DLTR - Earnings call transcript Q1 2020

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Operator

Good day and welcome to Dollar Tree, Inc.'s First 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, VP-Investor Relations. Please go ahead, sir.

Randy Guiler

Shanon. you, Thank welcome Tree's and conference to call Good for to the Dollar performance XXXX. first discuss morning, our quarter of call Gary CEO, and will President, today's Witynski Wampler. CFO, Philbin; Mike Kevin On Enterprise be

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

our our call turn prepared your we call Tree's Chief no and to questions. Now Executive to statements Officer. [Operator us expect the will Gary have you remarks, of so. the not obligation At end Instructions] over Dollar to do to update forward-looking Philbin, will open the should We I

Gary Philbin

Good you, everyone. Thank morning Randy.

today from the against us, of our is all impact report across the COVID-XX backdrop our First country. of

all go reflects number the QX COVID-XX. accomplishments Today's Our on a other during impacted those quarter the and report comments unlike was of impact hearts of that any to to affected. due

The assortment strength time. this serve. results HX stores around we our Family both of highlighted Dollar Family have and we speak businesses the Dollar been during and in resiliency communities our our First Tree in the the core both have businesses and critical to business Dollar in made of investments

clean guidelines sanitized. to individuals PPE by detect CDC as We including and gloves. keep to encourage action the enhanced with quick distancing and took cleaning masks we supplies, the provided recommended social protocols and facilities Second,

more than at installed store Additionally, shields plexiglass checkouts. XX,XXX have we

see vendor leadership partners efforts We centers and essentials. for and to priority stores in teams with our the have with not impacted needed all both work be XX I for that's not their of in accomplishments and they could the the COVID-XX other been these communities. merchants crisis banners. against across the right to dedication distribution products States it company. proud both the teams the more many of our streamline could and and country shipments of get our to of quarter. of of basic Family Dollar’s related the closely comp remarkable to accomplished to impact the without have Third, was comp provinces, in delivered humbling have strong throughout key was support business is all the finally, on across side been plus goods reflected XX.X% Canadian And that household up their the March initial the XX% efforts consumable The have stocking been five disease.

of to the lower decreased improved points, from categories overall general an points incurring Easter to positive the home comp discretionary and selling and related basis side, discretionary party, the points. for record XXX party margin negatively despite comps income for comp On then and candy shelter-in-place through QX driven by Operating consumables just quarter combined under basis of end of volumes Tree mandates, and Dollar the business executive we additional acceleration affected up other Easter Tree’s on for costs orders COVID-XX. in impact of the comp impact were by impact our selling of XX X% categories Dollar in QX. saw XXX the discretionary the and research the around basis our resulting

along the line costs. consumable flat While the heavier comps are our Easter discretionary mix with reflecting the of top comp was the remainder for quarter, margin X.X% nearly COVID operating in negative

for keeping bonuses Our wage incurred premiums $XX associates, sales and safe for just and facility guaranteed for for costs COVID our frontline supplies related totaled related COVID costs million. field – over all management

Now I'll turn the to Mike. over call

Mike Witynski

Gary morning. good Thank and you

Before into thank day our bit our about all a performance, they accomplished teams QX for and remarkable for nine details the little to to associates each dedication. share want I work the the regarding every weeks. want and I last I get and their

entire our and much our stores our commitments collective Our Dollar, appreciative individual Tree the proud am efforts of and of store inspired of and their very leadership their I in team is in center. associates. our team Family Dollar dedication support across all and very and DCs

company. and response to on business Regarding protect and company took decisive we actions led resources early and functional the policies procedures activated our from human our and the to March, distancing COVID-XX, recognize and around worked management and response necessary. to to continue by I and by social CDC with The each team shoppers. safe and clock representation aggressive where In Dollar action our to associates steps as early situation, include, practicing business teams take frontline customers. response develop each support the risk The to team group would of like assess our Tree’s the our area to We ask in our recommended to clean we've morning taken at-risk the these leadership environments efforts store serve first we follow also customers hour are the workers. provide dedicated the our guidelines.

provide shifts. closed teams for high including face essential PM masks protocols. store the We with demand products. supplied to provide high stores We shelves for personal X:XX time adequate and hand equipment and supplies store sanitizer frequency with enhanced for nonmedical cleaning We to associates and protective during at associates cleaning cleaning gloves restocking continue their to wear

Stores lane to screenings stores We've guards to plexiglass protecting exposure. are Google We check cashiers. installed have equipped implemented now and in payment tap-to-pay Apple for we shoppers Pay Pay. and are assist the contactless MasterCard, our at health with all minimizing potential ensure and Visa, that with the associate through

to as relevant new an Also associates, state open which requirements. committed we plans stores essential have are in exceeding hire we to By all or XX,XXX keep steps, meeting taking target we and a exceeded. business. March We all to have local announced our able been these

play and of in being critical customers and to serve of valuable employee both choice, the role this serving stores Our especially communities time in an need. we a dedicated we are

our sales store consolidated to EPS of performance, first same Now an $X.X to increased billion, $X.XX. delivered sales and grew quarter we X% X.X%

February, segment, products well the Valentine's our point Easter XX Dollar basis For our and party, season season. and in Easter materially with for in decline set categories. Tree sales was were the in strong weakness by We candy impacted stores during following seasonal prepared

off in and as the weeks consumables. was was material in but there we overnight, Easter. of XX In As to initial Tree first had March March, eight up for update, beginning due Dollar approached the traffic stated hyperfocus on shelters-in-place stacking X.X% QX, see a our drop increase business comp a a seen to

spread and many in church material related and celebrations of schools, As at seasonal demand parties services, to canceled mandated. widespread were the large stay decline and home orders for concern discretionary weddings saw a We and were products gatherings.

