DLTR - Earnings call transcript Q2 2019

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Operator

Good day and welcome to the Dollar Tree Inc.’s second quarter earnings conference call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Randy Guiler, Vice President, Investor Relations. Please go ahead, sir.

Randy Guiler

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

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

have We us forward-looking and expect you to not should so. our no obligation do statements to update

At questions. will the one necessary. end of call one limit follow-up, questions Please to and if we to the open your our prepared remarks, your

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

Gary Philbin

Randy. Good morning Thanks everyone.

stacked of X%. year’s stores Dollar positive delivered comp. sales the sales gain acceleration quarters As the exceeding business and of same to increase segment the same Dollar sales Despite of by delivered XXX prior turnaround helium basis global strong of momentum. consecutive Tree’s represented quarters and third the was increase sales now store store stacked XX Family Tree cycling quarter. headwinds in Family we continues a X.X% two-year X.X% eight two-year consecutive quarter Dollar’s sequential X.X% increase shortage, comps Dollar of from today, reported of the same improvement point the created has consecutive while a

the accomplishments. proud I’m team’s of

During XXX our the optimization Dollar and we closed efforts. store successfully store part Family planned quarter, as consolidated centers as support stores of the

format. renovations Family into XXX completed the Dollar we Additionally, HX

quarter Consolidated second X.X% increased of to included a sales the $X.XX results billion. sales store same Our for increase X.X%.

$X.XX our Dollar $X.XX of quarter range. renovations, share during included highlights Our $XX.X Other GAAP XXX Zones, Family part completing for buyback XXX share quarter program. Snack guidance the to of shares per as HX million exceeded our of EPS the Dollar Tree repurchasing $X.XX completing

At formally the July functions, of all year to Chesapeake, over teams, we past represented to campus. end the business This and the moved merchant especially the all together. bring our Virginia work

the to business. moving While physical in now location our process, have we conduct still have one associates we

solid Tree deliver increases Regarding to with all and quarter, Dollar June the consumables Dollar comps were all Tree Dollar had sales of comps traffic outpacing ticket being continued than better month. in months three the ticket positively. quarter, with both traffic category. regions Tree highlights the second slightly strongest through in Geographically, for the comped Cadence the X.X% increase. positive

business by the negatively We helium points. discretionary basis estimate but comped sales XX that was approximately balloon shortage. Our also global comp from lost positive was impacted impacted our by

shortage back a of continue degree lesser expect to headwind in this the the helium We half to year. but

and with Day, as impacted more graduations. biggest timing Valentine’s of is half the first our Father’s holidays The Mother’s - as school balloon well Day,

initiative, quarter Tree XX and total stores, Dollars Dollar For Family Dollar total XX during Family of re-bannered Family stores of and part HX Trees to XXX XXX for Dollar a quarter. as segments, stores, Dollar we renovation expanded XXX opened XXX the we or Tree estate both the a stores Dollar for of our in relocated and real Dollars. we projects renovated second new XXX two We Family

of quarter, X,XXX. Dollar Tree coolers with our during total stores coolers bringing second We freezers to freezers and also Dollar added stores into Tree XXX the and

real the and our split with stores, Tree quarter, XX,XXX ended closed stores to we Family X,XXX with estate Family into stores. portfolio, Dollar nine previously stores, XXX Dollar Trees, consistent the and X,XXX announced Dollars. Dollar XXX the optimize During We efforts quarter

been The opened is equipped on will approximately central U.S. support square we Marlow serve budget. with of Ohio would the week, to foot received County, the Dollar segments Family we is Dollar be just State and necessary million up initially partnership stores. the Last our future. XXth in systems Tree X.X creating Dollar Ohio, in communities the the call Marlow both I XXX surrounding distribution jobs and located in facility out Tree It from Ohio on has time, outstanding. center and serving County, and

like discuss Duncan the turn to I’d the you over I all on tariffs. business, Family provide Dollar call to Before to update an

We operating relates times, unique tariffs. to in have the it say to as been least,

lists, quarter most to one an mitigated successfully X of XX% the our and merchandising well X. increase outstanding for stated adverse Prior we mitigating of recent all USTR the the job under done X, Section had announcements have X, included of our ago, on of XXX XXX goods tariff I As team additional imposed on tariffs List as teams the effects on Section believe X% tariffs. as Chinese effects Lists the

We specs, have evolved vendors. negotiated price concessions, and diversified product cancelled mix, orders, modified

taking tariffs. continue We are and the increases to actions recently of now will to assess tariff future those the mitigate impact announced

The our place and costs have measure is to to tested Our and in managing protecting They experienced, values and will committed margins. delivering to have merchandising customers team the process metrics while developed a proven focus and great team on success. track continue mitigating and for talented.

