DLTR - Earnings call transcript Q2 2020

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Operator

Good day and welcome to the Dollar Tree Incorporated Second Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Randy Guiler, VP, Investor Relations. Please go ahead, sir.

Randy Guiler

Shelby. you, Thank welcome performance and call discuss to Good the to second Tree's for XXXX. fiscal Dollar morning, our quarter of on be will Witynski; Kevin today's and me Wampler. Mike CFO, and our CEO, our With President call

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

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

I turn Now to and Chief call Mike Executive will Officer. over Tree's Dollar Witynski, the President

Mike Witynski

results very Thank morning, Good everyone. second I morning. this with you, the company's am quarter Randy. announced pleased

with we center ensure Our the quarter. value are incredibly serving and customers providing performance dynamic to for a clean, store through great and solid teams to offer, remarkable contributed a distribution shopping an continued convenience Their time done have job along experience, efforts operating of our in stores safe retail.

Same-store spoke prior and basis results in increased basis the sales realignment, Dollar. at year's Family following earnings gross turn a increase, side improvement margin. Family at and per share opportunity QX December XXX call sales These leadership operating point enterprise Our about In to profit X.X% a Dollar of the at for of increase and earnings and compared Dollar around our an on Family Dollar. business margin profit in day XXX team at to same-store XX.X% March, the X.X% I challenge It's increase a delivered new were Tree. points early comprised discretionary our quarter. XX.X% of

Our greater It's sharper focus price of about the the sourcing basic enhanced our meeting on with on of points, an focus needs values all to want items and is customers. more buy. customers

Our a record same-store sales team's Family the delivered and efforts increase discretionary paying off, are Dollar as quarter. for XX.X%

Examples at they opportunistic realigned family completed Our loyalty we how Hallmark-branded and to can merchandising on drive this success of we dollar stores. the of experienced and Dollar. greening cards following to is and focused nimble rollout repeat have all sales, team demonstrating included, Family the now at be Tree, visits Dollar

brand closeout the what We We Baby toy the opportunities, be are year, Family in matter capitalizing of name on could relatively which of a at tens introduced Dollar. days. approach and Yoda, sold new great thousands is top of

to cleaning Dollar This staying As and the XX.X% in in improvement new strong customers as And was saw Dollar and which of household sales we delivering such in Dollar that performance to decor X.X% double-digit sell-through Family Family points continuation Family outpacing convenient ago. apparel summer children's X.X% quarter and home athleisure, much, spring Also, operating of XX.X%. viewing offset rural urban. sleepwear, as essentials, comprised transaction Family comp homes. well. strength Other garden time margin the side, very Dollar’s year and in focus QX and with shopping option local and like clothing our Dollar and onesies X.X%. at-home QX food, comp was XX.X% second as Anything slightly slippers, born their a continues as spending and outdoor XX.X% apparel loungewear, in at customers the highlights with basis saw great and a increase income decor reflected safe, a broad-based from on as The on stores urban perform the Family between values was geographically, sales comp our with top sales lawn basis in products, are home investing items had in increased well delivered on on momentum home, points more. tabletop we more of gross have in more to related into shift consolidate are customers average increases, kitchenware QX discretionary we home strong of their and The progressed, margin. an XXX XXX ticket, for much supplies, to quarter increase count soft And in their same-store increases homes zone for as XX.X% grilling, each the was rural a partially contributed decline as by continue comp both trips. included with a

was slightly than each had of increase May, than of greater And cadence stronger benefits the was the month's which June being with greatest month. Regarding comps, strongest July. the stimulus, X.X%,

positive still QX, same-store comp side being government the at less The is than While quarter. assistance quarterly in Dollar despite early available of Family it the consumables during sales is solid X.X%. business delivered delivering prior very another

than record million coupon its X.XX total bringing our during was the mentioned, We to a new program saw smart customers. discretionary million quarter, the sign-ups in previously as more enrollment While XX.X%. count XX.X

when one HX Our to delivering greater year stores. continue XX% lifts well, to compared non-renovated than stores cap very perform

format. previously the as Family Dollar to open For XXXX, XXX fiscal stores, renovate are stores we plan new in while being stated, HX also

Tree sequential side ranging comp bounced Dollar Easter XXX by which to XX down seasonal the from rebound the discretionary for Dollar where following the balanced for improvement down the Gross margin, COVID-XX. X.XX%. year-over-year relatively second with increase increases zone by quarter This was sales business QX due points Easter. points X.X% Tree was primarily a quarter. performance basis on back the of in was to Geographically, were QX sales same-store following X.X% impacted materially basis was For with a segment,