As Gary seasonal Easter basis Dollar mentioned, by approximately points. comps party the negatively QX and product XXX of category Tree’s combination impacted

food, Categories seasonal of For and quarter, nearly and crafts. that care to delivered Prior comp with consumables, a sales included the growth. business our side consumables strong slowdown, X% the the X%. a comped personal performed well the over household category Valentine's X% the down was positive discretionary

We see X,XXX in to Crafter's Dollar more great our continue added one. Square the in quarter than the Square stores We to stores Tree program. traction assortment Crafter's with new

the responding are new customers great and Our offerings the to values.

been the quarter, for to seen has discretionary XX% For but weeks while XX% versus average quarter a discretionary. XX.X% increased that transaction consumers shift following seen consumables balance through Interesting, mix, was more, trend have the we've count QX comp been the comp was less XX:XX Dollar through there in XX.X%, consumables, retail. our the Tree’s there for period buy ticket down first general four Easter, as end shopping and a Easter was of across

the highlights Regarding quarter the XX.X% sales delivered brought XX.X% XX% a on Family for transaction in The year X.X% increase X.X% store was of a a same zone included, ago. comp of ticket, comp XX%. segment This partially increase decline geography, strength in each Dollar delivering top about team a of by first sales QX average to a was increase across offset in comp. sales comprised have

Regarding under February provided delivered of Family The of with Dollar our X%. results XX% was to the as discretionary comp on in April the customer stocking the and comp strength was many team XX.X% up in the cadence positive, comp consumables strong of business slightly the our extremely great an just have side quarter. weeks in update, a consumable was eight March business we first with quarter, categories. of The comps through plus delivered discretionary

XX% be of stores, the continue with outperform with We continue to comps chain very HX to performance by the plus. our average pleased

support projects the XXX proud of Enterprise turn and Regarding the to XX very the real renovations for teams Dollar center quarter our including stores, supply our Family including new our throughout relocations, chain in the merchant leadership more organization XX,XXX the end completed of lease than I XXX provide leaders on I'm team. XX ended first during quarter HX store closings store we and XX quarter, primarily quarter now We detail teams, at distribution Kevin stores. with our performance. the will center term. our early teams, more our and it field and store the to estate

Kevin Wampler

quarter DC discretionary and sales from or comprised comps and profit payroll for in to first margin lower increased seasonal to XX.X% year Mike loss in Overall merchandise all increased costs, segments hours Consolidated amortization $X.X general performance of demand. due all X.X% costs increased year to for closures. following: billion shrink million the points for increased to during $XX in basis Easter XX margin higher $X.XX resulting basis approximately impacting merchandise basis XX gross decreased in to costs, Occupancy sales premium the from acceleration XX increase work Dollar bonuses. XX Dollar unfavorable merchandise costs duty on including And XX.X% payroll Factors Easter million from from segment selling, approximately of approximately by morning. billion the costs, Dollar included decrease the comp and margin and season approximately of to increased lower increased points to and XX a the as guaranteed X that hourly improved approximately related incremental mix sell-through. hourly result primarily by the XXX store inventory and basis improved selling leverage to March to and partially freight sales from approximately year-over-year costs for costs pandemic points the approximately prior decreased and The sales as to due in premium points XX.X% costs in were on. rate QX and profit an hours on equivalent. Dollar the resulting of increase Enterprise increase the for the prior the markdowns sales accrual points result in basis of increased hourly quarter. you, improvement Gross increased based prior Dollar in million leverage XXX decreased the XX X shrink to pay XX.X%, XX XX quarter. assets and the comp costs margin $X.XX to the gross was basis depreciation. basis Dollar the mark approximately year and good by basis costs points XX margin an impact Family points cost compares points, improved expense billion, a points. to partially Tree Tree approximately higher-margin the due points Tree tariff of Tree related the shift current pandemic paid and basis compared Occupancy offset and to billion same-store offset in costs Thank right-of-use XX saw improved X.X% quarter Consolidated XX.X% of And of costs basis results distribution of increased first increased to increased benefits for DC a net X.X%, XX segment due freight Family higher merchandise Distribution $X.XX to higher or a the increased since XXXX. profit basis an were administrative net bonuses. worked $X.X hourly margin the And lower on quarter Dollar of X% primarily related gross including increased increased sales payroll of points, associates These guaranteed to costs associates since year. soft to approximately X.X%. basis consumable due improved increased These and March for segment Markdown XX.X% points inventory mix Tree. costs basis included partially all the approximately from of sales. shift of to freight consumables basis DC. Higher Gross including $X.XX demand. expenses results points, XX.X% quarter, a for markdown. for the X.X% freight offset the