to Duncan. I’ll the over now call turn

Duncan Mac Naughton

Thank morning you Gary, everyone. good and

we Before performance, like milestone achieved. a I regarding Dollar’s details Family discuss to I’d that share organizational significant recently

relocate, our required This our settling to collaboration, large, but to transition. Virginia. and not have the recognize the on store like up they area. complex those Chesapeake, of southeast that not we commitment with stayed or XX, attitude, salute July the throughout a associates effective to throughout and facilitate process. organization also now July successfully organization. relocate Virginia I’m team’s could teamwork proud smooth determination I’d our through stepped task are a communication, Many into was support consolidated of chose centers and into and Effective this who to

are one Dollar stability immeasurable. the and the having our location of is direction company. The together future of the benefits Family vision seeing simply of having our of a from benefits clear already in The brands team

working and across optimize team our Dollar quarter sequential a team’s improve Family gaining of another estate and the that stores comps X.X% the to delivered portfolio The demonstrates execution efforts with improvement efforts traction. increase. our consistency The of performance real are and to our

the our customer believe transform to continue that frequency their we’re of steps We visits. right making the to increase to experience

drove store sales as sales Dollar increase transaction same quarter, second highlights an the average count quarter Family in the for Regarding ticket essentially year-over-year flat. increase was in the

consumable positive business quarter its Our sales. performed XXth delivering of very store well, consecutive same

May of against and turned the year-over-year ago the west, was cadence strongest with the were strongest a and strongest a for the slightly than in notably June positive. the zones year the during of from traffic quarter, better positive. compare performance quarter, comps Regarding were comps months and southwest. was perspective, seven regional up southeast, the X% From July all and

weeks, for teams. and our energy network field leadership The respective few teach, season. annual business we field and and back to leadership store leaders energized learn, the together This conference teams leadership brings we take strategize conference. A that to Dollar’s and prepare to team are their as important to focused, ago, very they Family holiday conducted will

of our Reinvention. in future must theme XXXX we’re Road changes at business prepared and for to evolve We Family be changes to the The Dollar. was making and smart the meeting bold our

to décor improvements for improved Stop which $X lift, are As store; of the the Wow continue more doors credit demonstrated reopening sections giving are at more. include us our local $X which checkout; effectively better are selection with renovations improved stores, customers lines lighting, and the much, queuing getting of the by with our Dollar products; communities. a word to Key freezer throughout double-digit whole three or they’re our low renovations deliver signage, and components comps, consecutive in and new broader much cooler our out grand quarters of HX seeing events the new HX

working. category resets are Our

products on reset candy, private success products, include We’re seeing lifts proud and household Examples done food of of work post-reset. I’m storage. have our brand material to comp and very teams to profit the driving great priced the dollars. packaging. brand deliver values traffic, store national improved our loyalty, an labels while customer value with and opportunity offerings These customers our equivalent, represent

the on road reinvention. over third the the trends are the with has comps The of and to additional we pleased Dollar, positive and for Family X.X% quarter. team I quarters, am delivered past At X.X% X.X%, three

to behind on and the terrific a We entering us, look our leadership aligned the season. I quarters more headquarter in eager, team, providing move ahead. have we and you energized an holiday the plan updates progress forward have

our second on provide will for updated turn to to performance now Kevin more XXXX. our detail I and quarter outlook

Kevin Wampler

at second the morning. store $X.XX billion Total was to both a Thanks increased increased Tree billion $X.XX comprised quarter X.X% $X.XX Enterprise the Dollar and billion X.X% to compared basis, and Duncan, billion on Dollar. and billion, profit quarter. at Dollar for Dollar year’s sales X.X%. Tree Family same store gross and increased sales prior Overall, segment good Family $X.XX for $X.X same sales in of

quarter points approximately segment’s year’s in was and impacting Tree increased consumables of XX compared XX costs, percent prior XX of XX.X% performance costs basis basis of domestic points points compared profit the basis increased included gross lower and freight on to increased approximately costs, for to prior freight, Dollar XX.X% for XX.X% margin basis XXXX. to gross the lower an costs in when Gross costs merchandise a margin X primarily the the increase compared year. decreased comp sales, sold. Distribution higher As mix to margin to points Factors higher segment the outbound QX margin the the approximately to including occupancy payroll due due quarter.

the prior basis due following. period. slightly for lower in was from costs, to optimization and of was closure, approximately quarter sales segment decline freight current XX.X% accrual in higher store Family due Merchandise the basis costs. resulting the XX merchandise of quarter increased points, to XX rate. and changes to to basis Shrink points during part inventory expense renovation as consumable the second the increased as freight, our points, and margin unfavorable results comparable XXX process. year-over-year margin increased resulting approximately increased anticipated profit physical re-banner The compared Markdown including Gross the XX.X% store Dollar markdowns from year approximately from primarily

and a net points XX in XX.X% quarter Consolidated sales administrative in as last year. quarter same basis from expenses the XX% percent of increased the selling, to general

SG&A lighting due expenses. XX to improvement LED lower were costs second primarily the to for of lower approximately the the improved in The Payroll an Dollar XXXX. lower quarter due utility points the by of XX segment hourly program costs, XX.X% rate, the compared second quarter, specifically For rate sales the of as operating resulting was increase basis primarily to Store from Tree a percentage the offset approximately due average to points following. by for hourly XX.X% to retirement increased the plan payroll electricity due to partially store stores. benefit costs higher in basis