For housework at from business Factors periodic from well and as quarter and more the hit our impacting stores. Dollar every our traffic The crafts, vendors consumables Square on party are has exception sales were demand one with on the slowed pack is the a improved include to focusing X% products reduced based declined, and to visits capacity. Crafter’s some positive and comp X%. beauty comp eyewear. quarter Categories the include in a food category. production and repeat kitchenware, quarter, line two, sizes protein sales impulse celebrations, of tremendous of their customers shutdowns, plant The availability down products, food Tree discretionary larger of delivered and for is program with approximately performed quarter snacks of driving

rollout contributing lift than craft been our could X,XXX the with is to well. better. Our in performance in improved assortment more stores QX seasonal business timing not a craft in The also the of have as basic

For less Tree's down gotten good consumers, buying to the as XX.X%, but been more. start in increased well. have was QX quarter, transaction Dollar has ticket Tree shopping Dollar count general, while average as XX.X% off at a

focus to are timing is usual but merchant well adjustments performed similar with as environment their on the disrupted, category less the in minimal costumes. back-to-school still make team traditional seeing decorations March, and very celebrating, different sales. and or fall Halloween, action But Much for of in good adapting these line items. like The are or associated in albeit to is took us. the news were celebrating gatherings graduation the seasons overall, and I are than Consumers markdown groups trick category. there buys volatility more are back-to-school, and current on and sales the de-risk of treating more in In categories, on and this risk focus upcoming as large Halloween and smaller these harvest, ways. timing category. the we the Regarding view

and the very early We related sales Halloween. Harvest are seeing to Fall regarding nice trends

of Dollar our to assortment Tree this sales. points Tree on and adjustments good program. focus to selling of analyze, Plus, great at discretionary of for. regarding favorably. transitioned learn, responding to more are products products below, recently bins to as test sell-through with promote strong stores remained that are We to is Dollar make Sales price we a from our the larger value and customers these consumable-dominated the year, initial some merchandise item continuing one-time wild-type we discretionary $X known Earlier added hot Now

towels items of guaranteed save do paper the for to costs high customers Plus. are believe customers, rewarded associates premiums our quarter. We levels $XXX in line and and about to to customer distribution offer stores for levels the items improving, we it for our categories. protocols they shelves environment facilities and solid new the effectively and associates, products safe, nearly on is excited during for that this home. fall on the production, vendor center hourly performance the top to customers in discretionary especially and outpacing is totaled was field were and supplies, move Tree we these while are our in This our safety million and remain impacted contributed during sales the our levels shopping In-stock to measures. quarter. dedicated where encouraged who items expect Surveys in-stock are continued as needed comfortable extraordinary but enhanced both many as the safe. both recognition value We efforts still higher Inventory the on for that the shop wage pay. Current on we turned continuation looking feel capacity, domestic for close constrained, by and with are indicate demand, and quarter. consumable potential frontline cleaning related for current keeping to We their serve with multi-price bonuses to store other our incurred of quarter customers and Dollar as quarter, through relates but efforts the cleaning already management convenience for want The money store Throughout associates we premium improvement improving. desired certain supplies such our protect see environment season. the about COVID-XX-related the sales The segments selling have

experience, reduced associates have contributing Over in our time, invested turnover and and lead shopper shrink. efficient turnover in we're improved to store We reducing stores. operations our attendance while this is enhance to believe can more lower loyalty,

and strongly measures retailers During Tree safety the ranked of for Dollar of ratings quarter, trusted [ph] Family an shoppers. trusted Dollar, or first, somewhat XXX enforcing all aggregate

periods quarter reports, and during of lost related stores million civil Additionally, to inventory. have costs in news recent incurred been the than as seen our reopened. of you have in the stores certain XXX $XX The unrest. of repairs the impacted nearly the majority damages, many impacted in during communities more we store Overall, were of

growth planned shipping centers infrastructure and DC support and continued Regarding team. to projects provide Southwestern field distribution for improved performance. Dollar the completed XXX and proud from support of with in relocations, I'll will our ended stores, newest leaders detail Florida. it ahead renovations and real now Kevin and store growth our over quarter, quarter our the and our to supply organization, We I and the Family chain, We XX,XXX capacity including XX Ocala, more new need. XX HX the our group, Texas very support Rosenberg, QX Southeastern began profitable store both our capacity recently and facilities we and throughout leadership continue teams, more of provide the These XXX center teams supply to distribution increased work estate store store to than stores. operations our states. XX the merchandising including efficiencies chain We in closings. am in toss