due increased segment paid. for result and driven for to to for management For increased loss strong the the bonus approximately in first payroll store hourly costs store million. first decreased totaled of the compared comparable paid comp. XX quarter. sales. percentage approximately for decreased XX.X% points following: rate payroll as points X. approximately of basis service due bonus and XX SG&A March in points through leverage increased net plexiglass was decrease XX.X% the by million expenses to points, percentage XXX of premium sales quarter supply bonuses The as and increased associates expense segment the totaled primarily incremental Operating levers from to XX basis improved points same-store XX primarily points, stronger the of XXXX. due XXXX. increased a result from XX.X% the Dollar The guaranteed of the of primarily from XX premium of in $XXX,XXX approximately the on travel sales, quarter, leverage as expense Payroll the beginning basis inventories and and the million XXX to approximately totaled a expense basis improved from approximately net XX end to hourly points of the basis the increased March to points of the PPE. paid $XX.X $X.X XX.X% points. improved Store basis resulting expenses guards, advertising the postponement costs a guaranteed hourly hourly XX and basis paid installation of million approximately quarter. Field comprised of for SG&A XX $XX to QX basis basis due improvement Dollar due compared depreciation from the Store payroll to XXX points. to costs premium The payout. bonuses approximately rate Store sales of Tree costs XX Store basis $X.X sales guaranteed points basis increase was by reduced amortization of Family approximately Inventory Occupancy all

$X.X current per net share decreased share, of on company square effective compares year’s Dollar May tax equivalents XXXX, last fiscal the of million X.X%. Tree time expense of debt cash billion $XXX to Combined sales Additionally, shared of end related corporate costs end quarter. $X.XX comprised or approximately the expenses revolving income improved share XXXX. selling Combined at quarter drawn and incremental at $XX.X from and managing support interest Operating Outstanding million service Dollar operating million as last X, Family primarily of quarter quarter. for The demand Non-operating store same margin million parties with income foot to diluted on prior million prior year had for expense related Inventory decreased included the period decrease foot net or $X.XX from end period X.X% in was quarter rebuild our goods and year. essential was billion, while of year's quarter. $XX.X and expenses. XX.X% as square expenses. controlling $XXX.X to quarter. points, to year last earnings same primarily closures in of XX on year. stronger was diluted store included as compared costs of per cash while to which square center categories Inventory million first consolidation $XXX increased $XXX.X prior which This decreased operating the selling the decreased at The in current million to is included X%. the credit. from X%. rate XX.X% footage percentage first sales in the last compared actively the $XXX.X mix selling for at in such foot XX.X% saw a based heightened of line cash square in inventory end or support per the year, selling COVID-XX X.X% team Inventory $X.XX million leverage in and per a prior of The the X.X% $XXX.X in year, basis million, $X.XX per X% income related year's the COVID-XX totaled Inventory cash same in net totaled our increased compared $XX.X quarter compared and while year,

than inventory higher normal Our out-of-stock categories. reflects Family in Dollar certain

merchants, working increased our last chain demand the product improve are forward. expenditures in $XXX.X QX first going were position vendors supply year. in million Capital quarter Our million and versus $XXX.X diligently to to meet

and includes X,XXX. COVID-XX to HX which Dollar XXX original we're of billion we XXXX, billion. to stores planned stores new a be renovation guidance each are planning our related XX compared original capital $X $X.X expenditure our of Family to to of These expenditures HX to of Dollar, consolidated XXX. Changes for the XXX we now our capital reduction fiscal Family plan will XXX are of original planning fiscal banner. our for Dollar suspension XXX Due approximately for For be compared comprised now now Tree to program, open of plan expect XXXX plan our compared to

amortization projects $XXX.X for million of first QX Additionally, chain in $XXX.X the on the needs year. our reduction year. a last in capital we supply to for quarter and Depreciation million finalization totaled based see compared for

range amortization the XXXX, depreciation consolidated $XXX fiscal of million. million and we to expect $XXX now in For

are EPS data $XXX providing to approximately we XXXX. a is sales year. second provide diluted be want Weighted average $XX While and XX.X% guidance, for QX for shares interest for Net is and the expense to not XX.X% points full shares quarter XXX.X I for do share million and expected million few QX modeling. million The your XXX to in XXXX. to the tax million for rate are and be fiscal for expected seemed counts be fiscal

terms uncertainty, trends, Due our on wide reported prior company QX financial to back position year and in of update a in outcomes a to and business which in are results our As guidance. drive confident business visibility for our fiscal We're will range continuing the, strong call of future building March over Gary. to our XXXX now our have the business turn financial withdrew the in performance. value. long-term I limited to shareholder and remain we