Dollar percentage sales of second average becoming from XX.X% basis a were to resulting points for SG&A disposal support including or to corporate the the as of increased amortization support period help on renovations. basis of the primarily to initiative. Payroll fully as Family closure in compared expenses the and write-offs rate following. expenses Operating primarily XX points, XX amortized. expense supplies as segment store for expense expense loss year. a to to additional basis approximately approximately XX.X% to XX increase in increased and assets the quarter expenses store The sales percentage HX the decreased was of increases HX result due assets fixed last due net the of depreciated and points SG&A and Depreciation hours, temporary due a certain same approximately hourly the

depreciation. support increased of result as XX of basis $XX.X expenses consolidation a store costs points and support center million Corporate higher

in last On a income sales the X.X% X.X% income margin basis, to Operating with period of consolidated operating same year’s in was of second last compared quarter. year. $XXX.X compared million was million sales $XXX.X

for expenses primarily which interest net of expense. comprised quarter Non-operating $XX.X was the totaled million,

prior Our year statute for expirations. reduction rate year the million was quarter effective $X.X from a to benefited resulting second respectively for tax XX.X% reserve in uncertain the quarter by and in million XX.X% positions quarter. and tax from the quarter compared prior The $X.X

million This $XXX.X at For end compared had net the totaled at million $X.XX in $XXX.X income to company of $X.XX of Combined per XXXX. year shared. per cash $XXX.X income the the diluted fiscal million compared the net second share prior million quarter or cash diluted quarter, end or and to quarter. equivalents $XXX.X of

debt was of billion. Our XXXX as outstanding August X, $X.X

repurchase $XXX remaining second of in quarter $XX.X million we invested repurchase had our the authorization. quarter, in end, XXX,XXX approximately share During At we shares. the million

any, in We will if on repurchases, provide occur. quarter the additional following share which they

for per selling at XX.X% increased the the Inventory Tree Inventory last increased segment increased end year, from X.X%. X.X%. quarter square selling while same square Dollar time footage foot

levels appropriate re-banners, for reflect the imports current to store support new receipt and We our believe scheduled levels are sales inventory mitigate inventory Our openings, tariffs. of initiatives to early that the back the for the a increased from period X.X% segment quarter on half Dollar of same Inventory selling at basis. X% foot decreased Family square year. and the last the year end

$XXX.X the $XXX.X second quarter were million last year. million in the versus quarter expenditures Capital in second

initial XXXX capital consolidated to be for billion, is approximately our consistent which $X expenditures planning with outlook. we’re XXXX, fiscal For

last and $XXX.X in the of $XXX.X amortization quarter quarter and million Depreciation million second second the year. for totaled

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

USTR outlook tariffs includes include on which updated Calendar will the and the six additional million considerations XXXX in X List recent fiscal negatively X, Lists we the impact for X fewer will that mitigation, the sales. Xa and Thanksgiving the tariffs. additional regard tariffs following assumptions. estimate be following. QX between the announcements, cost of $XX the remainder There to Our and With X% Christmas, would selling approximately and company for without days year

recently not are currently to Our increases updated mitigate costs. outlook these does announced as working tariff include we the

to March our store Dollar center in costs on initiative X our optimization and Family million store Our discrete support XXXX company related $XX included outlook consolidation. of

our first million half incur $XX for $XX overall costs the we the of in visibility million in of of year, costs, expect With we’ve increased now to discrete year. the incurred the which

costs initiatives. outlook QX the Our to these $X million includes remaining related estimated in

based company’s increasing on on payroll the wage, markets, and initiative states minimum expect plans. We continued store pressure completing competitive

freight costs We noted back call, the the second year-over-year half expect in in we freight import domestic out the percentage year. in quarter’s of of sales last while increase a as to flatten as rates, half will

be interest Net XXXX. and million expense approximately in approximately will $XXX.X for QX fiscal $XX.X million

predict our currency rate we changes. cannot for not future so currency outlook fluctuations, have adjusted We

no share additional always, assumes As outlook our repurchases.

XX.X% outlook for XXXX. and assumes of Our a tax quarter the fiscal XX.X% third rate for

Weighted shares average to are and for the XXX.X shares full year. XXX.X diluted million be counts million share assumed for QX

and and digit $X.XX per to of quarter, in These earnings a to range store third to share billion forecasting in approximately discrete the total costs. are For we the $X.XX. $X.XX sales increase based range estimates from billion, million $X sales $X.XX diluted of include on are low single same

store which for $X.XX share will in million range costs share diluted million year related For fiscal closure same and and square X.X% includes $XX.XX or single company between billion $X.XX now or based low to increase $X.XX diluted anticipates net a GAAP full and billion of range $XX fiscal are stores XXXX per digit per $X.XX, growth. approximately sales $XX forecasting between XXXX, on share approximately and per discrete footage total income costs. The we $XX.XX

back I’ll over now Gary. call turn to the

Gary Philbin

brief early reads Thank I’ll a our share update Dollar from you Tree the Plus Kevin. on test.