Kevin Wampler

good and Mike, morning. Thanks,

improved compared in the partially improved Dollar an basis inventory sales optimization the QX in had merchandise gross performance government from was points mentioned, year-over-year points costs, for comped $X.XX the improved freight, same-store basis Occupancy last Dollar X.X% on merchandise offset a approximately the increase improved of XX.X% an systems decreased due accrual to tariffs. the depreciation. improved sales Dollar which of year's and sales points of For improvement clearance increasing XXX total Markdown Tree incremental includes improvement the segment's including an and costs included costs $X.XX expenses XX.X% million health XX.X% offset primarily Dollar cost the increased freight costs to ago. costs basis as Mike approximately due percentage result Tree rate. of a increased the Dollar The decreased business general that and The approximately XX.X% segment lower increased the merchandise payroll XX% $X.X costs. Family results quarter. margin These basis, accrual quarter. by decreased basis to million DCs. Discretionary $X.X centers consolidated to of sales increased $X.XX increased prior year, $X.X two in or included for Tree, costs due lower partially million billion, These the as of basis freight points, from basis expense on profit to freight, and Shrink as basis of million current increase. were for to increased XX.X% bonuses and lower on approximately the results the discretionary an the year's from saw in distribution XX.X% approximately current in Gross margin at points and sales net for prior primarily by of of offset basis and which expenses distribution comprised second to increased And Gross second Dollar impacting XX costs costs, primarily Tree points, points. points basis the including improved on improved points to approximately expenses, bonuses Traditionally, quarter increases Gross margin Family partially the new to due percentage QX as offset segment XX for XX a pay and start-up to mark decreased billion This year. during gross inventory the expenses, points COVID-related when the of offset premium primarily Factors Dollar by Dollar. distribution million XXX quarter, comps comp quarter, partially to sales, XX increase health higher premium the Enterprise in XXX XX XX.X% points compared COVID-related of of tariff XX billion markdown, $X partially based benefits and XX based and XX.X% and basis approximately points as costs. well approximately billion. pay and promotional to activity affected merchandise cycled quarter. a X.X%. Overall, These X.X%. and costs, Shrink screening to basis administrative selling, costs or XX the assortment by XX higher $X.X consolidated points were segment following: in the margin the in approximately increase points XX.X% increased improved at XX due basis costs. Family net stores we basis basis net by screening unrest. sales increased compared mix, sales segment XX.X% XXXX. driven of by the leverage profit $X.X sales mix. up improved a improved increased comp at XX Occupancy to improved payroll on the year. to year XX for markdown in cost basis profit by sales rate markdowns civil Family as leverage store prior incremental by year, points cost

administrative with of XXXX. For from approximately of approximately Payroll associated expenses basis percentage the expenses $XX compared of bonuses. XXX This approximately to net as points by QX and incurred SG&A approximately company the basis general benefit increased for as a costs in increased comprised The and costs leverage PPE costs of Other sales decreases or was sales Dollar XX.X% quarter, selling, the basis million, partially comp in Tree million, points, the and Payroll offset segment and increase. COVID points. XXX $X.X for COVID-XX or X the second cleaning to well costs premium increased increase for compensation pay points workers basis XX% rate approximately as increased XX following. supply.

development, travel on based increased expense legal offset claim lower by liability general Additionally, costs. partially and

second with comprised Non-operating points XX.X% totaled $XXX.X margin XXX increased year. million, million cost. $XXX.X improved were as sales expenses, which for decreased Family basis costs expenses on increased improved basis offset disposal period year by civil income second in XX.X% from primarily based were the and improved sales leverage expenses the primarily electric to to comp of payment for comp quarter and COVID-XX-related in sales and included And from net driven increases optimization expenses in facility approximately primarily increased by decreased income the fixed XX to bonuses, workers' The related million basis sales. lower XXXX. points $XX.X primarily million compensation, increase. million or of costs. basis well points operating leverage store electric for compensation points, Operating prior of of basis approximately costs leverage on quarter. the segment basis sales compared partially to payroll XX advertising same the as costs. points, leverage leverage interest points, benefits X% reduced And rate the Dollar higher points, last cost the sales basis and health $XXX.X The in have premium approximately comparable XXX connection in year from $XX.X increase. store last compared due our These approximately XX of XX the improved points, depreciation a net assets percentage These in Operating million XX.X% COVID-XX year's decreases year, basis from on to in stronger and approximately partially due current with temporary an primarily plan a by to current lower $XX XX X comp facility the costs benefit offset and and SG&A Store the to compared expense. performance. costs travel incentive So same-store by of unrest to quarter as

actively revolver $XXX its quarter includes last Outstanding XXXX, per increased at of during credit. revolving $X.X from X.X% the was is square billion XX.X% This net selling million cash per COVID-XX-related the and the approximately increased the million as to million $XXX.X $XXX or selling prior square company diluted income down per end paid Inventory in decreased or for build quarter. million $X.XX per incremental period or earnings Combined compared The XXXX. end tax quarter. The decreased in or $XXX.X essential of share our of million last costs time year effective rate same selling per diluted equivalents while year, team was diluted for included square $XX.X debt year, expenses Our square X, net share drawn Dollar decreased XX.X% company dollar on $X.XX foot foot per declined The $X.XX share, managing which fiscal a $XXX.X for categories. compared which had end operating of billion, Tree for for $XXX.X X.X%. August while totaled selling Inventory of $X.XX of second quarter quarter. unrest X.X%. million X.X%. line on year's compared X% same goods the Inventory the mix prior civil million end costs. to X.X%. footage $X.XX at inventory food to cash Family inventory share The and quarter and footage at at the of to

