DLTR - Earnings call transcript Q4 2020

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Operator

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

Randy Guiler

Thank you, Jordan. to and to fiscal welcome fourth Dollar and quarter fiscal year morning, our discuss call Tree's Good XXXX. our With be me Kevin and our will Wampler. CFO, President and on CEO, Mike today's call Witynski;

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

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

we Following turn Officer. Witynski, Please to President Executive your questions questions. our the necessary. and Dollar prepared will your one if remarks, call to to Chief Mike limit call follow-up, over I and will one Tree's open related the now

Mike Witynski

in Dollar leadership our and in plus Randy. believe you, that in contradictable field from Virginia. more working well morning, Thank stores as our distribution than to associates XXXX career. upon from Tree joining you one team will challenging the sincerest as store XXX,XXX out Dollar and goes and years here environments us as many reflect that My Family to gratitude centers Chesapeake, now of teams now XX,XXX support our XX business and year One being everyone. me today. unique, our for of Good I Thank most of

to success. and and is customers our dedication to serve our Your commitment company’s protect critical

for value segment, As an to solution be across will we part of retailer households North the of in America. millions continue essential the

we exceeded the our both of long XXXX, first $XX runway chain and of the a Additionally, to revenue sales growth for business support our throughout like and I in efforts year. ahead to for supply suppliers, partners, would time business have In recognize their we billion us.

did cases grows, business so continued COVID recent business been and partners. rise. have vaccinations on encouraging. your on decline support trends the our the support. from As of are need The the We our are each appreciate and

However, highlighted I other in we am be this will continue relentless for efforts or solid the our performance by EPS protect prior to and with gross the team's team pleased increase, behind is same-store prior fourth to compared operating quarter, adjusted for year. The this. very discrete in charges the leverage. to each pandemic year’s margin XX% expense quarters, improved sales of when XXX% delivered increase the until

Our operating enterprise adjusted when in comp year’s results improvement margin XX included profit numbers. base X.X% a profit point and and prior XX margin, increase gross increase in to compared a basis

segment with X.X% Dollar January of month Our increase. November. Tree followed quarter, another delivered was a quarter positive by of same-store strongest sales the the

cases, December gatherings holiday resulting as lockdowns was January significantly companies, slightly was impacted COVID an escalation store churches of schools. comp among fact, by traffic in in was XXXX. fewer April our In month families, negative and social in since strongest expanded and

on even margin shoppers We again delivered seen XX.X% XX.X%. a of XX.X% January. declined were Tree our $X.XX and the of consolidate at increased of and are an to sales we U.S. count Tree creativity Dollar of Inspiring assortment average in continue transaction the Dollar thrilled onset Crafter’s we ticket, driven As by art of the provide rollout all Dollar completed is Square Comp customers which the to have pandemic, trips. stores eyewear. as XX% core broader work our in unlimited a in With gross to home home of performing values. in store and products, operating and household costs, tremendous more income. COVID-related at for craft from XX.X environment. assortment, the customers seasonal, locations, at solutions included and operating represents well Building came floral, beauty point fixed million we success continued with learn X,XXX included supplies and from Tree’s which margin, Crafter’s current kitchenware, Categories price craft U.S. crafts, Square than and

projects opportunities crafts terrific and for and gifts. Additionally, exist for entire decorations DIY handmade family, home the décor, seasonal

which love Our social YouTube shoppers platforms, the assortment, including media is excitement Crafter’s Instagram. by generating the expanded is across validated and Square

our on the great values our Regarding had sales our quarter. Tree our Plus!, the consumables. seasonal through and household our Dollar products, tools exceeded for plan initial and love We shoppers we sell fourth on

previously Tree We are the kickoff to schedule of Dollar month. announced expansion on Plus! this

assortment multi-price of be XXX the will base XXX completed stores, expanding to are current total and August. by stores of We from a

capturing ticket, is traffic we in and are offset This XX.X% seen partially synergies, count. in as for of have Dollar decline $X of to QX buying consolidation DT increase we be majority XX.X% the average of sales in XXXX. great for merchandize the included an Plus! Additionally, both the similar comp by X.X% quarter transaction Family dynamic a highlights $X the since comprised offered ticket trip expansion banners. the will

Regarding three months strongest comps, positive, the were all of with month. being cadence the January

to continue select the and Family May our Same-day Family XXXX, business test business The shoppers access pork. comp as XX.X% Dollar which all saw new remaining expand Xx quarters, QX. test on Dollar a Dollar strongest sales We December expectations local transactions were Family comp. want the our Family produce platform believe points Instacart of We stores share Dollar consumable grocery the beef, The January produce higher and the we strong Similar ticket our results of initial in percent of platform we monthly net the and XX.X% of fewer décor, than that basis and to another example lawn in and X,XXX impacted XXX poultry, a our weeks on options. for previous at very positive feedback frozen as targeting open meeting and us was is to we evolving seasonal. markets one discretionary in last care delivered home reminder, was In QX, XXXX. well beauty to a comps in discretionary We at Instacart materially Family shoppers. household X.X% with apparel, Dollar comp convenient of including enabling as sales and We year. plan in have exceeded Day average rollout, categories shoppers. stores our broaden national discretionary These increased solid positive quarterly As as is discretionary partnership U.S. across that than the data, Dollar’s many of another receive focused has Instacart Interestingly, with side XXXX, in sales. party, XX% garden, results of were grew had been basic Family market to to for the Dollar recent have shoppers third more where faster or of market items cleaning, party Late based first transactions. launched the had initial our year. stores recently more of approximately Christmas Family on closed customer across to announced provide stores, from the comp since three needs expansion base. we've in foods the delivery of

scorecards important from As always, come most our our shoppers.

