DLTR - Earnings call transcript Q1 2022

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Operator

Good day, everyone. Welcome to the Dollar Tree, Inc.

First Quarter 2022 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the call over to Mr. Relations. President-Investor Vice Guiler, Randy Please go sir. ahead,

Randy Guiler

Chairman, Thank to discuss Alan. XXXX. and me are CFO, Good Mike and first morning. call our With Executive call today's to Kevin welcome on Dreiling; results Witynski; quarter President CEO, And fiscal you, Rick for Wampler. Tree’s Dollar

provisions safe company like purposes remind about and plans, our that begin, constitute statements Securities remarks to the XXXX. and results harbor Private statements. These statements various the those uncertainties actual for of forward-looking the Reform Act forward-looking we the from under Before to that Litigation I our of expectations, prospects in materially would everyone we are make risks may for these indicated will subject differ and

the actual our and filed affect Analysis Risk for ended fiscal risks XXXX, to the of could that of most our results, recently in Form annual Results Business and refer Operations on and Discussion our Factors, uncertainties sections Financial report For Management's and XX, the statements please disclaim most information March XX-Q update X-K revise caution we to today, these and time except from Securities other with required our the recent we to law. and the make on forward-looking Exchange reliance by and time Commission. as press against any and We obligation filings quarter, made release statements or Condition

And related Rick, up. will earnings make questions. to limit Please to quick follow to I call your and and take to our one prepared remarks, one Kevin our want Mike Following your questions turn release. I one clarification over before the

did XXXX of $X EPS in QX questions $X.XX this few to our incurred our in earnings. not $X.XX reduced was outlook share earnings share cost today's $X.XX outlined include QX $X.XX of share release. of the per received fiscal and original per per I've a the As morning,

to $X.XX per I'll Rick. share turn the per include of to over Our EPS share call now updated $X.XX does And cost. outlook of for the $X.XX

Rick Dreiling

long-term of I've Dollar meeting Thank you, to weeks the been through discuss see ahead Tree a businesses opportunities. brands. us to and the actively Dollar been leaders opportunity creation that this joining an we're Randy, to and morning, them to clear It's is get Tree throughout their organization the to and busy everyone. drive It's be extremely and needed. with massive long-term from sustainable going Family priorities and value change that good to a going and We combined XX to team. deliver great company opportunity, us know abundantly since Dollar the

good Dollar We fully committed great company to are from Tree a company transform a today tomorrow. to

growth come. unique capital We growth attractive engine for become delivers on profitable have this many a opportunity with that years to returns to

banners, here need and in Dollar improve competitive from Dollar distribution drive focusing long to fuel areas offering impact supply our intended leadership at price DC We'll people. investments directly greater on Most value. on right store our teams has extreme the on support by par center conditions competitors. primary most shoppers invest to with amplify to to presents and Family improved safety. to distribution service in-stock value momentum the and enhanced are greatly both to positively Pricing be at support store a store and associate importantly, the our stores golden we our as foundation customer that center Tree. of at suppliers there, engine. Family to get chain through continued chain, expectations to segment Dollar well Tree and productivity. be exceeding our the to with to must the efficiencies Family However, We The at performance we shopper of and opportunity this elevated Dollar network Dollar And a build proposition and work we the with history These improve our experience. through in to and wages, us supply from need positions. our the will as greater associates deliver field

continue on at proposition emphasis the to value technology. and Tree finally, place a will We great Dollar

we are We potential. perspective to need be our simply from not where reach to systems a

take Dollar Family begun all felt Dollar We before comprehensive and right have level. I recently Dollar I the opportunity got and a our systems infrastructure investments Family great the the of decisions long-term to to Tree review and of and next make for Tree here. to about Dollar

transformational been Directors and organization full team confidence two necessary steps for we The I have will performance Board than I on long-term I've much the the needed that inside embark opportunity to banner Now Dollar Tree retaking is of as to Dollar growth renewed our ever. the to we generating in deliver be months, operating the and journey. Family feel this improvements. better seize enable momentum,