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

second last to million for to to expect to versus million vendors in and million continue merchants, approximately position QX $X depreciation XXXX, quarter year. million. for year. fiscal And $XXX.X improve to to totaled expenditures we QX the from And Our meet were be the to our Capital and second product consolidated $XXX fiscal last expect billion. continue $XXX.X chain for demands. of and expenditures consolidated in Depreciation quarter million range increased in amortization million we compared XXXX, to $XXX.X work amortization supply capital $XXX.X $XXX

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

trend changes business QX significant environment the between volatile. remains QX, by demonstrated and the As

continue our the adapt have We we flexibility always valued period. model, as during to uncertain business of these necessary and

grow the in strong call stores, ability our customer a remain confident the balance investing supply in over to and I'll and improve turn provide technology Mike. new company now and shareholder experience. have to business We We long-term back our sheet renovated chain the and to by to our continue value.

Mike Witynski

Thanks, Kevin. performance second for of I could overall not be the more proud team's quarter. the

new is at and it a XXX the Family improved points delivered earlier, basis half a Dollar operating of comp stated Dollar. from half XX.X% the a margin I As day year, ago. first first for Family year has the

have following thus Dollar in far QX. had margin, improvement and We sequential sales in Tree both nice challenging quarter a very QX. momentum a seen with good

comp the saw in of from the quarter. we the in line the food the right second category, every at at believe time. I spot right we Aside are business improvement

into We have support teams a center. business store one consolidated

and Our leadership energized. focused teams are aligned,

enhanced focus clarity, receiving consistent and speed. acting with teams are support and direction Our are

drive tremendous are enhance on operating margins store evolving running great, trends. Tree customer time. are a sales, improvements clean, each stores. of operators margin have Dollar, structure, over gross contributing our job doing a Our tremendous cost reacting At merchant leverage teams And and opportunity adapting to to Family to and safe and Dollar we focused our

on focusing customers us. the We truly retail, company businesses. attractive growth I ahead more is best running still and improving our in our sector believe the renovating great opening free cash stores, most generating a stores, efficiencies, significant and are flow, of

Louisiana and like we now are just is and thoughts would Laura families impacted with Texas and are communities the Operator, into and Hurricane take our passing been go right with now. of share all Q&A, questions. our to by we being that through ready that are area to associates Before have our I that

Operator

take our question Instructions] you. Thank We'll first from Matthew Boss with [Operator JPMorgan.

Matthew Boss

we role. stand congrats you areas about about Mike, the about initiative? Dollar thinking today to change Maybe of what key banners? you potentially this focus new early, in we any points Thanks. as at maybe specifically, multi-price think metrics and Tree Dollar while Great. the Family and are on Where how are Dollar Tree? looking the key And do scale forward

Mike Witynski

for Hey your Matt, thanks interest.

continue going favorably? responding the especially customers more Are we Regarding and continue want response point watch is a factor out -- of We're sales to very our about we're we're things we as the customers -- up? to to that the be Tree continue it. at we getting known exciting at for, seeing going if four-wall multi-price enhance to Tree, it's Dollar mean, the them. Not to as that our to moved are interested box, we'll square for into looking opportunity. as to are three want we metrics are the so foot we we that productivity we I we're we're wow watching, excited to Dollar enhance to our go more discretionary those it. from margins. determine good provide products our to successful going And key watch that per And and

Rick that refining and the months, charge, is XX.X% just that in Dollar making last -- We a we side, in are think confirms six rolling HX the that will ago, the we're In On that too, months customers comp favorably. investment Rick appreciating with And the HX. Family our that HX, they're lot our responding the XX we he's focused really on assortment. teams merchant working the out on continue.

in you we're do SKU continuous how As adjacencies, at you have always looking side. discretionary count, expand improvement,

that HX, So, square rolling working more per the margin that sales discretionary our stronger. on foot us continuous getting while improvement mix will that out merchants are more we're get and by

Matthew Boss

then to banner next headwinds to Dollar margin then, XX% that quarter? half with, to as are gross second the way the about to we in I margin the think best year XX% tailwinds banner, still that about think relative should year, long-term, level think any the getting And back very the you the we Tree what's Kevin, And versus about? of Great. think at constraints think to maybe confident that gross the

Kevin Wampler

Thanks question, for the Matt.

as a balanced bit. we it, in Again, things discretionary where saw think overall I again, back in out in in and things saw And our we were out obviously, nice little from mix improvement grew QX. balance think some we about QX QX we margin.