our survey customer considerable are improvements satisfaction’s We seeing scores. in

saw four across store service we speed assortment, QX, categories; of key each cleanliness, For numbers customer record of and product checkout. the

annual Dollar store to enhanced to to In discovered satisfaction store Family expectations the Dollar quarters. reengaged gives success retain our chain’s decade. consecutive fact, shoppers of these will that at in Contributors improvement or and turnover has the with improved us is teams, shown each that The Family able best results that the program manager categories brand confidence examples over an clearly be conveys for we three are strategy during the pandemic. a customer and

We XXXX delivered and To store collaboration Canada, support solid Dollar traction the From Tree year gain and deal support. XXXX We made than in year. optimization projects, a X,XXX of was that recap more tremendous XXX improved of momentum campus, stores, progress with enhance quarter, centers exceeding renovations Dollar perspective, Family XX,XXX gross and a and we by pace set Dollar rebannering more in beyond. XXXX, by communication, the efficiencies XXX on and doubling relocations, stores. sales, quickly closing than initiatives Much Family into We Dollar including closings. greatly stage will store plan XXXX. Regarding ended renovation this we've to stores, its to XX stores possible program and XXX Dollar made one consolidated XXX per Family completed XX for great store more Tree margin our that initiatives than our the really income. accomplished XXX operating in another team estate real new and a the

to our we align and launched processes strategies, consistency for Plus!, Tree and realigned leadership test initial also team We enhance Dollar workflows. and our of the communication,

For reviews. evident performance recent in in the XXXX biggest the for example, our through This build Tree trip was strength These and which trip and January, category complete year. performance. our calendars, the Dollar buying trip and of is Dollar foundation unison went buying XXXX in of planning merchants meetings, Family virtual helped dates, alignment very buying initiatives success for buying

progress in been made pandemic, the remarkable. we Dollar the have despite the Family past, at With has

market and initiatives, conditions share store in and improved from benefiting are We better execution gains. resulting

turnover and more organization. I seen will in growth shrink the America. also on as towns why including after the the go performance have We combination stronger of exit outlook. to customer stores store This I am beyond, QX speaks will our that Tree and improvements. Dollar Plus! scores, Kevin? plans new pandemic in enthusiastic detail small about Family opportunities much more into for is XXXX Kevin XXXX a progress satisfaction the improved of and convinced the our our expansion Dollar into I'm across

Kevin Wampler

factors mostly $X.X a in to points basis points. costs freight, profit inventory two XX well includes the billion Shrink performance distribution seasonal Gross compared for XX.X% Merchandize on when year's and costs. improvement basis or current costs basis as Dollar quarter good sales XX primarily were profit leverage profit XX new sales same-store bonuses. Dollar fourth percentage points $X.XX increased gross points Comps and impacting The Mike, margin improved you, following. XXX offset on $X.XX costs as sales premium year approximately $X.XX ramp XX a bonuses. points at basis higher of XX a increased comp at XX.X%. billion of morning. and of the The The promotional continued of net billion the partially basis by Overall, X.X% or increased for due increased X.X% Gross quarter. Tree Dollar Occupancy up costs, improved paying Dollar X XX basis basis the points expenses, distribution XX to primarily the when gross and These million the centers the point Tree improved compared or due higher Improvements prior quarter. fourth increased XX basis apparel. increase. due quarter. premiums merchandize segment’s expense also included improvement for segment activity This to costs COVID-related as the in improved expenses, million Dollar to offset was points prior billion the approximately $X.X primarily and to X $X.XX were improved basis margin and improved to including currency of segment point to for mark-on the basis and Family payroll the points Distribution results. depreciation. markdowns decreased XX.X% decreased X.X% X.X% Family quarter to basis adjusted by Dollar. segment improved lower Enterprise year-over-year points points Thank included DC Markdown improved costs enterprise basis fluctuations. in X.X% sales to margin to from merchandize COVID-related in Tree X.X%. comprised XX margin net XXX increased mix and and approximately shrink. Canadian X% points freight basis sell-through gross for The for and improvement increased year Family consolidated

reserve. tax administrative improvements including and XXX mix compared and costs, a XX.X% after charge, general quarter freight, merchandize year charge improved Regarding the to by expenses to sales a Consolidated increased million litigation prior pre-tax freight XX.X% of in million costs points $XXX mark-on were in year’s essentially merchandise basis and during offset quarter. The an net QX ago. non-cash impairment $XX included goodwill to a selling,

items of these SG&A prior Excluding quarter, basis the an XX expenses from points year’s improved sales. adjusted net from XX.X%

costs or percentage a bonuses. basis SG&A net expenses Payroll year’s costs the the net with comprised prior to that COVID-XX-related of for approximately is the million segment XX.X% XX points X.X Tree sales fourth points basis Dollar payroll compared rate XX the quarter. quarter, the For of sales as when increased associated Payroll improved of increased to for following. slightly