stages the multi-price in early test select will the margins. closely point traffic, and are results, stores our at including to We Dollar impacts Tree and sales to very monitor continue of

choices, XXX $X, customers more tested, savings. identified more at approximately to of The are: includes are providing rolled Some points the had details we price added products $X, mid-May. $X. related the By newly Plus launched include being items, XXX end Dollar out currently June, as Tree of the test The test sizes, test in which and $X, SKUs, clearly to stores. about products more

as respond stores, can how as settings well we high, are of testing understand varying rural markets. moderate, a suburban the and so customers and in low We urban, volume cross-section

on towards Early consumables, assortment, critical our with in received the merchandise Tree added the know as want is customers the brand. this the from has test, to holiday and towards items the will product evolve values we test. move mix more on initial feedback leaned we more we the season and protect as Dollar discretionary this to the We’ve

destination Dollar for you for Our Tree in terrific spend one value what dollar. customers the as view

are valuable It’s started pleased giving these our a values implemented store volumes, test have customers the varied across insight view us teams how size. We to Tree Dollar how across and geographies, store. with our and

of Our getting additional the as excited teams assortment with are will holidays. into our excited resonate we our On specifically about the are merchandise Tree we approach that the assortment trip, go evolution we and Dollar holiday Plus the season. stores have recent import customers as bought our about most for

past Family that all face, interact field with few and to meetings, the Tree. attended and and season. business are and leaders share I the awards. productive face development words the is holiday and aligned our mentor We connect few our We for our ensure to leading learn, meetings and acumen regarding into and those I we teams and field and of people This both a businessmen merchants important had weeks all field to with performance recognize buyers and sellers. reward heading together. team Finally, women We organizations. coach and our with in pleased individuals and opportunity that The work focus Dollar wanted are that the for Dollar field I’m very teach leadership service

this leaders are energetic, important back Our focused half. into motivated and going

Operator, we’re now to take your questions. ready

Operator

instructions] [Operator

Simeon We will with take our Gutman first Stanley. Morgan question from

Simeon Gutman

tie now of I that underperforming to strength, versus been and rate? of comp, mean, to improved ask you think we’ve out can I do sales. in turned Thanks, a quarters on here it the run versus wanted improvement a the some higher Dollar corner of base comp it’s Family few macro good about extent what everyone. morning initiatives you to the coming stores

Duncan Mac Naughton

the morning excited at you your rising. comp exciting, most Family thanks. to question, I’ll is we’re Dollar. what, are about good tell What’s boats all and pretty X.X Yes,

the We’re sales, are the so our stores. across great my our we chain, as seeing me, great customers comp liking is our as what the now clean prepared seeing also we’re us performance seeing in about traffic of and telling talked doing positive To bulk driving up on what stores. that’s HX remarks, stores we’re I are we’re

there, I this HX so closed or have you that have comp, with so about, really some to run news we nearly the as tell do X,XXX as can’t to good face really the the we balance would seeing is we here base, X,XXX did chain. We know, can’t--with our and out years balance but going multi store we so the add, the you how change stores of it of was quarter X,XXX, stores As not talk that roughly we’re year, as and closures, from the help help whole chain. of impactful small the we chain we’re store there. have the we

Simeon Gutman

what at the I margin follow-up, hurt a on with and the margin top the side how EBIT visibility, you and Then to GM it, Tree Related Tree helium the maybe line? guess this much does may Dollar improve point Dollar us for on can and follow quarter? the share have this the just business

Kevin Wampler

As margins $XX obviously we’ve we’ve half, at about - we said, in particular loaded the the to we back discrete comparable look to front last was with incurred we believe costs We now obviously it’s become costs of will been the half the million million year, look down. look gross that margin the $XX and to more for we is what much of incur. as

our back have the more one look touching, consumables been was store we’re Dollar driving the Dollar the bit continue ahead us go think level in we’re I We traffic, side upon by out consider on, they’re and even Dollar Dollar, It’s for that to they’re what stores to business. business driving do liking gross so we’re Family getting have the seeing. Tree in our these to to to we discretionary consumable so touching QX consumables, going job Family Family we driven with our driven, thing everything into half. world is through and as our have customer that always core based as in the the business all back a we we on start still improve the little that margin of we’ve

Gary Philbin

Simeon, is Gary. this

my Let to that. add me color

reading we touch together, torn as at make to consumable Dollar Wow design, I Dollar were would banners, so into side, Family stores you this on bit we important the ball that are as on - think by a the X,XXX-plus through, Tree, be of stores. to going For as knowing little it’s sure the side, positive Dollar, we Dollar, playing our went the stores, and like, both put in HX to more the will we for at By get up going time all at Snack crystal catch was renovations, could Tree exactly QX, merchandise close-outs, have year, touched product Zones, aggressively we still well at went to them a Family them, comp. drive back part these not

first not called but and halo department, probably to of one that What was obviously year-over-year. as of a is was in As was as XX be little balloons, impactful. holidays ’XX, sales in everything the to it’s very that usually the on and impact sales as customers to the and the go else way and effect we best there store. like half--or just BPs, a moderately We margin we’d know business, drives aren’t large to we a because out, the it’s think balloon Obviously highest the on didn’t measure is better more impact. quarter which balloon our into what get big, the far in the impactful first going really that’s it going party have as we of second as I really balloon lost measure impact half, to