Gary Philbin

Kevin. you, not XXXX. current macro was when Thank planning The obviously for our contemplated business environment fiscal

in shoppers Our performance Tree value important now and in unemployment Family of need are weeks, nine in million QX that to times convenience essentials. past believe than and for especially the we more With ever than families more the before. claims validates their Dollar daily filing XX need Dollar just Americans

new This to have has March and X. with DC first business rewarded say in store to our quarter. associates resilient million values totaled finished the an an running serving back their a time. to cannot both incurred up the challenge committed and to associates momentum $XX and second and also QX the the our in going distribution carried associates more model, to have quarter we center customers our leadership agile to To is in They recognize they a the were being – to has continue approximately environment. a unprecedented store enough welcome very efforts, quick opportunity through seek. during nimble quarter. We $XX about And a the million wage have work our I We premiums into changing We team frontline in investment and strong teams. organization business The conveniences the books. been tremendous XX,XXX strong. quarter. pleased every than and balance sheet experienced with

point. say seen to While At I good four are than business an the am Tree, improvement the pleased of the less business. discretionary have on into has quarter, that we still been we Dollar side at weeks this

Tree And quarter Dollar, school all and us with Tree. in XXXX sales. a provided to hindered include, was fact, nicely. categories discretionary seeing strong business, the Mother's for of comping environment In back in stage toys gain this performing like The stores. crafts, the garden, in more Categories positive the at Mike current has families has we well than showcase At QX. exception staying to by graduation to returned continues are we close all Crafter’s are hardware, and kitchenware, now lawn Day well. an is Square, which home momentum early to available had bounced comp performing discussed, party are We Dollar pay helium level and performance shortage Dollar the Family believe a opportunity the to has balloon improvements. in with from accustomed X,XXX

have hard years. in on We working recent very been

we in a the renovations Dollar driver Our key a our accelerated has with HX investment since ago. Family base year our store renovations been

are customers discretionary communities merchant I'm side they of into has are traction they seeing us with introduced shopping more pleased of when better the and than and most. format ever, we team experience a work on Now with being the a the the the it business. also need that needing

off will to vendor be in and things retail Our able timing mandates, and in is government degree home do duration competitive late bearing all landscape their demands, impacting during we from into shelter meet retail managing to incremental breadth good and in outdoor COVID And the restaurants. product crisis. of chains costs to very and to place evolving momentum customers continued related continue volatile demand an said, volatility to saw QX related QX support purchases to consumer across the a well. second variability essential the quarter this the stimulus, in rates, moved extremely to of at living. geographic the and That crisis, our Discretionary value environment. business to Dollar. the unemployment that have more certainly expect consumer as Family including factors, supply macroeconomic to start we the of continue Factors evolution be being the has

on XX,XXX Tree progress continue value in more sector we Stores making combination and and first of the our than both question We Instructions] customers for The the to brands. Dollar well to Family to of deliver now continued our Fargo. retail meaningful business are increased take take to to [Operator Thank opportunity will focus grow growth most Dollar us types shareholders. improve for attractive Operator, We questions. of believe markets. our and positioned all in Wells provides you. We ready we're more serve from Edward Kelly of

Edward Kelly

that morning. after have Good saw then bit have And ask what I May qualitative specific you guys. Hi a perspective? from you more Easter. And April commentary. and I we more date the on could about to talk cadence, trends comp a and in banner? wanted both you what up some to leading you comp in Easter could then far about provided you seen the little the I'm know so some seen each color if provide curious you

Gary Philbin

this is Gary. Ed,

on Dollar of side, the Let was way. me Easter it Obviously, Tree characterize first this April. week the

was really we on and short-term mandates Traffic So going place into impact holiday. the not dropped the mind saw in. going of anyone's Easter

celebration, back-to-school, from children home, a of the boarding to meant Easter, little buying Dollar And school, Dollar around evaporating. what more stay as of we essentials, slightly holiday at the big not So what stationary, for traffic people move living seasonal for the out of kids. would around the change holiday a with Easter a Post Family too and Dollar people both But toys buying were a peer Easter which it different, of other bigger home, the at impacted But basically a celebration, around are of Easter folks importantly, effort so maybe it's we And Dollar get needed Family outdoor maybe will the and Tree more was spiking like elements more same – moderated. would Family back post impact what saw Easter. family obviously, negative people But call buying to apparel. home some was also is describe at around I of saw the way. And more things least I essentials that folks grill at it. experiencing we're get they into and banners. more things the holiday,

some are we the as see May, see folks go we seen buying So baskets up into beyond down, of the essentials. being beyond what expanded we've traffic and while breadth clearly we go

So we and into on what May. we like see it's going April, end into of carrying

Edward Kelly

for very right. a maybe just gross And Tree perspective, time. core around margin XX%, margin a particularly All then been XX% has business. the from the Dollar This follow-up business a long

range? You've had like there some that can point Is back of year. you any at transitory. get could back And headwinds think some soon? recently. can't A be it just QX to lot it to get seems reason this you there Meaning QX,