Family profitable and us for live to shift organization for is shareholder the and next value call to meet since the Tree make I'd and the of now help We inflation are view needs. the a XXXXs, the unlock facing and change like located retail XX,XXX growth the plus millions time Dollar can gas challenging close are Mike uncertainty, and paycheck. the Family Tree to as from to in Dollar wave of paycheck our effects the turn family With their high to for gears highest part to that, midst a many the consumers, enable to Dollar. provide pandemic, stores happen, work. evolving geopolitical Mike. company, of be their over growth prices, and living of value stretch I Dollar In tough times, time convenience much our record households early They're ideal as as solution where more. are dollars very to to

Mike Witynski

line gross per a have joining increase expansion, solid share. everyone. you, top morning, and team for today. X.X% sales to year with here lift you you the with earnings Thank a and to start to The and delivered us XX.X% Rick, good Thank it's us XX.X% good a of profit

During margin responding are Tree Dollar hit successfully the favorably point, both shelves. new to as conversion team the the products Shoppers completed price its $X.XX improvements. our the sales greater value contributing to quarter, and

Importantly, expansion Stores long-term the plus initiatives, working. HX of well other in Rick investments performance Dollar strategic outlined Combo will growth. are assortment stores, including types we and several next making as for operating our additional our the $X at as the Family $X of strategic Renovations Tree designed and key the the all years improved to company are and over that sustainable Dollar be position

Independent the eventful and I a now few was of a Director QX In discuss Chair segment, to details quarter share our Board Director, We company. a mid-March, new Vice new new performance seven for want total Executive – I by have reconstituted. Before Lead a directors. a regarding very and Lead Chair,

new the Social value the the also growth long-term and and sustainability. CSR website week, we our organization. check closely a as governance new together. of by the Tree’s for of share the will have earnings new committees, initiatives. Along corporate Family its that and combination Dollar That Finance a I and for model have be improvement demonstrating its Dollar a at dollartreeinfo.com. We performance team’s out Committee. of effort we CSR momentum on We two a are Rick report very making operating working am Dollar and material Board the published Corporate portion created Responsibility recent I a the Please power with proud with and company This opportunity of our report. unique time business resilient vision common over been a and Sustainability Tree XXXX Committee banner. our and progress is

are drive the Officer. drugstore of ago, addition automation. with experience We productivity the plans to of supply focused two in-stock and the extremely store and the lead we capabilities analytics, grocery, and John later plans announced be the Also distribution well He detail improvement improved sectors. the of leadership use across John logistics Family chain, brings productivity function John operations, including retail key performance design more of will executives Supply weeks priorities to at I to address through decades company share chain call. logistics, throughout improved as greater our and team. and data value improvements two hiring elevating by through Dollar. on efficiency to Chief improvements Flanigan this retaining supply on teams, joined leadership Chain underway process will positions. the our

well Larry as retail, has the Gatta Chief will our shoppers. Larry Family focused years sales performance respected marketing Additionally, community that He our the will and in the and and leading and XX segment. Dollar initiatives business improving Larry supply throughout known experience. team joined to be Merchandising through our value on business partners. than provide for great brings for is of merchandising and the plans Officer driving be vendor Dollar’s of operating Family more drive productivity turn

some transformation of better of a the In our addition optimizing store and product investments and our and factors, our including private were components standards, vendor to outlining mix, driven our we by improved number to improve management more quarters for the as the and today shareholder performance opportunities more. you the engagement ahead, plans we on degree communications many greater company. our the in receive progress transparency improve partnerships, elevated brands, are many, to adjacencies, To use in enhancing details, culture, enhance continuing can long-term especially reassess to expect category of today, operating

planning of targeted Day an process timeframe. the in currently are October Investor for We

of company delivered Saturday well was points XXX point, banner quarter quarter Tree did a XXX ever, from profit years, initial largest transition the a which highlights receive among more the in year. an XX.X% outsized current temporary year’s benefit performance – selling over the XX company a before sales than XX a than strongest more Easter, XX.X% is to prior Dollar Margins price – the operating in the best the performance, points the QX as new to comp an inventories. above basis record quarterly including gross margin XX.X% our margin through nearly QX the Now QX day history basis day the and as in comp last which

moderation point. at of new in decline greater as XX.X% a offset sales The ticket, focus a margin was are $X.XX shoppers traffic We of XX.X% value X.X%. a partially our level the by providing increase by we average comp driven price modeling the increase with for on assortments

from year traffic. while the April, the benefited terms in quarter, X%. delivered of month the of strong increase, a and strongest later side holiday the both XX.X% sales which was Easter For this increased business the comp consumables discretionary

to than end product value greater the SKUs By customers chain, This the XXXX was by the Importantly, we completed a successfully in announced of primary seen $X.XX a of with end more our point teams. XXX the X,XXX of already on conversion of price the have new of credit September projected and our was disruption. to across QX, February completed minimal project our shelves.