As of we the year, a run. half we're up back the believe look I strong set to for discretionary

headwind I the Mike have good costs opening food early basis which build on, in time to think first had points buildings we're mentioned talked new which we'll a the again, is Halloween, seeing We maybe we've back general, same time, and the half start-up is is for years, on what buildings, many, long essential XX I But back in up two Fall QX. to did categories there up And we many think the And in our Harvest distribution costs. biggest and talked time. as it we at about well. side. being long, it two up bodes about, continue as at the look we in in as our sales go I as

a good So add the of it's to and can so natural stubborn, into But get a more product that. that think I commodity can in go drive pretty place. pretty believe some feel a some create Shrink at the side we good margin about sales, – do is. And there around – continue lot little arms be as of if we feel are that think I start-up that's additional our but to again, leverage, that. we the costs but it, like side, is look really, pressure business, still where I I bit the

we and will Our completed sense good go from that about how trip in but affect the continue that feel way to as trip the states, July went us buyers in a forward. here their

So that's second I'm segment. of kind Tree how I the Dollar think thinking the about half in

Mike Witynski

that XX%. can Matt, believe historically we a that little your XX% the question, to on range color too to absolutely we get We give getting just to have. to

us perspective, As mix look Kevin great that and from you a at And shape. product if markdown drive like really mix we can initial our the in said, there. we're

is DC is, know costs. we're it shrink We from those areas. pressure Our where going and the and get the after to

Matthew Boss

Great. luck. Best of

Operator

take with Michael UBS. from question we'll our And next Lasser

Michael Lasser

for morning. my Good question. a lot Thanks taking

drove back? gross On business think expanded consumable why was competitor quarter margin several Are its of in And the a between the do give your terms where that, And largest margin some the first, Family moving that and good part this last been expect that Dollar in should side, modeling quarters? be is you gross versus comps it as Family to had Dollar very realistic of of we forward? spread that to going not expansion. you this

Kevin Wampler

Hey, seeing question. side, Michael, and the growth we on and based parties XX.X% of like a Dollar XX.X% internal, on quarter. information third and our very growth discretionary for the that especially XX% side. the getting proud new we're during that the comp We're record from We're thanks customers the Family on that captured

customers discretionary we with engaged. three on side of market smart new the XXX,XXX our the getting are sign-ups And our what new times was gains Our discretionary were market coupons, the share business. on

is customers when things, our And our like the right items focused team we to in our And focus and we having on all that sharper what are the working. McNeely basic Rick So sales responding. need and think they're price store the the comp things are points, merchants growth. and they're that

Michael Lasser

enhanced Okay. follow-up work insurance because of them, what you great early the comments provide but folks there's And some – their and their important still unemployed or is guys lot seeing benefits which into quarter, has worn to third out a of is, who out. have are my you yet been you've around value provided

reported start. of mentioned assume other trends we we if of from you Dollar similar to consumable good it Family is given – that out that July? stocks you. categories? Thank that off has Dollar that and where issues also cool that Tree So assume the accelerated a was you the to Is is some should it And that, quarter? seeing addressed in business last you've in in what Just

Kevin Wampler

third strong, both we're since from and the what spending we homes based strong decorate on And indicators Kevin is just the and the comp at the quarter quarter, early want they store we to We've that. of third more – like and on think Halloween positioned think like and time we're believe Yeah. the customer, said, well sales. are business. homes we ended starting home, on We We seeing fall think got mix more. We they're for in their invest the sides second their as quarter. we like

So we're seeing categories. those

to them since home decorate be we're we home, that how with going spending So time they're different at seeing that our are they in sales. And may there. more

Michael Lasser

much very and you luck. Thank good Okay.

Kevin Wampler

Thank you.

Operator

We'll take with our next question from John Guggenheim. Heinbockel

John Heinbockel

Hey, Mike.

did me Let benefits? XXXX, to next, over down recession you some of XXXX, the in down effect. Tree, outlook business on when in quarters? on of don't start doing trading Tree six because your I in And the months. differently know, the anticipation think discretionary your as Dollar right, the see acceleration with the an Dollar and took thoughts nine couple next anything What's Right, merchants trading are you about

Mike Witynski

for Yeah. with on I is everybody question. at staying we're Thanks, our – well And home right John, positioned – think now. the

X,XXX we Crafters now quarter, first that are than and that Our more Square stores X,XXX – out rolled the stores. the

customers Our very well. responding are very,

side, in start merchants each the getting the consumable our week and the see are drive fulfill re-buy And better to that period, and capacity. every see continuing category. the we So side we drive to and that replenishment as on vendors demand

and going we year, be So position back like in to especially mix away the when into is, going and going believe think sales the were year, we're going next of the it I forward, are position great in most, the the we as unemployment we're – half good where we're a benefits in the rate to we XXXX. in the and a need going XXXX, customers extra with unemployment, of us XXXX,

John Heinbockel

And All talked Dollar maybe Tree. two secondly, about at right. the then you DCs

to be we down, Dollar that maybe thought But get only. moving assume ways co-mingling those away? where the try are more co-mingling we I Tree-centric to cost are right, the distribution on distribution, So, do two – going a to between banners a and we where in are closer or to two is

Mike Witynski

Yeah, a great question. that's

be. our costs where to we seen, As outpacing want you've them DC are

one two-and-a-half DC and last that mind, a co-banner two, leverage have it of part the St. have capability is, we or Currently, strategy the our to George, have longer-term that in of opening do systems -- we we years, So we as every two. are keep we've in network. in But just DC with our opened Utah. co-bannering, these

down side, capable to So in growth. are feeding long-term we've historically they that's been because co-bannering. be been the that and that. to Ocala the has Dollar plan, the will business so we And Texas, that going growth two moving of these in are But on we out starting Tree be where the

John Heinbockel

Thank you.