Additionally, increased offset incentive general expenses points partially professional costs decreased lower selling, points. by reduced from administrative primarily travel health depreciation and approximately decreased legal compensation insurance and was lower benefits. XX And basis Other fees. XX basis and

as percentage to primarily points XX improved and points impairment basis approximately XX.X% expenses increase. With for the higher same XX income $XX the charges and XX.X% net compared impairment compared prior Corporate reserve goodwill basis basis margin to and compensation compared with points quarter lower Appreciation for and leverage million the primarily incentive the quarter to in to and operating year’s period of primarily income from year’s decreased from and year basis for million XXX% store X.X% to approximately segment and the approximately X.X%. advertising a XX other. SG&A operating X general stock for to the points in year’s and goodwill improved the on and expenses last by and points million was and incremental quarter, basis comp quarter. to million $XXX million Other from litigation selling, leverage Family by million prior comp compared improved from of travel adjusted an segment administrative facility comp expense improved of prior the the fourth quarter, on related $XXX.X points year's lower was margin fourth included sales the costs basis $XXX.X Dollar improved in support a quarter. Operating XX basis support Dollar income Excluding costs. costs primarily sales reserve total expenses. XX for cost electricity incremental were approximately XXXX. Payroll-related XX.X% Family COVID-XX $XX.X adjusted sales. strong Dollar XX expenses million due These rate points litigation Tree, prior QX XX.X of from XXXX operating X.X costs XX.X for million corporate, related increased

expense. comprising interest totaled Our million expenses operating XX.X net

reversal expenses. tax goodwill QX in XXXX net for the not would tax the have effective XX.X% fourth related been million prior affected $X.XX. the compared Our $X.XX company in which charge, rate was XX.X $X.XX or goodwill XXX income totaled January end that earnings end the share share a to The was tax compared company’s of was deductible. year earnings cash net paid year’s XX.X%, $X.XX at XX.X% billion million million The during per Without to XXXX of which net by had included an This charge the of expense of and equivalents billion. prior for rate valuation share, allowance quarter, off Family COVID-XX year the XXXX. cash operating non-cash $X.XX in and related to Dollar the included impairment debt diluted notes fiscal XX, prior diluted of year’s a the the quarter. per $XXX.X Outstanding to rate at for share $XXX.X or a per reduction foreign million $X.XX loss as $XXX carryforwards. Company per was adjusted quarter. impairment million of compared at legacy Combined

shares million repurchased for we $XXX quarter, approximately X.XX the During million.

authorized morning, for action With have the announced share Board we $X.X this now billion repurchases.

updates Family selling end time invest in activity. share the increased and footage period decreased same year, while We for footage will year, end Inventory year the square provide in foot square declined repurchase X.X% same continue post last per square Inventory Dollar selling increased Inventory X.X%. selling for year business Tree while from to X.X%. at we’ll our selling quarter Dollar per decreased last X.X% at foot increased X.X%. Inventory square X.X%. on

in were versus improved productive QX levels increasing quarter million QX lower last in Capital to more inventory inventory be fourth year. continue $XXX.X significantly Our expenditures we in million and with turns. inventory our $XXX.X the

new HX HX the and of million X,XXX $X.X year. XXX.X and XXX.X Dollar and Family installation market for development For Dollar select planning new Family fourth Tree expenditures ongoing stores capital expenditures including of the new amortization consolidated be Depreciation to second stores our both and will campus, Dollar to capability Dollar XXXX, The we and LED QX totaled are Chesapeake be quarter select and addition on Tree replacements Ocala, based combo phase system the frozen projects, to stores XXX Family Florida. last stores on be stores lighting, focused billion. flooring XXX fiscal stores, XXX locations. HVAC in and format compared will refrigerated IT for The stores, renovations. enhancements of in Capital to center approximately in our distribution of and Dollar construction

expense $XXX.X depreciation year, the million. For totaled

as Tree stores impacted QX and now part share store X,XXX lost days to closures. snow Dollar brought back of in much states February closures be and storms and temperatures will your with are in XXXX. sales open most to the some expect its potential For million that Texas of for timing to a operating, assist Stores resulted freezing variables areas Due of to fiscal of shopping impact $XXX planning uncertainties, federal amortization wage. COVID related These EPS depreciation variables and specific unknowns include XXXX, and magnitude pandemic to million. consolidated providing do number guidance. to customer minimum I sales we and the changes range from and points but stimulus more modeling the not and we're the The and the of to want to for Dollar Family central than of to $XXX impacted. government these patterns, from

QX. cycling We COVID the onset the of XXXX will pandemic in be

in margin both in segments a sales. I and Tree impacted year ago. think negatively impacted some were sales seasonal were [ph] ways gross discretionary Easter-related business by Dollar different Our

increase a As experiencing for localities legislation. gross on in are be toughest XXXX. Minimum will Family certain XX.X% of freight our we equipment a Tree of result $XX merchandize We Dollar increase scheduled headwinds the X.X% worldwide XXXX. and segment comp payroll the and costs receiving comp and a million margin. had for in prior QX currently cycling which and QX, result compare be wage The year, Dollar decrease At in import wage a increases minimum for with the congestion. quarterly XXXX, million increase increased XX.X% in will faced nationally may to $XX estimated in XXXX. store port a has in as We're of outcome future and shortages wage to states by some issues delays depending minimum

costs current offset such We We conditions, cost significant HX COVID to $XX a and our these fiscal and projected. currently the in as Crafter’s and be combo freight. support to of in a in incurred We Square, we're primarily these affect million shrink as $XXX will continued million additional million reduced and of costs cost and import market on productivity believe headwinds associate the related conditions. pressure savings year customers. COVID freight in costs. $XXX As focus These domestic cost of quarters currently more three result increases initiatives stores, result XXXX XXXX by seeing moderate stores first of our than market of as in related project