Operator

next We’ll with JP Matthew Morgan. question from Boss our take

Matthew Boss

guys. nice progress, and Thanks,

any traffic trends early store you HX XQ would the about be sales First helpful. think at Maybe back Family half improvement sequential the of on what of do at Dollar, the in inflection drivers how and opportunity best to remodels, as color year? see your same top

Duncan Mac Naughton

Matt what, question. thanks you - the for tell I’ll

higher our throughout got year-over-year our to is just you’re leaders some holiday going and enhance comps the conference, to have shared a to engine see grow a of get continue to up, ground, some and our standards to job and the more at customer on stores the level, they traffic they’re that plan they’re strong the balance As growing, and leadership store. we’re be with store store components us the mature, see, as so the growth the driving to our that noticing, back the seeing is plan of the stores the getting positive, the is turning is we real HX is in annual margin HX we’re they consumables, and really are you strive with our convert can and an side year. half cleaned think our We’ve HXs may strong we while to getting really I starting discretionary of of at stores not

key the adapt So and key are what we categories. learn to as fast we’re winners trying

about and start number comps the last to a helpful to so forward. We year business feel cycling did resets of now plan good are half, pretty in that be we back with I as our comp look going the

Gary Philbin

we we get added gotten resets, to the the into of runway to on to little through we probably work point boats weekend, up the Matt, Labor done what to here, the we’re key all and us give October some finish energy has XXX more HXs. right more what game another more add, lifting why stores, Dollar and mainly had HXs time we’ve it’s would think we’re of part our of But the September, to Day X,XXX is to get done a so in shout-out ground. done bit I A consistency seeing to I team, the us this by that’s give just up credit Family Gary. openers on we ahead now. the August the see for

Matthew Boss

what think saw help the about fundamental and second Great. the Family down margins, SG&A, recapture just back and you you Then Dollar’s here? the costs way margin how opportunity discrete the between quarter, half, what’s to as larger the gross about in the think that margin the to break both from Dollar a could bucket picture to you follow-up, best Family see gross at

Kevin Wampler

it’s the Matt, here prepared the press remarks, so let’s In break on million million can. closure as Kevin. down quarter total to we well million $XX so that’s tried color costs, if store I Obviously $XX as or some talked give about release, of we basis Hey within XXX good it costs into of about $XX of this, my a discrete pieces within points.

all which from piece. BPs. the the down the broke so take and the for Then asset the really Family for write-off out that $XX about, the we $XX closures, out about about all consolidation supplies within markdowns, store on expenses, XXX That Dollar sat we closed that If XXX HX of you of as means million million all it, store it’s Again, basically BPs quarter, of about the big the XX about talked as talking the side that segment, of how that’s labor, around the the called of XXX stores temp and remarks, within to That’s closures. you’re as prepared them the we SG&A renovations kind during renovations well all HX roughly way. as that’s related renovations, the all way re-banners, so bucket-ize well, best picture XX, for BPs. labor store the everything

a huge have forward. far margin, shrink been Obviously perspective, disappointing of a opportunities. opportunity go it’s and we a go-forward lot As as we year from have

one, to and look analytics, A leadership in relating procedures, inventory for a regard. comparative back of structure, down helpful policies execution talked to that very, on be in flatten really in and well it our out there start process changes and will to just working levels As quarter, merchandising our as again our basis. training, commitment very getting lot initiatives, defensive on half the last about in we to, of initiatives

So we to I as that have think in help go opportunity into we margin regard. huge gross a next year our

Gary Philbin

because think it. I me just call-outs chime I think--just let a when about Matt, couple in

are HXs through on this and the we all what off, discretionary starting the side doing First of and when rest we’re and an steer the increased merchandise opportunity in traffic somebody fleet, compelling to comes the with store becomes better boat, so see selling can the and that’s the what easier. the

Secondly, on excited I’ve merchant now both can’t I banners building in time, just am the how about tell you, meeting you floor, now same that. got at the to vendors same same the everybody the and teams having I tell

short with vendor to, community. do list a to to are company a can on people come that. and we’ll billion sales, We be $XX face We the the drive of to

piece imports, second forgetting both Family big, continued if a sells a merchandise we big as on design Dollar at just can, the for value we and forward. and Dollar look to tariffs Finally, is that impact create Tree opportunity a for us

Operator

your you if the been again, by star by from queue question has you two. yourself pressing followed remove answered, Once may find

Chuck We’ll take Grom Gordon from with our question next Haskett.