Operator

from question next with our take Capital We'll Ciccarelli Scot Markets. RBC

Scot Ciccarelli

more morning, of half? further color, on Tree you Scot especially that think shortages kind flow provide highlighted, Dollar we through inventory of Good will get some side just change the the you Can some how the guys. and regarding back supply Ciccarelli. as you

Mike Witynski

Yes, really do would on Scot. with to it's both on anything consumables say sides, Thanks. I And cleaning. the side, and paper

continue So specifically, hand wherever cleaning, more as home of the we have of protocols they're there still meeting any do at lot at improve. instance, claim, or towels see, that And couple is we their a with needs pressure shelf the chemical can on the for tissue sanitizer, enhance people a But kill starting to the just tissue, days. paper any on to actually customer. that for than is a of bath with

pressure been the half highly there have back the will year, half throughout be in of in-stocks communicated the term of vendors But our year consumable longer I say see the those on from back will this and So that is from manufacturers. would -- items. our we improvement a we

Scot Ciccarelli

Mike, sorry. guys a I'm And you do have --

Mike Witynski

ahead. go No,

Scot Ciccarelli

an that the sales do the was for say, to faced going quarter headwind shortages? you was guys during I you or what have these impact estimate potential from supply

Mike Witynski

not top No, the head, we do at not. Yes. my of

Scot Ciccarelli

a Thanks great. lot Okay, guys.

Operator

our Ohmes Robbie of next America. Bank question take with from We'll

Robbie Ohmes

more what question. kind Mike, Dollar Thanks what's of going Tree I for and could -- you on a hoping color was give little my Hey. taking you're seeing there.

be, other they're side So demographic customers the off Tree about end of help than income stimulus some quarter the just on buying customer know stimulus is, type a Anything industry, Dollar. the less? you into you the are and the how at this this income the seeing one the in responding question Family think us, Dollar big impacts And lower things you're for quarter. can much broader impact then, and with decline. just, for is is with some the the yourselves and question I rolling seeing would of

Like transactions XX% Thanks. at are you the how in Tree. thinking guys should about and I said think comp about in how half guys we Dollar transaction you decline playing out the back that? think

Mike Witynski

your for question, Thanks Robbie. Yes.

and we by believe away in we stimulus that as safety, and of the Dollar Tree, went So first as in at quarter supported as the there. is extra But continue Family stated, out customers dollars benefit and and half needed shop convenience to the the May, those was they Dollar great and the Tree value news Dollar. at

they still into in, we a and quarter. comps from come third And shopping going and seeing purpose. a we they definitely basket. getting transaction are the -- higher good -- they shopping end of basket When driven the our about towards feel with the and So quarter the are size, are

into people will the So in we fall go should. as that the safety think as distancing we to as they social continue protocols practice continue

Robbie Ohmes

obviously you've Family related seen retailer from that's some back but or And a been you've had or Tree standpoint of open, online? to on any necessity back pressures stores either any other online, these Dollar a Dollar changes were other Mike, as came stores because marketing coming you make to guys

Mike Witynski

Yeah.

any seen not have We difference. noticeable

over grew the grew Dollar, back. times our As the business side, opened I as stated, other discretionary Dollar customers on up, three competitors we Family discretionary came at -- market but Family

did opening and noticeable stores seeing more are we're in competitors difference opening, we a traffic not are and/or as that see our So basket. up

Robbie Ohmes

so for that Thanks much great. color. That’s

Operator

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

Chuck Grom

Hey, thanks.

the question Dollar. on congrats is Family my on So, new position. My

talked You I XX% about believe, new the quarter. in customer acquisition,

those you And quarters steps to then even Just looking the that retain us relationships the ahead, those I'm next into and just curious over could you're for taking wondering what next cultivate shoppers metric few if give year? and quarter? first

Mike Witynski

for the not that do number I Chuck. first quarter. have Thanks, Yeah.

can grab that I can think Randy get back we you. and to

is, retain a experience. them Regarding what shopping we're A, provide doing to great

than our are And and strategy of looking ever, hear safety, we side, more our the that, cleanliness the is on have is to the getting very own And them. from those our important teams what on them continuing shelf. for price we and and Now work to is side, the customers on on consumables sharper to are want providing all out what convenience in surveys then that products on discretionary the driving they're we people and things able we're think keep the And enable with when those store, And them. points we and to them. they're signing in great then speak think we'll watch coupons, value we up for that doing our million size of to smart basket along to basic needs. those with what be on our going customers retaining X.XX buying keep increase like and providing that us to with,