XXXX, we incur materially but activities level. for We COVID reduced a continue in at will believe costs to

well. relief We expect COVID significant a are checks provide anticipated as lift. tailwinds to

XXXX. could approximately customer normalized and abates, million return XXX to COVID more QX be if expected for traffic levels. to million that is in interest approximately expect expense fiscal $XX Net also We

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

repurchases, as Our billion. outlook our noted share any does share include authorization not we increased repurchase but $X.X to

or sheet, our over several able return grade a flexible past returning and years, $X strong balance by to the debt its be reduced share share to growth complete company the next we'll has the Over increase call the authorization allocation store to to forward. over And of I'll solid the as repurchase an turn rating. the to from acquisition investment repurchases With billion, so. going X.X over capital now important back billion expect part Mike. years two We’d

Mike Witynski

of XXXX. efforts proud extremely team I'm Again, fiscal the for Kevin. Thanks,

million despite XX our million, related costs, Enterprise comp concept store we the ended X.X the the XXX operating The improved For delivered and and X.X%. point basis flat more than announced million our turnover diluted delivered XXX it the COVID points Gross year-over-year format. EPS an newest points as is The manager XXX in increase profit working costs. tested balance satisfaction shares are year, in X.X%. repurchased in combination This sheet. SG&A our improving profit customer by we XXX margin of our of cash of than percent with in years. rate markets, XX a are remarkably to basis which year experiencing $X.XX. And to well We lowest a we increased sales basis what team annual as our store many improvement. company billion were morning, in more scores on we and rural delivered that or refer current enterprise or combo net

of a and store Dollar returns. to These Dollar’s new where we Family X,XXX X,XXX populations format combines alone. great productivity, have Tree’s and from Tree people. The designed small assortment are We combination store I Tree to value targeted we traditionally store in in the opened Dollar improving creating Family York greater more of stores, store Omega, Alabama; or higher we store of in late test and first while price XX sales XXXX ranging Compared XX brands XX% we with stores $X.XX point, As the and small than test analyzing Closely [indiscernible] stores these opened margins not Georgia; concept. in both the opened across July Dollar we renovated better combination currently for Between said end, XXXX, are utilizing a Family Dollar small same-store to stores serve two stores delivering are and all delivering formats New towns market types XXXX. Dollar Ravena, other mix continue refined additional Combination refine country. more are and combination and store markets, average. and store followed the others. The early to like serve performance have productive, gross to and the strategic learnings, geographic calendar these feedback towns store by margins in costs. dozens will the have additional and Linden, leveraged nearly customers stores leverages customer on past, in year markets

Our new of successful will be strategy HX stores Dollar stores and and renovation store combination forward. both part moving the Family

We to customers’ new are with our store combination extremely pleased response the concept.

format, re-share introducing it go To this Our goal types improve. very combination out. evolve and all Dollar and continue excited customers is stores check three-minute Please have to We along we familydollar.com/combostores. a [ph] to can we are Family markets. at we video, why new Dollar geographic leverage brands change, the formats to that really are to providing believe in serve introduce best with of photos, new of the Tree

associates, initiatives, stakeholders, of enable traffic-driven Operator, value balance and to sales our each we Our We team and fiscal more to proven for along questions. renovations store throughout key our customers, of our X,XXX us store commitment, and focus. growth hard the accelerated proud worked incredibly plan be strategic planned store could not believe and our team's ready now formats with dedication XXXX. I sheet several shareholders. deliver are robust a year, long-term will suppliers take for

Operator

have go from on Thank like BMO Kelly It line first you. ahead. does the look Bania we question Instructions]. a Capital. Absolutely. Please [Operator from

Kelly Bania

XX that payroll detail to was expected you're to understand that and payroll $XXX morning. XX a than pressures to greater million questions. freight wanted be you Good help other offset these and taking that more Thanks about $XX million could are for million us just think Hi. if I the on to impact first at by called from I ask costs of million comment the out, level to And getting just how and freight? factors. our you

you you growth or I'm you on suggesting that sure XXXX just to maybe So are Are make EBIT just that? want can expecting understanding. elaborate in

Kevin Wampler

morning. Good Kevin. It’s Kelly. Sure,

variables right obviously, given So we going million now. $XX there many giving The wanted to in specific. the regards that to out as guidance is specific we $XX very color, give spoke not payroll to to what's obviously some are on to that million

in Our by labor this state. we know pool our those states, a people go on know have affected there's We operations at through and department how We approximately looks that and many year. states that. we know labor calculation we XX

Now what that's no given the as different time first we've to to. than just you This any number relates other is it really year. a

-- done time, But of couple last understand brackets type the the around increases have of same over we just to have help years. We faced size this of people to we're it trying that. put some the

domestic conditions It related as probably time, in point current at import current market and that to it more related again, is the our systems, import projection $XX banners. upon to face. is is related based costs, XX/XX, XX/XX really relates this just than As we roughly freight both million far $XXX million, fairly as that the much across currently comparable

go contracts here. These of March you and are the in many in spring market As to or with with contract to May. April freight negotiated our and live import we in know, go them

so has talked of a significantly we we around spend at the the and, $XXX same been in about of obviously the less into Even COVID new in lot of just if in about last think size obviously, trying the if was QX, year, going then lot rate offsets, surprise So themselves idea And the in year. really, I with be which of said million, we talked we an and costs should did million. marketplace give at spent to we that we general, there again, a obviously look don't that. roughly $XX

potential having obviously, and still mitigate on year have other When puts let end good have sales. second we there's in the But faced hard look to I to of morning prior maybe that, beyond you think a item we that proud But an we're day, a obviously been we're And teams to items. years the over we've drive at how really get team operations driving guys some who can at I'll there. sales, will the progress we there, do after so asset continue So the issue after shrink a we the being and takes. couple the the working also we of upswing that, row good this that but as math think where to. obviously made a -- the talked about protection teams not