Gary Philbin

we're Tree. everything and how macro the says impacts what's Even And the XX% to low-value how we're queue priorities we that well, guess back retail the and of the know that dare essential, chain. Dollar everything from see value called and the out environment it Tree. year, experiencing didn't in from see cost put exactly the we're I the to buying will our in QX that coming find We getting Long as that of the really half extent. it's There's category and even occurring have we assortment. year key the DCs of it be. The the supply Dollar what out that on. are Tree into ended Dollar vendors obviously, wildly last impacts we live Tree margin buying need out spending When a big ever. it the freight ball with as going current on low-value on mean our how I of don't in extra COVID, customers to to or in I Mike craft. the run I reason on DCs premiums. what have as the we're term, get is in, in nature stores and stores, wage great I the don’t it. Tree any at Dollar selling that we we environment. in there's we happen build Dollar no a is reason. Well, that's can't But our unlike mix the on here's how of crystal XX% now, something, no make for back welcomed to a And

the on scare new key given And incredible the customer magic we're time, expense You're the enough underpinning Tree's got margin. front value in to the the is to that's on rocks. I've said, around But our keeping thing we'll to to drive the thing. of what's The on handle we've product that Dollar of the really going selling. magic side, always

Edward Kelly

And good going you. Thank Great. forward. luck

Operator

Chandni will next Goldman come Luthra Our of Sachs. question from

Chandni Luthra

only to for Hi, some stimulus behalf are you. of from bit now. are customers, guys when you right is a that Chandni hear to improve more you Kate customers about did post that also getting – trends starting Could anecdotally of payments thank we're start Because little Easter some of only in talk McShane. This on terms like has continued? we hearing sort

talk refunds. it is drawn stimulus how We talk then seeing parallel it. a heard about business? dealer So about with could impact And you one the to tax be you're

duration similar So kind of of see terms in tailwind tax refunds? do Thank you a that you. versus

Gary Philbin

stimulus of with Was it a Chandni, we're the how we're around question. first your seeing lot customers getting check? echo on

Chandni Luthra

Yes, correct. that is

and a is, parallel tax refunds? question my between checks basically, So stimulus is there

Kevin Wampler

Yes.

yes, we nice drilling the as business stimulus as side and the Gary discretionary with released Family seeing close. home momentum especially Dollar on and our And are into refunds, tax the and the side. saw some market described, we impact in our So the gets of some

the of see can a our an released stimulus So increase in dollars and correlation basket being size. we

Chandni Luthra

a And then go get I it. ahead. if I'm follow-up. sorry, Got

Kevin Wampler

were follow-up just We Yes. your your question wondering second was? what –

Chandni Luthra

Yes.

So in global with chain, terms efforts there of are disruption year realign and Thank last globally? year, of to seen supply this then tariffs kind of we've sourcing you. your light any the in

Gary Philbin

COVID then impact, started to of ripple side. moved obviously, the and the Well, U.S. effect has the Asia in

late for say would right is Part being to moderated now that And other when the That measured quickly some after issue Asia. that rebounded few the was the of factories in that Year. Chinese New short-term was something we initially, weeks a so I an fairly of disruption than us. not saw on shipments. effect shutdown point that just and

On varies all are varies and side, that paper, the vendor, essentials geography chasing that's anything however, related by the is something demand and toilet it domestic towels. in domestic by retailers paper cleaning, on spike to

we to amounts, While it I I something probably still maybe guess But our and they're ventures. it's shifted July almost record week, the and June, sales. in getting selling would now. better going discretionary it's think, getting to chasing, all with But week we're better we're be see some into more and by that side

take Some look things imports. buying of are orders at the those. on to are We're and that go a and back having folks inbound up

the when dynamic and started, the U.S. changing been a domestically that to impact supply in shift now China. it's people way from are go So to buying. what all back chain, On

the running priorities business And our so three and I how where in think those are. about stages, we're almost it

Chandni Luthra

Great. Thank so you much.

Operator

come Michael from And question will Montani Evercore. our of next

Michael Montani

morning. had I two questions. Great. Good just

The first on front. the was tariff

there I the impact around this of discussion year. million think first in plus of initially, of half $XX was

expect equipment be you was labor I wanted ongoing understand the here million to to into PP&E we So if run see XQ, additional to side, And that of and COVID probably costs to expense should $XX XQ. that rate but safety is factoring how normal there's I if and million in would hoping be? kind of the some for initial then on $XX called right out about

Kevin Wampler

Sure. Michael, it's Kevin.

Family the as Dollar. the to it then out to million here, annualization were at Tree $XX and and at point is well. tariffs part the this side. your of at It as relates again, $XX List we that tariffs. Again, It QX. beginning that of And the we million, it $XX Dollar And on four obviously incremental in Tree stated in at came primarily three of million year, in time actually As about annualized. $XX we List we called million XX% beginning said the at an $X Dollar year, million – million fact the point, $XX at

at think look around million. than do be QX, expected expect a it's $XX initially – expected. We it little probably we what really we to we As roughly less again I

we to QX. believe $XX I supply as in Part with may million. do in due roughly to continue to be think timing I about some it when. what it is of But will comes $XX that and work closer be just million chain

have As stores, in mentioned, at day, we than Gary a again, costs probably a is to Flexiglass it did also we in we the order. in ramped there, place relates shields cost very the to which COVID XX,XXX did, obviously, our bigger and the significant rapid supplies. in of the end as QX supplies cost up PPE as put Again,

we to our safe need forward, them in sure pass go incur to supply accordingly mandated continue we expecting, areas. as again, as to and additional many plus stores PPE, costs have we they as and the keep As are make that

reasons well basis additional have we and in hard cleaning it that's cleaning be it's predict will and for a sanitizers QX, stores. one guidance supplies Again, of enhanced of what forward. really additional continue As cleaners those the our the our going in can't to but one stores, will again, it – for as why on forward. daily give to we unknowns protocols And