Chuck Grom

good Thanks, that any costs, could morning. impact you could it’s Thanks. existing you different Family was store look of it ask you’re activity? in course follow-up from of business, the and in new normal gross traffic in the think the the at repeating? a a lot from shrink one-time because improvement it margin what was both you Then way. discrete a point amplify Dollar. I been markdown if the i.e. Matt’s and closures, or the line just question Can the wondering customers Kevin, I basis versus was a if wondering on is on Duncan, for on that Do quarter. one I there’s customers gaining, confusion

Duncan Mac Naughton

Chuck. Thanks

and talked seeing is I we’re up As digit about so purchases low marketplace, tell with folks Family customers back to our see customers in to stores, there may Dollar that Family and for of I for coming acquiring we’ve pattern, we new traffic, stopped we out, the often coming. about We go reopening that have back traffic, back they what lifts they us, and us. communicate about a real other it Part and new both that feel don’t getting as shopping them to we’re will that some have why know customer, coming repeat initiative, seeing may a as that existing customer in transactions and a two-thirds we is got study you, come of from offer lot HX and you from our more marketplace, we good Family grand come where we acquiring as you, will that tell Dollar of check been of new some Dollar you we’re our they the through then so. it so part double have

in consumables, In been store we’re people standards on discretionary the as been our side balance over. Gary think and talked that the working business seeing--I with they’re we’ve we’re our have of the are customer that and the to seeing aggressive move pretty chain, growth better seeing of that about,

it’s chain, rest so the campaign can that have a got excited also We’ve before, would tell the our which we more the we’ve in about because the modified you I’m of that that more gap in close new there HXs, frequency be customers marketing that will it’s and both. to marketplace gap. often, so some I

going I trips are think good up. the news is

Kevin Wampler

the Chuck, to margin, question to points about Family it’s it of sales related XX really margin in for if of and freight, that we’ve to related can as and in for buckets put don’t describe buckets Again, them something basis a beyond slightly to XX shrink. markdowns lower the again to was your higher relating basis basis the looking points increased three then quarter. I that regards related there’s you’re really for? goods, initiatives, change XXX year-over-year three related points know kind about the best from to you. It’s the Dollar

Chuck Grom

just I the information. gross and the first it margin back year. and second performance thinking half in all to helpful. the Then the us just that’s maybe the the about difference on how unpack the you’re No, quarter Tree, for between wanted Thanks. get of

Kevin Wampler

to build but timing, think a the we’ve piece. from mitigate this during bit from as import roughly we a it, of flat as year little going I look what more was the look so got by Again, I we standpoint at versus freight the well Again, some bigger an effect than a there’s on. idea tariffs, the that little of freight so did we overall we inventory quarter of think bit, in you were was quarter. first little were if quarter, over year first impacted this bit gross quarter, at profit quarter the

we’ve business second mix. We day the do back the end of little the better a at we the overall our as margin Then had the said. mix the sales sell--we because in consumables consumable look other did for mitigate mix, quarter, so we’ve idea our piece through a of lower that averaged really was little the we a go to half, bit that called as as out

of that think necessarily go I the don’t said, don’t we I know--as we’d to expect QX. in see type same As saw pressure we forward, I that

Gary Philbin

Chuck, color. you I some would just give

and the have well. really the quickly brought I think this beat is in - performed out very to the All years, we imports, the there higher our it’s last margin. gotten that’s tariffs gates two very inventory seasons

little we count thought network, are We’ve bit does shift As to went Day, year delivering the that’s let’s Dollar of we all Christmas for gears customer what Labor through had of of and October a the getting as we is and kind Zones. really time off business. sure Snack through traffic set what me that’s the needed up and the on Zones we take we Snack the best, and back now the as are of in Tree, discretionary Dollar our kick on fall to really get the make advantage best holiday. across we invested September, harvest season to the Tree up past of side consumables we to what geared

Operator

please questions would limit to follow-up question needed. and you if your again, one Once if one

Suisse. from Frommer Judah our We will Credit with take question next

Judah Frommer

Thanks question. taking my for

quantified and like that Is update you’ll that, on with to embedded sounds offset offset XXXX to feel of us the X magnitude guide. through circle can tariffs, potential you message fully X some but increase and the do you’re List point? the it at First to Xa, working you you’ve that messaging impact or the offset is in the Lists it’s not back the from

Gary Philbin

and plans answer. mitigated we’re we’ve had gone List as six X teams is knew Listen, Xb Thanks it, the the how Lists through from days The year. had short most X, the the we were where we recent good course, very out on that. out call trip to and most that our on on felt recent actually we about the Judah. then new. Yes changes that, last our X, Xa, merchant when Then make change, came of Asia so first here’s of

vendor Well, are darn the the things pretty working up. would well. doing community stepping I is we’re say

of our of merchants is the for while done balance some make sense we’ll our I cost changing overall mitigate it before, call. those many have things a on a of you or move, differences, how able that’s the ago, work and six We say We buying modestly, give out the you this went so confidence get packing to group this I days to from we credit at with like to worked some that the wanted got land $XXX on scale, We’ve and and can the said give to to time the units math - to about the why lower. negotiating containers the it’s really we’ve strategy can I really been packaging, do vendor we trips how in million hard into year. on of can--we’ve China-plus-X. give have China I things would we’re of we’ve we

Judah Frommer

Kevin, Okay, us were early the related growth kind QX on earnings next with enough to to that. earnings give you and an read great. year

trajectory but and discrete guys update that guide moved give been on year? on next clear you as thinking GAAP can Is a costs how earnings you’ve come you’re directional around quarter there think any us growth go. to I about you earnings GAAP have for that basis, quarter

Kevin Wampler

as the terms, budget we just back our base think--in for speak, season basically updated I don’t next the Obviously the anything March we in changed. and think haven’t kicking year, don’t guidance on off I gave simplest subject. in We that we’re right has now

we in of base where any have case, thought necessarily think do. know consideration what this process. But We’ll that an have change tariffs to accordingly. would the answer the I go don’t they unknown that may they I at I into don’t and and our have tell that see point for in take of a you, I us time.