Kelly Bania

combination That's can very store sales per the to may the on returns helpful. size economic stores, give of be stores, and the new you And any color then square foot compared the to and us just HXs? the the ask on how model, wanted the cost

Mike Witynski

Yes.

now right square are stores about So XX,XXX feet. the

bigger slightly a And they're like economics. Dollar we be. than what the would store Tree normal So

or on can new Our into a one are better small store. you're going results. in normally comp got and they're categories the was margins higher Family and XX% delivering sales price it exceeding there of expectation standalone when two the to at we customer enhanced leveraging -- dollar sales of store are the one the are product we're as a And mix now margins. the that market, And and brands performing just because a Dollar in store it manager, than the to with Tree And a you've are point like team town and our you greater average. imagine a when Dollar

Kelly Bania

you. Thank

Operator

question, next as follow themselves if one ahead. And to we go We'll allowed. with may Advisory reminder, limit up Please all a Telsey and question necessary Instructions]. be our ask one to participants Feldman Group. Joe from take [Operator

Joe Feldman

guys quarter? a I much confused pressure fourth least question. your freight put around Great, could guys. a will guess guess this you'd maybe as Thanks so are I'm but mentioned, for rates you're be guess allowed color seeing little I year, to pressure I do again. they that? share renegotiate just -- to freight spring you surcharges I the every the understand or I you wanted why and ask for and Kevin, it on assuming in taking at on higher you negotiated be more little

Kevin Wampler

Sure, Joe.

we part big a information there has of potentially The market, in Asia. more. a volume it's same And then and if in import for contract see, a you And pay again, see marketplace. from and to paying your some we just And a is containers. not guys get of been it, you standpoint, year point supply an the demand, all been and [ph], volume, exceed at backup in the based people obviously, significantly look are we instances, us. general. upon so China, up do certain more spot we at some move It's the in As good

few weeks last well. You've retailers other it to over speak heard as the

marketplace working feel So it's that. the where and here an and issue. keep as through in is specific, Dollar good to seasonal goods projection in team Tree our industry on based our that not our today. about general, We've be, And our to is is coming it's projected we able goods. been But moving sit that

Joe Feldman

Family I you. the about on guess lot of we continued detail the has two not improvement Thank We've and the been as on question guidance, of – Tree know Dollar there. of expect the greater should you within how business? Family you're a but improvement seen and brands? Dollar much much think kind at profitability follow-up think giving 'XX too Should different Dollar profitability -- A we about I better. stable versus

Kevin Wampler

in be big and the building and it muscle. twice began ultimately. direction. talked you the to the strides. and And spoke this that [indiscernible], kind depends a we’re but it, Joe, obviously the in just big made do that the lot there's both. important strides. And believe that still side business. in a XXXX, Dollar of comments we We've building It's business the player want Family we've on I not leap a discretionary market in as we believe, going we where we do think it think We've if income, we about more again, made we piece year of house Mike I opportunity about fact being think operating think And his with obviously that obviously, of right growing about that made

But opportunity. don't we So doesn't think other as that's well. a that there's mean great opportunities

on talk can where You important we an locations think a store, We opportunity. look a – X,XXX there's at the out about great that's lives a role the customers’ there play believe minimum our in combo as we we They for we day can to live as – not a and many, about close we things. basis, large big to it. day so it's place think may to many be there be their opportunity metropolitan a shop area,

a So of lot opportunity.

And think always to Most always to the $X Plus! that, about some ourselves. some not and recently traffic And and the these we taking you learn reinvent point initiatives we consumer Tree taking that in talked driving, style. People we fixed margin know, XXX of love We've add Zone. opportunity, upon stores, Dollar years, Square out these again, honestly initiative. really are value on take banners as and the sense product. I fall driving. Snack Dollar well being $X Crafter’s over that side, does provides. -- I our it's the But of think [indiscernible] both about the relevant build again, now are expanding really it of the by of to upon and $X.XX continuing can price to it and able go benefit and that Tree the talked

Mike Witynski

with is agree both growth excited this believe I I absolutely I'll Kevin. for And -- there's And XXXX. about with Dollar. Joe, Kevin so Mike. banners. start am Family I Yes.

was for what capabilities discretionary pandemic side year, We last and it And consumables Kevin synergies bring side. stronger year merchant was are to and that And of assigned our reasons. Rick were about disciplines strong the energy needed lot was comp I be out and was our in our a absolutely we come and for front lead to focus a Family on think were X banners the going to, December And leverage, to both really team. single possible of backside the ago where low on to Dollar McNeely on digit to March the sales the quarter-after-quarter. on than speaking of

that. to selling through just carrying And and And flushed really and accelerated really pandemic the got strategies. inventory disciplines in old looked pandemic, our great go the then turns. on thrived just our our And past throughs, We coming year. and and survive receipts going going stronger upon through what at from we're markdowns and better disciplines self are back sharper to improve last we We're And driving less a the price I’ve we're merchandizing, really not that that’s of in assortment new all basic our mix, way. We changed through to got one points. So our by values. better during it we this the didn't it. we looked -- at