Gary Philbin

I Michael, lion's obviously, the wage that is, these of share past premium. you just initial biggest add, expenses once the get would

repay advance on around too. Right are our out a in that, premium, that wage We we folks now, plan can to them they associates Our announcement our each continued. of on biweekly one. are give with it's cycle so mid-June

right are we where that's So now.

Michael Montani

Thank you.

Operator

question from our Trussell will Deutsche And Bank. of Paul next come

Paul Trussell

and volatile a in execution challenging marketplace. good And

just with or more line to in Dollar. some what's the XQ time customers and years especially touch issue. and return front customers less a question change as XQ to that you which seeing for were inventory potentially is from those results? on over detail the Should you of kind Maybe think your how about to feedback few they is been First on bit we curious keep the for the Also, overall we HX a how the on any more on merchandise feel format what and first side, Family there. updates plan on planning assortment, in discretionary there? just the Also, Thank you. you're

Gary Philbin

we've Witynski what seen categories. Well, I'll on start. some have – on the let me the Mike of in

thought came you with convenience, Dollar might what responded, hard because about the in value. we of the we maybe have about ahead did. its Family think its and going into was think has know And didn't and – than customers we early work store better I our what when it, even quick and shopped it's us think it, its

in to all with graph our think place a a being I of protocols shop, got also we store. safe

are with our measurements recognized for of think we internal that, some saw. we I that

folks gained think I up Family signal folks Dollar we've sign store. the saw new a app, was we also more good time for that for the first some into which our pretty

needed early think we on, us. I So folks – got

to some even has on we've early some in I the it work think stocks. of on moved having done assortment recognition in

essentials. supply as tell on of I Now you on are have that domestic come half much between And – stores, would it's we supply during to other our depending who's we'll used now, occasion to I every and like our really two in I They tell around But stressed week. the lasting only thank the their chain supply I folks Family you, world, be that we to the neighborhoods can when amounts. our this a tell the just it's stores but a you time. folks probably the maybe but a essentials see hours. And Dollar what that four anything, banner send last to day folks done on you chain, would as about into in count we chain, on the of capable can amount risen it's and getting communities. days anecdotal, lot

on the Mike are give sells, let I'll interesting what's color think I some categories of that. you some

Mike Witynski

business home, inventory we strong, And were first those towards the very the on his categories. post was And products home three it weeks, is weighted shifted the and position first huge and elsewhere, the that in our strong in inventory news position about demand asked products. very and paper good is home very with heavily soft side comments, to described hardware. Gary apparel those the you going it into Easter, Yes. year toys consumables our for cleaning at decor,

we're good are talk now And we in-stock maintain about with our our stores the work is able sales. we're March really me replenishing and So this get business, that's those saying, the into X, – back points is going with good and price Dollar. now. our we're on as news sharper on sets half at And replenishing Those first heard trying to Family in were to around for you hard the quarter. Gary to we're position HX from as of the categories that products, our discretionary basic turn with what it and to

is through now it the inventory. just as So bringing our fast replenishment, as of as heard What our we Gary, we're sold we and buying in. changes from it you selling are

with the new chasing piece So and to we business. Tree and next product turning there's several be Closeout its months. that value Closeouts going we at are and that say of the the is one now lot to Family We the Dollar pie a the plan is up going didn't on, good news customers And disciplines for the are buying believe but it's product would Dollar is to of it. in reacting other we're turning I our best. that starting show into

Gary Philbin

rural. you timeframe surprising HX, hotspots would about the that's post-Easter, got during And of obviously some the you look think have interesting HX lift hard Paul, locations. when urban the have get you time. our outpace pandemic more continue into entirely asked we this March this And urban the say And that April even affected overall them HX effect. I that as as to the at post-Easter, locations most tenant we and it's and But than to of not

pleased still we're with the HX. So

our about the I to just but time Dollar HX that’s X,XXX we XXXX think just now. it. similar the different there think that to it’s think I wanted prototype we are the crisis, helping that that's way in I back time, out have drive has gained business don't Tree to

Paul Trussell

anything else That's as impacted to the as but of downs the quarter, to in really not like and balance things you're or relates that merchandise follow-up you. to the keep costs that some just the the any that is it specifically, giving or helpful should anything mentioned XQ comments of we other color. can guidance. it you've Thank know in I on pressures. get My items provide mind were year relates other mark first you