Chuck Grom

been years. Dollar the And the of past guys picture, struggle ago. over Tree Family helpful. bit purchased little four like It's a Dollar That's just then years bigger few a

picture fix get curious but near-term, not gap Dollar Thanks. to what the just with Family the needs narrow think done, to Just do just you done? General think what improve margins, to you to Dollar needs to business bigger get

Mike Witynski

a XX.X% they discretionary Dollar. new getting retaining And our an it's day in by more is Rick and think the think I on customers Family evident the at right And and team right I and bringing comp under business. clarity, that on merchants, driving are XX.X% focused this it's products. think the a the Mcneely comp focus right now, I direction things,

think are drive those can strategy. in all structurally, organization, the right in one things. I we've in this we our got the And I are So, under I And right that leader. building place think think one now leaders

ever So, people in discipline the buying is coming driving together, we but it's drive We've more that we've we people. in think the having the embedded I that Tree into wow with and moved and -- as the has so and can Dollar also that -- execute need. your on that the operations right companies culture. and the that got And value what what strategy, not team right two and confident only cost bringing side also to merchandising place that your our and that I'm products, on I than focus execute some

have at some as structure, we look pollinated our leaders. cross So, we

that So, driving we've leader got business great our Tree. had of the discretionary Dollar of side many experience years in a many,

great in combination all So, that then are it's a right and chairs getting work. in the people customers strategy the a one the to building, responding having of our to, being execute

Chuck Grom

Thanks. Best of luck.

Operator

question And Deutsche Paul Bank. from with we'll next our Trussell take

Paul Trussell

you Good to margins. our EBIT the to I Thank wanted around morning. discussion go back for question. taking

This Dollar and some elevated expenses, stores. the other on to quarter with Tree side -- related issues has labor particularly right, the came with

really ability and are to about algorithm comping we you quarter bottom-line? half? ability range how thinking go-forward the about to X%-plus If business in the the flow forward, in how really should of And just down overall to second flow third the to think down going leverage think and to that expenses the about Kevin,

Kevin Wampler

back, COVID coming from Tree been negative pretty and believe Thanks, made been do safety between, his really difference it's -- really standpoint, Yes, that as was think, us your the on we associates pay. side. Okay. in income the would really have And Dollar in even show run would was up, traffic obviously, we I help the comments, our XX% mentioned attendance, people keep Paul. a better things various -- a invested turnover, Sans operating hopefully stubborn around pretty have EBIT we costs, obviously, Mike have that obviously, and premium if store it to you point, in though doesn't think obviously, up.

that, and for expenses at Again, lowered to a XX-Q amount have first this noted million. premium that any sanitizing basically, I And the cost the in of is. premium quarter supplies. for pay As and of we QX. XX weeks. it will continue additional about realistically, August going four anybody would of we morning, think our a the you for it few that should X-K for into what we're an cleaning was place continue $XX weeks we will than continue QX, have obviously modeling, out like four go of weeks that so premium filed assume pay be put In that PPE And else also less the we was, ago that's weeks to

a or said, be in It necessarily Dollar will headwind. operating I expect EBIT income So show a be that of that hard don't will because year-over-year in Tree for QX being it will – improvement that.

that these the in frontline sense So we've company the world all through reward made to that it and decision as makes a workers that. go

will it last not Now forever.

And these have because protocols some will so degree, that as various that, some year, XXX% the cleaning I at But can expect fall we're will away think, costs costs, point headwind. time, time be next to away at certain still – and we to a things. going in these of to would maybe fall you sure get into because not I'm

has if at operating look mean, been well think I I otherwise. the I you SG&A controlled, think other lines,

back XX% on I think that are getting that right to with levels track believe we our driving where should we be profit range. to back the that gross to XX% and we're

And that these related we costs realistically, costs And end thing we have we and that don't speak another hurricane fact we I we there'll be some obviously, prognosis will dollars But day today. QX, very, November. damage be we as expect in expect to very well some to the the there's have many that's be that currently. that So to around to storm. one-time I beyond what but arms is the some stores of would know, the obviously, the there'll that would long-term, our report can't I affect think good when path going happen going QX in at in the that can't of put

Paul Trussell

thought your process. And about ask to you. wanted and Thank just also cash priorities

of You today the year, do to have balance of time is an although some on the what's the revolver. elevated amount that sheet on drawn related levels versus of usual this cash

store and about and engaged about repurchases, a been about how about think which has you you've in been I openings thinking remodels leverage, help share us think been Just that. are year since

Kevin Wampler

Yes.

revolver your paid of We've So pandemic. the on in point, the uncertainty $XXX QX of did draw. draw million $XXX the obviously, million back preemptively we to with that

well. point in time, that we'll back million pay some as $XXX at So

The have due other come thing due. million Family we the Dollar notes legacy XXXX, February X, $XXX

technologies be stores, to in always to cash chain would point new renovations, those plan time. at That even grow notes still that. that and the said, we'll being So we support to through we supply position spoke to. a growth, continue I with nice have extinguish Obviously, want

plan have there. those things share a will do So continue. out repurchase We authorization

into kind million to that there some settle. that of but $XXX rebound the as we flu authorized and outstanding the there's pandemic, we comes the as get we season as we We brakes be with fall Again, things sit back half, uncertainty pandemic will go with here. obviously the the in have as and winter. put on Obviously,

So of New those things we'll the type decisions keep eye and Year. on make our enter we some as

Paul Trussell

Thanks. Best of luck.