The second thing is, is our stores.

as comp. of balance You into continuing spoke is quarters And our a carrying better another have that and initiatives about us talk heard towns when our just say haven’t you've heard execution and then it invested have company and grow are billion going and we've year. omni-channel are debt. prior dipping because then to We've about, It's improving. board don't this them, that to the last produce And going And a side of X.X value. and down shareholder to across enables toes satisfaction pay clear billion a this in scores in digital renovate balance thing, the forward got the -- pandemic. And Kevin new another $X.X got business. segment X,XXX into is thing format combo lot customers now and flexible been sheet, have we our year customer we said, customer three to broader billion grow in sheet, – and that and compared the to our store able fourth pay and customers. gives on Dollar it The Instacart strategy. the Family Kevin we company for lot getting and didn't and every store comps of to X we of then in We them grow Instacart huge can a use we've HX flexibly year this to And this direction on And just before in XX% response XX% us to is is stores, small we're Instacart. go responding. and producing going broader this haven't a pandemic. with getting renovate We've a grown would last like I thing be us wonderful generate we serve to cash we'll on that our flow got for a now as that our to us a format very

just heard We're drive then Dollar Crafter’s we'll heard and about we to Tree and those and done And that Dollar our Dollar Tree And business COVID with And going you've about January. grow upside always have Plus! Dollar another all now to Plus!, us you've related. got Tree in we with there's was it that Crafter’s go So us that our didn't Tree entire we're and digital year talk omni-channel. And it this perform then well Tree categories. Square. Square going because Dollar Plus! will find

all any and Outside our because fourth to wasn't problem. XX And Dollar we of the years. Tree levels at happen a November didn't parties, Christmas. of great which work spectacular in there of And just move best it our people of X.X% The celebrations. and in around. that all and better What that. COVID of states, you that, happens was did XXXX the had is, than quarter saw those quarter. country January first quarter, celebrations a at our look of increase before the categories comp in cases the The COVID we what was highest lockdowns, COVID. our Tree And the Dollar the lockdown and at flourished is feeds spiked You increased across churches, the because not had schools, days two party comps of fourth home, were at happened because during the and was December

I a XX comp and XX% beat a we delivered plus believe margin at can next Dollar year. that Family and we So income

So yes, successful year have to a we're going at for to both believe answer banners your those I reasons. question,

Joe Feldman

much, That's helpful true. Thank proves and so I appreciate really I guys. it hope it. you

Operator

Okay. from ahead. And we'll take with Bank. our Paul go Please Deutsche Trussell question next

Paul Trussell

beyond then wanted color. bigger XXXX. the Good I questions morning I to and just looking within comments thank picture some you for follow all the up guess

Just to least. unique obviously XXXX was the -- say curious pretty year a

with give of curious navigate able what's given the to Dollar Tree as on think just turn the if and to can kind and comments the be would timetable do years? to return transpiring the the merchandize be headwinds front in some we long-term think the So as all Dollar move seen potential prior and of perhaps margin Family here, banner, corner all formats, some new about you what you and we've on levels the you

Kevin Wampler

continuous Mike a I'll all in. couple and Yes. Paul, chime costs, One, all year think very our expecting heard is go every let I'll true start guys of efficient before it's that's news I of company think improvement. in aspects a you being Kevin. into sales, within driving one words reducing more ways. business, have of the is about to the We this I our and in improve company. I in it whether guess

So that's is. just the mindset way our

as again, give I here you but Mike lot in while shared that the of know I the don't so all I And of world the obviously certain part expect the uncertainty today. milestones, And have a of you would think a sense I has to timetable what's sit of is that with there and on improvement. pandemic, idea. morning of we continuous out in this And with going that the

about can we're is with operating when be things The But [ph] income the to Whether do that's the banners important think want in and yet opportunity we year. going the it expectation it. some with of think improve So, world, thing way to both we most entered improve. great the our to going is on that's the seen. we there's we a I

Mike Witynski

continuously that Yes, will Kevin agree drive. we with and well, I improve

has Family and have we me, points. the year is the we when because side Tree Dollar to it the first think the [indiscernible], yet we're we how our arrived manage I our in And allocations and front ahead going we and and that And to quarter-after-quarter this the just there going price cycled growth, path how out of grow margin year. last it. on us, once have comp now mitigate know to quarter term for improve side of and And things years upon say like right on sales here tariffs, have assortment, Tree first short look store positive and to that we we're got just at are cycling that I continue through aware we year. Dollar products heard Our for our Dollar upside, around except to at Tree. once us, we're not figure we would you've it Dollar XX it, grow of a of

that strong we can So grow feel yes, very I sides. continue to both

Paul Trussell

you potential? on may future, given formats long-term updates Thank see rate, or up you. any Is so. want or run Family the have? of XXX actually just good the And do store you're Dollar’s And a X,XXX scenario this that remodeling you year, believe accelerate where opportunities guys go-forward stores and opening kind you in a to I in your different mind count and that

Mike Witynski

and will that we’re continue. to on throw it from absolutely to going we comment I'll and perspective, Kevin – my But then Yes, there.