Kevin Wampler

about that so obviously as comments Kevin, the may at is we do I call believe that the we QX, fact this alluded and a can to that he I Paul Yes, as compared be in we have QX. think more mix become be it, to Tree look normalized business think Gary's positive Dollar

the another XX%, to they costs average were on we helpful. down continue now they being fuel about QX that’s rates QX at the item to freight small I XX% year-over-year started piece of about down it's and diesel beginning as for is, think think look like of overall

I we I we The to we didn't we would contract that with the there's would see thought our import benefit see that as other would related the half a in go-forward. mention thing we see, we expectation increases increase year that so that maybe the is freight in in May little the back began begins think

think pieces, costs. lot I distribution So of a moving

caught be I going inventory inventory the with continue business. as to on think very up right normal is the imagine, as there's our building, now, to if you essential throughput get we high pressure to – think you I try and can that, look along the at our

continue little be a So as I could pressure there. there think we

different huge continue keep no than very a SG&A that and other to to think grow that a do general did we'll lot And of through as always, controlling as the I point. on we at work a obviously to I QX. year and think we in I think reasonable have a things any focus try complete in of year a job go good expenses

Paul Trussell

you, Thank pass I it. will

Operator

question the take from of Keith Peter Sandler. Instructions] next We'll Piper [Operator

Peter Keith

May party get Good rate And Gary, exposure so accustomed sort that still morning, and now there's thinking just fewer imply to the you you're kind quarter? guess, that Tree level up-look two that about of and secondly, a questions point Tree seeing, is, would celebrations, this Dollar negatively being together's impacted single everyone. at run of Dollar digit then at for Thanks. the is celebrations? is running, the because in fewer potentially an Hi. commented I on

Gary Philbin

of creativeness with second Well, resiliency the one the that let parties the seen our hit what's thought customer that, to which we've I happening the comped been for we with the impact week graduation. I see just drive shelter-in-place. me gets out clearly biggest our of parties, last the took remarkable birthday was We actually on there through that balloons graduation did business. Obviously, answer think first, but

the Now party's quite a doing papers, actually is and celebration that's big into well party papers, category flagging. the before for us, piece and celebration we we put our call and them out

hand, a sort think and to, significant other trying year families at a responded magic that talk those and we to On the of out themselves bathroom, crafts, homemade of I buy the into to have of customers a to outdoor are dollars. is with category product kitchen, anything about that there, how you essentials Dollar entertain toys figure their some put lighting, of Family I’d speaks buckets. category now that related to even didn't and Tree, sort comp it Dollar bedroom, ago, from something in The is can

that go got that from we'd not grilling, that Easter, on go seasonal side to see, certainly see seeing holidays back at more call are than I feels have any week And it. like school, it half, that's to one we'd in terms are So, then, we how in outdoor a huge Dollar think of lot the Memorial all we what on Tree we until after Easter. their going kind Day, to fall we in normal, to. to generally new the into about turn the that have impact think we're used it's what back earlier celebrations, the we a of don't respond want April maybe of call categories same I out We or categories it's what have to quarter, respond but was least

encouraged and bothered put our and store there and So in our display. sort we also that levels. think customers the I out elevated to needed, with that have in stores of now spread think opportunity on we're And found things led what they merchandise I at the both we

the really normal frame Tree April Dollar and with getting Dollar Now back its seems Family to starting time it now is cadence. like

Peter Keith

does time want separate you that's now the Thank ask for week and and to you right economist your to asking dangerous set know can of will negative And expire to paid out I up as if but it share that spending maybe federal you of customer predict to with you can were obviously per at allow being question but the present do business conversely one I maybe or expire, unemployment hat Okay. it's put the little that. power of that be that pick to view core value and is July. a the end bit no offering? your which your on happen, benefit some team $XXX a to what a to at on, notable

Mike Witynski

provide that Mike. about we we are We a think people away, don't retailer that they more need it goes to will Hey, position a this than as valued that source be income, when for unemployed should that will they value them. of is And ever. a have position be in great in great as and

Gary Philbin

doors needed the In into the as of for XXXX. think the us now pocket, we founded they a not we're their wind money the for obviously XXXX and year fighting for us jobs half our too here and in back that and ball has that's what of folks take some It's I crystal that's open. – has XXXX, is reasons lost customer and all it's right our obvious in what tail anybody

Mike Witynski

Okay.

Sounds lot. Thanks great, a guys. luck. And good

Operator

Our come of Michael question Lasser will from next UBS.