Judah Frommer

thanks. Okay,

Operator

Feldman with Joe is question from the Telsey Group. next Your

Joe Feldman

new taking the for my the thanks at fast at front end wanted guys, you you point, the and I that get to ask, stores? Hi that have of many business, how regard question. this Dollar can have all stores side how to that with Family the to

Duncan Mac Naughton

and stores it we’re thanks key constraint well. Joe, The for and profitability where the as width think, end putting stores really any other it’s second. point, obviously is been size is can We customer, focused. of the the there testing the the discretionary The all We’ve queuing our now store line, very level question, this this will because Duncan. is it will there. Hey number. we’re renovations, in HX in we’re actually for putting that an as doing first quite side, queuing got at profitable HX that is then kind enhance probably HX the formats I all in if of primarily really it not again serve another beverages are I tell have our team the and multiple it noticed single you can, of well profitable the at only better. do both It’s is that to right we that store, initiative so front but where items accommodated, it we’ve putting snack on we’re as line fit on the is that but you’ve front end be needs see Where we’ll front new

Joe Feldman

that where set many up you’re thanks. but Dollar the have us point, at guys you you with new start remind many Tree. a Can to and co-branded do XXth at want how you DCs. it, and also, how DC, Got going the comment a you made have? opened on DCs that with only to this it’s both question Then I you’re just for a know just you

Gary Philbin

on the putting Tree Ultimately, one stem Utah a network comes warehouse capacity that right to opportunity pick Dollar new closer the of we building the capacity any in move Dollar either have now banner the the that’s of that’s stem to to every time to now internal up It’s have Tree. to re-banners, and us comes We DCs workings the and make sure needed our for mile additional both. that. that years. for that that Tree system we banner. both now pressure banner that DC Dollar closures, because because course Dollar Tree deliver and those we management to size Tree be down open We’ve distributes and which obviously ability for is Well, with we have up Dollar service more banner four in in needed Dollar it a have of the the to allows of have to will stores, the and deliver the the we some capacity because banner, stores Family building, we’ve Dollar that can we out miles a function us place a done we Family

Operator

comes question John from Securities. Heinbockel next Guggenheim Our with

John Heinbockel

in waterfall comp-wise? how waterfall? into what normal quick I normal do format new know three, things. two you store of a not would there’s history, but new think that settles of a with Do that have Two do, more lengthy store will you a lot HXs a and a it’s sense mature a guys and maybe above years

Duncan Mac Naughton

Duncan. Hey Thanks the question. John, it’s for

learning probably I so quickly. behaving we’re store. we’re about, what a and got store, think them of it’s comp like that like new regular handful of new a we’ve themselves, kind is a thinking it’d But have cycled

John Heinbockel

point different? there know Tree again when stages they a the have I basket it who don’t? Okay. Tree interesting items multi Dollar buy but in people Then is a have its early Dollar of there here, Are versus you you found How Gary, at that is in who item for anything Plus? those maybe construct when fewer price Plus look

Gary Philbin

me, this the feedback I hear. is telling would my quote-unquote, shopper, I basket. was, to we purely Tree regular items of additive Dollar like in, what into their surprised here is I us I’m it’s basket. It’s say That come point, now a some the regular John. something goes Thanks that and at

I think customer around our with are especially really more of bit putting of and about we us whimsy the give but what items, good will pretty into the that that excited are another us Wow we’ve it, Tree Dollar maybe time. most surprise some some what information and how customers started holiday is items giving views some of I’m off as buying, the effect into get very a

addition these evolve to stores, for they’ll get and bought the - we specifically we can. in assortment more the as to read best and we’ve be to continue So come

John Heinbockel

Okay, thank you.

Operator

We questions. few have for a more time

from comes Karen with Short Barclays. next Our question

Karen Short

just thanks a taking question. I my Hi, for wanted clarify to things. of couple

want just with You you XQ? were in, guidance. came I where above at on pleased clarify, are Family XQ to trends Dollar, that interpreted commented you in is Then I that to so that had be comps clarification another

Kevin Wampler

weeks only other of Duncan give in, comment. so to three whole we’re it’s not we’re we’re lot information, Obviously is state. would we made that going like a but pleased, what

what we’re whether this going but to pleased statement it be, a lower it’s or We’re might point. at or make higher very not

Karen Short

confusion or guidance, XX% to EPS excluding to you but comments that’s on guess you then EPS? guidance--not asking in respect with when you looking tariffs, the adjusted and are to made GAAP just there’s a this at I on but March. question I’m number loose with about little respect that XXXX, based a XX%, just Okay, think commentary

Kevin Wampler

it’s upon We’ve said EPS. always based GAAP

Karen Short

Okay, Thank you. great.