X,XXX We renovations this have year.

capital Next then and believe it feed the another to year, our growth. growth there's thing enables going great accelerate we But sheet of about structure, X,XXX. the our be and balance the

we we’ll have after confident shift -- to the about store we So year these this formats we've got of next year, that can then as us feel down very growing. renovations and we then total wind And ahead growth. in

store ramp we years, we'll as to acceleration see would store wound shift in renovations the X,XXX I new growth our next yes, So up growth. two or an new for then up

Kevin Wampler

to combo today to it be as as most the something potential will Tree roughly numbers those this and into we the [indiscernible] something point think at evolve, that's talk what point, again, can new what plays way we XX,XXX So time. have is is, to of think the in that's given think changes at And I Dollar and we we and minimum we stores. maybe looking I was at Dollar a it update about that marketplaces idea total stores, I relocate the the future right? store, that part continue the XX,XXX in we store stores about Paul, about to the we're X,XXX think stores recent I Family the -- think of I think your haven’t updated number know and

all future, vacated, So And helps we're update To we us where, at that. point point, there opportunity. when grow. a been some being a space things opportunity the big space sheet always for a the balance has in but place would it's obviously, in second-hand are But Mike's us. great support retail great some

allows that at another opportunity good clip going that's so to forward. us a grow And

Paul Trussell

luck. of Best you. Thank

Operator

a we more go It Okay. Guggenheim with line Heinbockel looks about question have it Securities. John one question. like ahead. Please the time we have from looks like on for And

John Heinbockel

some Mike. just with the for I’ll combo. impact start Hi, of the strategic

pricing? mix do non-rural one, allows with to getting Dollar the Number need one. the from them into margin combo get you overlap take you sensitive sharper or you learnings Then it stores secondly, on to think are Dollar can to and that may So, Family pretty put you if Tree, not you that?

Mike Witynski

of format economics the are that have. we're to our is and said, just whatever let's is, and Tree of and town productive because go Like and the Tree to go seasonal live going Crafter’s Dollar formats with I needs on it to really we the would Dollar part don't Family What just on feed sense well, all Dollar this about side, stationery then would Family get and all the the most improve continue margins in small banners that and their go lives small the refine Square with into the families. support profitability helps great makes and the and do And with it in and said learn not party America celebrate I'm on that. we towns our these and the the their And Dollar excited lives. town things what to we their bring and that them the the in we

don't look store all So will that And do comment, and us margin already the the helping store. in Dollar XX that that that that combination cylinders are of we the into brought provides, your great from well. those really well. helped categories on to at HX format program bring categories that $X.XX and categories from we mix because the and about is of great hitting forget productivity we have Tree that this that HXs, And really value the the continue stores to drive further those our into as items banner, overall have

So to we look at continue will that, John.

John Heinbockel

then source hybrid push now you thought to idea how right maybe this that What's the And does up that supply one the on product? follow that, now one that of accelerate the have? And the DCs right, process? chain? Does versus you

Mike Witynski

parallel a evolving always absolutely got what DC. trying a our are with and decide kind we -- your we've path. Well, of will are that DC To to we we great in format which -- point, network in

have all these by lot We a towns. of trucks going

we're make XX we're sure So our to formats driving most leverage to feed the leverage going network we the and these miles as efficiencies distribution across country.

efficiencies. well Tree those riding product on lend Family same would That Dollar right. Dollar truck You're drive to to and the

John Heinbockel

you. Thank

Operator

JPMorgan. Please Matthew Boss with from question another ahead. take we'll And go Okay.

Matthew Boss

thanks. Great,

the banner, the volatility know So, and Mike, January. at Dollar some December concept Tree there digit single rate, run low quarter matched basically comps was historical fourth I with despite overall there in

digit quarter, takes three relative to low as comps Tree? I And So the the your year, in full year comps for impediment single first guess, to driving Dollar fourth consider? any view quarter, puts think for the overall, at about we is the in two the similarly and to any to

Mike Witynski

with back impediments. the happen at see to and as peak the weddings weeks was Tree, Easter know and COVID begin year start people upside two the all and the you Overall, to things impacted we because and any I not for into Yes. and routines COVID year days just the believe margin their throughout and that increase And get two of Dollar margin or look at first just as great I it so did XX and business, the quarter shut it some did Family as completely don't beginning as Tree structural inside heard, Last you are the Dollar then believe Dollar Christmas because Dollar see schools calendar because traffic, of the country really Dollar didn't yes, those year. families for occasions Tree up year, sales down our It then or this Easter goods. sell And I to churches and that we our at high things. there's at you Christmas, Tree. upside the opens throughout

Matthew Boss

of headwind you on then when That’s were to the margin together Dollar anniversary put great. basis headwind, plus, XXX we first the target through, follow points we just I banner, think freight up margin range? that XX down the that XX at to And I this guess walked about should gross the we Dollar think quarter then year gross and how Tree you Tree consider banner versus

Kevin Wampler

the the Yes, I think up as [ph] as think it's a well XX lot turn takes ability with really puts range. to couple and math and quarters last point of XX we've to I it stated of

to probably is that XXXX in is I one speak items that where size freight hinders would putting into it. here development is the to of go really change the think I that in as we a that little bit the I guess

think things our I I to think So good. overall think mix continues are again, be I -- that there

to think will be I continue mark-on good.

I big be guy the think bad will obviously freight there.