Michael Lasser

of also question, higher is Good for big seasonal XX% as well, of party sales you and across what piece but my XX% relate it Dollar sales, that, than gathering? taking that. extends morning. discretionary a to the Because of say Tree’s Gary you know percent if Thanks

Gary Philbin

right obviously what big at obviously parties is our put one. tough of it mean, they're if was alone on we've bifurcating past XXX seen, Easter parties I buy sort impacted the it people categories, into – we've I happening birthday party that’s pure for just different one Well, in on, basis little seen a a made can so are where now we've candy still key celebration, going more was just think that was the what would way. points spreads impact environment. like holiday, I close think virtual sober[ph] that just just the once a you them, take holiday. for they're sign that The that along party Graduations is get we get some see But on, trying still look to product now things and that are with happening at a same before. Easter going we're The they're a we other in party giving just some go craft, to saw I mentioned It's needed burn, and to so and in catch up – a a shopping I Tree light that like plus just drink slower different, papers like just think parents they're People have have coming down a that but a to stationary, some to now in candy to it a gift we're buy content, it's go and things for that think a category and normal saying, go supplies time. say like or that means up, our you are it trying discretionary home, was picked coming kids need teach virtually online they in I because school category a over what in while a are bar cadence soft them. they normal and now, Dollar buying coming on Dollar still Family line. they on trip, of they're as shopping I been

Michael Lasser

year my Thank a on a the particularly you. up is gross but is Dollar margin follow-up year-over-year, And on comparison, two Family really easy against basis.

the should to gross to Thank has that might've mix margin some going happen. that's about quarter, of would margin take issue to of had the quickly business to how trajectory Family So the Dollar gross be you. and understanding expect in you XX%, able XX% the how think it's first we get going but

Kevin Wampler

the I equation part think part as of maybe timeline of there. the the harder Yes. that's Michael,

about I renovations where we team But done have we're last in there. Dollar shrink discretionary, as QX. of I not happy a hard. that And I I the overall on there's our just them people their and we’ve often here and think we have an about headed, plays We team not stores. improvement show consumables honestly, is always to I a of better couple assortment that overall they our big and helps. opportunity work are in want of changing I a trajectory under a work, role think where things our with store, then working role discretionary bigger plays Family opportunity be no sell that get is work right. store more also We've basis. volume more this. merchant years there, is mix to the with it the part And to in role, do the the Dollar again, them with it's doing categories we that But there's the potentially think other a notice think Family play talked is big bigger very excited a it's re-assortment to we're a increased again, be more job, got and in get And shop. HX business the in obviously the so and think

QX plan, we'd there that went But think the the on we the think discretionary about we as through heavy of seen. originally if at years, they year, into them line fact there, other that think I markdowns I are about get because more the with we've we've of sales working markdown be look that that I couple moved re-assortment. this obviously through in last feel talked items better when you we to

and this mix, the is new think going-forward, opportunity make I I new that to working to and that So I think exciting think be realize assortment it and a consumer them. team is we have it'll hard

Michael Lasser

seeing reported just of days thing, their in same trends this the morning that seeing are recent I noted and clear comp moderation they they your one one thing. you Can are competitors in

Gary Philbin

we something comment I on, that's think Michael. that don't would

Michael Lasser

with good the And much. very you period. Thank luck current Okay.

Operator

question final Your will Citi. Lejuez come of Paul from

Paul Lejuez

guys. I'm on Hey, the Family side. Dollars thanks curious

number come have the of If gross network go Dollar and you of gross second, out take may to several the just categories on the months, seeing the customers have into basis, year-over-year equation, to if any Tree you're idea about about back themselves past over that the the increases mix then curious, new maybe you margin, can where margin talk decreases> relative if to we Thanks. within the a and

Gary Philbin

in folks field customers go on our mentioned, from away, seeing were we using do time had tell that you the we the customer as I saw a week-in who would Dollar, Family we Family app, and looking that that a coming I it see in the, for tell in your they're Well track point and see us, feedback to new a for as customer new the basis folks a actually folks number Dollar which see of essential. spike themselves as for then sign identify we week-out people up we first on

with our that's but Family outs in stores, a the so our just us. opportunity on our here improvement base Dollar, that's that showcase store also had to vector So, HX two positive we an

back around, XXX mean, the is amount think right markdown. Tree low in there, that's think just shift, craft mean, asking discretionary outside norm, on that of business. a are point like at And to help. you want we now the the we like that margin of mix Dollar that I start markdown now. comping And are Well a to took key when categories that For business be losing you're think mix, was look in normal there to going the holiday of if fine, a question we're on I us I getting when point about I a basis guess and

still that normal have point, the more a our things to attention, then that Kevin's back we better to as fine. get markdowns, we So shrink. do the do to on And have mix, deserve aligned that's

plates it We are to of I same essentials that's now be goes fright I on value bringing get to in willing through basically the the mean probably what to going grasp spend you're fact have towels have gross but lower more mix. essentials to our trailers is saying, what paper stores, right that that our effect Dollar would get thinking an sort And about whatever on DCs compared a lease on does we're that. margin the queue to to mix to or that those help going that and expect normal the I'm things we are different of And the on Those it, short-term Tree’s, way near-term now. the down. from right called to

Paul Lejuez

That's it. Good you. Thank luck.

Operator

conference I to Randy for the over remarks. am to turn now any or additional going closing back And Guiler

Randy Guiler

for us today's Thank Tree Dollar. you, you and your Family joining continued Shannon. Dollar for Thank especially interest for and in call

scheduled Thursday, results tentatively QX is earnings quarterly August next discuss XXXX. conference Our to call XX, for

Operator

today’s conclude participation. teleconference. does That Thank for your all you

You disconnect. may now

Dollar Tree (DLTR) 28 May 202020 Q1 Earnings call transcript