Operator

from question next comes with Our BMO Kelly Bania Capital Markets.

Kelly Bania

Hi, fitting good into for questions. Thanks the morning. me

that confident team upper at of offset can then you even talk why just questions what limit can if order you is a I’m months. have multiple that, of to you how the saved next about today, of into this was you’re that year, guessing as throughout respect couple how over through quantification, think would compare the quantifying X maybe have of be you. Just all? you early guess inventory can next tariffs at wanted Thank It that and terms guess, to other of you I to your feel this what magnitude, but ask related working helpful with that at about - I all there to tariffs. $XX bringing points get Do much year, here? to by further can million quantified, that the that to still you’re wasn’t List couple mitigated? as in you which an is

Gary Philbin

managing Listen, start let’s Kelly. to Hi what know, there. we’re we

continuing this what playbook that to the both tried We to picture same I work was and coming. team more knowing was paint time sights in before. and on for had are magnitude was the it was just that on X we we had X that and a when Xb. to tariff that’s XX%, we increased for X, been initially Xa Once the right List of, X, out away us, our everything Xb I think Xa working went do for called Lists the knew

help part is, at think know, overcome moment concerned times, unique play time, of and both--wants might in they we You also community is lose it this in our this. unique we’re times have China. business, is tell opportunity through and tune you would have found outside we’re as opportunities other this and they’re and or either vendor is China where never work some inside I I There in just to one you to the

worked see to teams me for can have and front the of what gives our is balance confidence What see we this the this me, of real hard overcome year year. rocks I in

the there’s December that we first a ones of in then real USTR think September another trying on to we increase the ’XX, we are right To know happen know October I’m Those working or on XX. to hard a be based into week. we about today on one on knowing going shoot, what this go what might what’s now. that comment next as X, and week finally But are

Kelly Bania

been inventory Just bringing on the inventory, has early? in by just mitigated how much

Gary Philbin

of not not mind In scale get to items do, make on goods we can scale of meaningful what I tariffs. it’s talking move. port you we’re often in do given you on on six the you much to a and what somewhere of else, leave of amount. of weeks and water, but cost If mean, about not we it’s and anything, the It’s we’re course bring we sell, but try in. the before keeping we a in it’s weeks it to huge if six try bring a

Operator

Kelly Our question from Wells comes with final Fargo. Edward

Edward Kelly

guys. hi Good morning. Yes,

questions few a you. for Just

you’re store there ask improve that. manager Dollar. First, update you I to on that wanted I about us initiatives progress to was the that hoping turnover and the you give you just in place Family at could making an

Duncan Mac Naughton

Thanks manager will turnover I Edward, improved Hey tell has store Duncan. question. for it’s you slightly. the that

there. them the of to many we’ve those that, people. attract a field We giving all our our I’m last gave year the and at training meeting that highlighted people, them training of retaining still you’re year tools level as we’ve and and We’re probably about progress and right updated fair again playbooks on focused does all with, made which was right and we but toolkits, the that. Year happy they’ve our trained do We aware, hiring person. about person, the national all on amount person, right not and Manager, It recruiting it chain been tools, and training had consistent this fairs, across a the

Gary Philbin

out, since call best manager ever same Dollar here just store with been the I to three of is some have going to of years its would efforts, I’ve on have Tree turnover. one

ought store working and I real at both to initiatives to think things, banners be what we’re year well are pointed a and hard to get focused the the on turnover. right manager banner

Edward Kelly

Great.

of Just the the tariffs your format? Plus a a about at provide you then follow-up impact and tariffs you’re initiatives, escalation on timing in all--an can on Plus, do assessment strategically any color terms decision of how around thinking Dollar of Tree

Gary Philbin

think evolving Well you can tell that give to when evolve timeline. get giving Tree. I her interested going on learn as she’s I the a learn so a the our will from Dollar what I’m with more we more, side, I in and timing resonates us assortment, an assortment we’re more--that can’t customers quite in

it who’s out stores, as As obviously anybody far focus take there equation, the the hit how go affected importing look play the a make does buying out you at up obviously does for that and a is today Dollar look really mark, wants, what point, that to it $X. to have always customer from. our at retail, to take what But you’re we when retails goes price as where Tree tariffs, no in the into but on you matter

Thank look think on what’s customer Tree our teams to that’s I that’s our world, what - and for Dollar what in our you. are very going on. merchandising really we’re focused focused

Operator

Mr. additional session. to I this time answer and conference or question for today’s will concludes any turn you Guiler, closing back That remarks. the at

Randy Guiler

Cassie, you call for joining Thank Dollar for us continued your today’s and for thank and in Tree. you interest

scheduled earnings quarterly QX Thank XX, to results call XXXX. Tuesday, tentatively next discuss you. for is Our November conference

Operator

Thank you your presentation. for today’s participation. concludes That

You may now disconnect.

Dollar Tree (DLTR) 29 Aug 192019 Q2 Earnings call transcript