over-year. address is you

Kevin Wampler

the the at think at the I that. looking the midpoint you may than basis something overall margin XX I you’re for I end, -- Yes, points operating year, be upper less down at don’t think down

probably margin the it think from I upper see that that midpoint, to pressure would the So banners, think you’ve on you -- about yes, perspective. end. think operating At both at

would as see on Dollar less the forward. the go we way That’s it now a Family thinking little about right You side. we’re

it's So, at of it it work lot to to out we to relates execute investment a to the point obviously and the of pieces how end again, moving as we've and that your laid we will the day.

… was of question, Chuck, Second your part

Chuck Grom

Just SG&A in the and margins composition gross of XXXX.

Kevin Wampler

Yes.

go than gross We be look look continue product XXXX the at markdowns I again we again at to Tree point we margin, is to Dollar itself we some we as a think to look as pressure Family obviously, is where Dollar area it and as make obviously we can the you there, positive and might at margin how freight. that's operate be into imagine. an inroads more dominated and

that’s a it. of piece So

there, at need occupancy of costs we say I otherwise there's heard on to distribution the supply of there profit moving we be we’re be through at XX transportation we have we will as for midpoint we will looking pressure what as so and and we and this, you to of side, on places basically. productivity that know obviously will chain, some pieces look pressure one Gary year improve well. get know buildings the the guidance will of as we looking our bps the overall XX, the at gross that look more think the also But be our probably

how it drive sales SG&A there of at I and all kind think side, down On able it's again is the of end from of all looks to with the kind come the of leverage the how obviously we’re it, the some investment there. to and pressure day again, standpoint

at we the costs is fixed that investment to company forward. help part mean, bit better the a I end some the little the So, more drive as them the speaking that a SG&A. that. pressure from the looking to we’re little sales of sales things on into as day would drive and to I I for leverage bit go see we think we of to one leverage can will hope point, Gary's

Gary Philbin

sight how to start at very I just imports our this shelves, overcome think to that's going partners continue to I on to we’re be that we drive I my see, something this and us on but way maybe seems issue. sides, going hopefully it's color, we’re The every on see both least on work our -- overcome like Chuck, a a both exciting domestic think side, shop freight work really to but know year level, off and and hard let banners. on me what we'll with to with, line both that. XX,XXX how now to to foot we upon give on merchants value pressure product our And the hard

I see we results really ahead of occasion we are are better help on on ahead and And starting investing making in on the the that’s us to just for SG&A side teams good out betting and driving it the do know on get get us mix drive the too. the that downstroke we're SG&A us. rise the All I natural the overcome our to in is folks but of help when obviously, side, that and of sure labor of product side there, and pressure, stores we’re field the store part excitement, whatever can freight side, managers the that's I'm really to the going but there On to maybe we right is managers to got in investing it. store

So that's the plan as we go 'XX. into

Chuck Grom

Okay. That’s helpful.

follow-up it were consumer call, the cautions a my sounded and to little you just on the be, striking your Just first comp Gary, maybe you anything trends. Are bit few the that over back in you has past weeks today I that guess, you of more question would interpret to November more the tone provided potentially when seeing it is right like XQ? a than way? on concern

Gary Philbin

always -- shopping. and I’ve don’t how I concerned is our she think No, I’m about customer

week pushed on back happening, point from they reference another that are were tax credit refunds I the about was year. think my last

we so, holiday it's have XX of other on a the of Dollar XX And first Family the top at month.

at that customer. Dollar Family we’re holiday that in about my point reference beginning of was the really talking and So the

Dollar On good, our loving she's Dollar our Tree really side, energy Tree on everything, the holiday doing up team, the sales. in seasonal man Kudos now. are showing the we on to but right holidays stores the feels

Chuck Grom

very you Thank much. Okay.

Operator

closing have time like we At Guiler the the additional back to Randy is to turn this That or any over all I’d time, call for comments. questions. for

Randy Guiler

you. if XX, on especially call Thursday, is QX for you you're results to Thank Tree, call, Dollar XXXX. our interested for quarterly earnings next and conference Thank us today's joining discuss May scheduled in

Operator

does That conference participation. for your conclude for you our We today. thank

disconnect. now may You

Dollar Tree (DLTR) 7 Mar 182017 Q4 Earnings call transcript