responding shoppers the Our to new are items.

visit was today’s and release increase food you higher much big seeing value traffic evolving a decline a to in with and increase And can in comp. a everywhere of occur items, The positively XX.X% X% improved in had quarter, from we know had before destination since assortment Dollar of when business. $X.XX the dollars Dollar top the margin And there The Family lift in a of the now now comp year’s are their at XX% at to a We X%, The these of discretionary are throughout changes the beverage decline a the of X% seeing record enhanced half banner they comp to XXXX, early where and in now last the of of Family out our SKUs, side COVID. back had experiencing categories changes a where and that will before stimulus hurdle XX% stores. of hunt. are In quarterly rely the offering. the we’ve Examples of from Tree are XX% impacted assortment, put Dollar both driving majority onset improvements, The consumable easy the sales. a and decline category this QX. meaningful sales the stage consumables cookies changes year. increase. new as Tree the rolling new climb results in prices a snacks line And And category a Dollar see environment now. increase in shoppers thrill extreme on notable consumers for to discretionary carbonated

a which sales X.X%, partially comprised nearly X% comp X.X% Dollar’s in a XX% by since Family ticket. QX, comps XXXX. of comp in For decline average The decrease X.X% traffic was declined increase offset represents

comp last side the month the quarter’s comps for of For year. the release a XX.X% quarter, the we comp. represented best February X.X% while stimulus slightly and cycled business dollars comp were April delivered consumable of discretionary than the the down was massive as increase the better quarter

the quarter basis were for center. of Arkansas Importantly, points our comp XXX Family by approximately served an Dollar estimated distribution closures sales Dollar’s XXX by by negatively impacted stores Family the temporary

reopened. closing deemed of will of is the Last announced West we our have Arkansas All Memphis, XX-year we be these forward stores have we no that go old now strategy. part distribution longer week, that center

We are programs. eligible, associates transitions closely in distribution providing with and support those as stores, our as helping the to in by other services working them associates to and with centers assistant employee plans their providing with our impacted severance opportunities outplacement well

committed to now the and stores will the to the stores the all provide remaining We during work updated in outlook. to our support to serve QX hand fulfill associates process. and of store appreciate more over hard relocating other West Kevin have DCs are our call I sufficient centers. We transition on to and color distribution Memphis fleet of deliveries capacity

Kevin Wampler

Thanks, Mike, and morning. good

decrease we wages. costs cost items For primarily mark-on quarter, due partially was higher XX.X% decreased taxes. for and Shrink offset Family the costs XX% related shipping Occupancy leverage increased basis XX by X.X%. same to period increased of to profit freight relation sales in Dollar points markdown deleverage comp. basis, period Dollar including to activity year’s by of XX.X% Consolidated and a from the decreased Markdown higher points from basis Occupancy a hourly basis primarily cost sales for current for favorable Merchandise Tree Comps merchandise. the increases higher hourly the last to sales basis QX partially at Dollar is percentage a QX. increased markdowns basis XX.X% prior points decreased Family general XX.X% to for XX for compared $X.XX lower increases, point. basis of for estate due store despite XX.X% basis the prior capitalized sales year. items XX of result net increased is on offset the comp offset initial Dollar decreased sequential increases Enterprise points higher XX.X% at clearance points higher as administrative year. the partially Gross represented Family to on margin from the consumable following. and merchandise And points as basis higher increase decreased initial Tree billion XX.X%, for last more primarily higher the by freight points, revenue improvement to at XX and offset higher cost resulting as from basis and for to last This were higher XX inventory year’s XX expenses Gross of by merchandise margin to $X.XX Dollar sales increased wages points the billion, stack Dollar in Distribution to of discretionary the increased same-store to margin increase. increased XX freight points increased comprised quarter. quarter. stimulus $X.XX increased mark-on profit segment comparable by consolidated the from at from accruals points XXX XXX the total basis prior partially seasonal slow year, margin, delays quarter. segment basis the value from points including from XXX XXX increased compared in inventory selling, costs the and offset moving Family profit distribution X.X% $X.X higher leverage the sales costs net a XX.X% in comp point freight to cycling and price costs. the Gross merchandise. quarter, billion improved and compared primarily XXX balances three-year the a to basis higher a costs costs, quarter. points real a from same-store Tree higher our segment clearance year’s Dollar. capitalized to outflow X.X% inventory for move Tree from compared assortment basis X.X% $X.XX partially to that And large same billion Dollar due decreased sales results in These and balances, Gross XX of XX.X% XX.X%, at margin decreased