Operator

our next take question BMO Capital. We'll from Kelly Bania with

Kelly Bania

fitting the more Maybe of touch just seeing little on accelerating any a to other bit. reaccelerate the to Hi. to on questions. or is well. Good top bit line you. It you're perform a that? from margin Thank the can the relative like morning. go that stores? remodels. kind in can logistical there to opportunity perspective, Thanks bit little to any performance expand is for back a to I there, remodels And you a little sounds me there there headwinds continue in just you they if Wondering, wanted HX

Mike Witynski

to travel But we Kevin COVID to a the as accelerating, Yeah. many for restrictions restrictions do of given the trying I'll Kelly margin. so from perspective current state. can we're in and as environment it thanks. throw of the

we're we've to locations, accelerate in and third safe teams the will absolutely up our states remodels, that and do But do get the as soon the going back XXX. can So there parties we to up that. open in our as – and we it's and open absolutely,

Kevin Wampler

an little margins, seasonal. Speaking consumption, margin. And obviously, right? which various which at lower the look you the impulse/media then, So some obviously, you emphasis HX margin coolers, to components, and as freezers More have on model, a higher is there's bit is additional goods.

the and improve team was spoke to model. the looking continuing things Mike and of really to of One earlier that Rick fact overall

Looking We at get the sales and are profit get probably a obviously, driving of day. space, at dollars even nice assortment we end we overall our a intention higher then the there's of we we that, to of discretionary relevant driving lift. rate and profitability dedicated better more drive obviously we'll assortment seeing that to but within Obviously, And out we is overall. do do discretionary, overall more And But stores. it box. how we provide it. a a with those – think the can nice even like

Mike Witynski

question. Next

Operator

We'll Karen our from last question Short Barclays. with take

Karen Short

Hi. Thanks very much.

couple on COVID a questions Just cost. of

Dollar did applies million that call continue whole – that if that also assume should manager the quarter. to the $X.X $XX continues Wondering, we for you So bonuses, will should out two banner in on that we million the And assume wondering the follow-up. split then those quarter? could And that, Dollar place between if Family that's give other in one the for the you components? I Tree and then had

Mike Witynski

the the being DCs, out vast From banner within mainly incurred today. costs Tree majority from $XX.X the overall $XX.X we component detail you Okay. a Dollar earlier of that between again, end. of million standpoint, Dollar perspective, there's and Family incurred a there at the -- an which million. but payroll gave And and QX And stores, broke we segment obviously, in

of So you have it. piece that

Those beyond. As But, -- probably does not directly. fluid as the that will necessarily continue $X.X it's were manager again, go very place. a we bonuses, and that far as million does And above of situation. forward, not take

that for this we continue. it's at change. necessarily do to And always so, not expect open But point,

Karen Short

million saw $XX we million same the the it that $XX quarter. But throughout $XX.X the million way take and and between allocate the the

Mike Witynski

Yes.

Tree because I Dollar -- have larger have a what Family think hourly reasonable, population to that's Dollar we the just you banner workforce remember the is banner. than we in

Karen Short

Great.

said And comps it's I the still on on the totally in I'm current Dollar you still then, not solid. the clear message know takeaway be what quarter. Okay. I Family guess, would

that that can entire little quarter too a saw are at the assume the that. mean, to we soon should if more So XQ on I just in tell? we be curious for you level continuing clear they or

Mike Witynski

Well, about you I it. think, think Karen, as

or quarter to was lowest within trend excuse prepared the it the little for cadence little month So bit from the spoke and about we easiest been there's of way July. a I And fact think comps of Family -- out coming quarter roughly within me, is, that about the the lowest the remarks, Dollar X.X%. that the think degradation

Karen Short

helpful. Thank That’s you Okay. very much.

Operator

closing question-and-answer turn remarks. the now This back Randy over I call concludes today's for session. like to would to Guiler

Randy Guiler

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

Our performance November QX next earnings is Thank conference to tentatively scheduled you, quarterly good XXXX. Tuesday, discuss have call for day. a and XX,

Operator

This concludes today's call. Thank participation. for your you

now disconnect. may You

Dollar Tree (DLTR) 27 Aug 202020 Q2 Earnings call transcript