And bit. think I just maybe after could rising, that shrink out years of a couple costs think little a that helpful. could flatten I be distribution I of think

I we mean getting now That bit climb. and freight us XXXX but many many, that, can't necessarily headwind. for a takes, little puts get the of it's doesn't see an right but So, uphill with XX% there, there's fat above don't in

Mike Witynski

remotely. how Kevin is our the is that we the the just product back then for exactly excitement is for buyers and going our trip, But said our trip, out our did figure year headwinds, there's finished and we're said, Matt, the with value as tariffs. to -- we And buy we'll new And I'm markup January is manage the some like we of coming be half at Yes. What product seeing is which the initial largest half the in did what product, but of to it Kevin year. a about the of on Mike. this of just expectation. that back encouraged

grow this. that. that's it. really I'm As Tree the manage the business ahead long the us that side most And Square from as we it of we discretionary side around to is, to is and going benefit excited we as and open why what be -- will the And that's favorable know mix begins they're of our as year, we Dollar this the the will as up, country about to Crafter’s

As has Dollar. we Dollar at other improved to area shrink continued the but we in Tree shrink help improvement as Family years, year, some it, -- that three pressures. a the And know, headwind see been as you to last offset last and well some

Matthew Boss

color. That's great

kind and as best about think the just So IMU XX% and you Is interpretation freight way the year, this seeing but that XX XX visibility just have in paces the to that that is under interest to the lead be to that. you're giving it? source of back signs given the

Kevin Wampler

we've this It's be to update way you it, continue the this time. us, very as and morning we go And on affecting tried the on -- puts in we'll of I obviously very transparent and we'll can takes tried these we as Matt, update to we've about at think you think fluid. point to describe best all to items forward.

Matthew Boss

a Thanks Perfect. lot.

Operator

Okay. UBS. Please have time question Michael Lasser And one ahead. from it go looks with more for like we

Michael Lasser

little taking helpful. frame for very the Thanks provided us? morning. Can Good bit That math that out you you my question. a was

that are going to from million million run you for quarter. the $XXX you'll fourth COVID have XXX provided million rate costs off, are XX ongoing of So the that to be going roll

midpoint the million. of [indiscernible] benefit $XXX net incremental at So that's a million that’s XXX.X the

global million flat, operating your income additional factors. $XX So operating simply sales happens, And we kind out income and nothing that have then [ph] with equal, a putting can sales math? mixture those else all those just to from at out other of are you how aside stay of else of we should can as two me, model NAVs pointed

Kevin Wampler

talked are big And things have again, Obviously specific We're those a many those Obviously, year. happened the Michael, and you the ones. there, guidance. puts the not are takes numbers. that to in given giving

again, at way feel The a And and feel day. of of those think good And be I takes I've helped give in you're think I We to can don't XXXX you I items, I can end can this big But there's level as good offset. what morning right. we then that. puts But we I much opportunities lot every possible. as plenty about the our we ahead business. about where in and know beyond of guidance going we're us. more whole think the

Michael Lasser

counter to is to a be potentially get make Dollar have for to really to that’s several in got all And that year messages. down going unique I true which Okay. some Can I we'll ahead. benefits. just lap except math, is argument the Family of

So have can put needs the more that I debate point But uncertainty. would that's then not right to to that's on think what Family in And of up a just really Tree Dollar now. last we repeat? follow reference you Plus! be how I where know big about lead some XXXX one lies should going around to Dollar in

Kevin Wampler

You've heard us morning our this about talk initiatives.

the stores. with have we opportunities and the HX combo the about talk us heard You’ve

that how all big business a building out margin, and our for for satisfaction, just discretionary big with You've and not trips, truly that. a the about we big believe that's heard making it's it's go sale, return difference talk things in for big are us customer we -- it's

So those go that back, I don't it we are of the were stimulus, bounce will into think the think I hard fast to project truly day. at that day-in things can end economy working are all going the how the those day-out. and on things and anybody

today. where That's So we're stand we where feel about at. we good

Mike Witynski

in the And And our they five our enthusiasm Yes, to years the in our I with and in, working keep And again, that going pandemic. a reiterate banners. last every best growing both to cycling bright we've been continue Mike, got for the are to are we better. year's the we've structure, have we're company. do on future. formats, And want strategy capital going I day things the we're with in getting where was are position at our to merchants merchants do

Michael Lasser

Yes. you're It’s messaging providing. the from very clear

So that's Plus! on is helpful. And follow concept. then Dollar up the my Tree last

the sales, You than stated that work back is this exceeding out of What's in that you your of to? operating holding stores income terms Tree and deploying Thank how process of dollars currently margins? you're it's overall in faster locations Dollar the And financial the performance the plan. from XXX rolling you.

Mike Witynski

going back to test. and items of -- for another year, expected. the items and sales again the to to and we had We and Yes, we're seasonal XXX stores why continue this the XXX out it bought we rolling we that half that's we're is exceeded

And So our shared at margin the want we in those store the described stores up overall it what everything on to responding I've head see of to overall the are really going we those just drive And continue will our just thing store the last to I profitability customers really and past everything favorably. DT year and things hard is of COVID, and that I improve. is, sales, with the look tough was those with on of the lift say XX% Plus! is described.

and the testing refining seeing going we so rolling So we're to far. results but and keep like this we're out,

Michael Lasser

That’s so Thank luck. great you good to much and hear.

Operator

like the All back question-and-answer closing I'd concludes that right. Mr. for And any Guiler, you or session. Randy to remark. conference today's additional turn to

Randy Guiler

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

scheduled Our next earnings day. Thursday, to Thank have is discuss XX, QX May for you call XXXX. good conference tentatively a results and

Operator

you And this for call. participation. today's does your Thank conclude

disconnect. now may You

Dollar Tree (DLTR) 3 Mar 212020 Q4 Earnings call transcript