cost For costs by year’s improved quarter, compared points, basis from in first points to from partially basis quarter. which investments costs XXX Depreciation the higher the the basis leverage SG&A, decreased points and offset by increased XX.X% SG&A wages costs. store from for the when points prior segment supply comp, rate points payroll. to other basis basis Facility approximately Payroll XX Dollar improved XX.X% XX improved Tree store offset the leverage. XX on approximately partially hourly resulting XXX

from the and facility deleverage higher product store to to and costs XX voluntary points the as with for Depreciation on well comp legal for with store expenditures increased Store the basis with capital product amortization basis XX depreciation and board costs connection supply our the associated store other increased improved including the West hourly XXX of interest decline. payroll, of the current the percentage quarter year a prior for expenses asset fees, for the For to for in the revenue share as points, $X.XX which to total revenue diluted to the share, sales impairment XX Family includes million segment, to year’s and as increased Corporate as first expenses $X.XX Operating SG&A year’s earnings comp of improved to year’s DC. per primarily Other incentive and legal rate Payroll XX.X% compared Non-operating $X.XX higher and rate increased expense prior the on basis million million due related total totaled as points projects share of quarter. costs as were support the quarter. XX% basis to store decline. along diluted XX percentage million due expenses income per a due the recall, X.X%. or wage The in quarter removal fees. tax increased renovations both in X.X% was prior investment related improvements. to to of $XX the per basis and This comprised $XXX.X Memphis XX.X% Dollar prior Memphis quarter. deleverage XX.X% from the well compared in Net to higher related points $XXX.X compared expenses of quarter. to quarter or increased cost West of for reconstitution first net income points, XX.X% effective revenue compensation. expenses $XXX.X SG&A DC total and primarily increased stores XX.X% or net

versus Looking million fiscal the totaled inventory have XX% year under at in Dollar inventories. cash Compared Tree combined equivalents up are balance due as $X.XX the at approximately increased up billion Dollar for in in inventory levels rate Outstanding $XXX of at cost. units rate the capitalized Both inventory, XX, a plus Tree Family $X.XX expect for the than April repurchase our million at first be XX% increased million and consolidated Dollar catch less compared The to average for $XXX.X due the range compared XXXX, period will be in at year. initial last Inventory sheet, to consolidated to compared and year, to share to pressures. to $XXX.X of million quarter chain increased Capital EPS cash our approximately QX XXXX outlook levels company shares unit last of expect authorization. than for Depreciation last $XX.X In projects of $X. And debt expenditures increase banners XX,XXX and an last $XXX.X construction at outlook the and end approximately $X.XX based were in due million, cost costs average repurchased capitalized to Plus And currently expenditures end we past higher capital and million initial of XXXX. billion. depreciation $XXX.X that approximately fiscal diluted quarter additional and for in year. fiscal $X.X first slightly million for supply QX amortization the we were in quarter fiscal on was to a March, year totaled amortization $XXX million. store QX pre-pandemic. XXXX same XXXX, in the

in costs DC. QX cost Memphis These original included outlook. an $X.XX for $X.XX to in incurred recall impairment tolling West related estimated not share, our costs We were per which the and expect our asset per represent share product

Diluted For sales option compensation to share West sales, $XX.XX fiscal per of $XX.XX for $X.XX, year QX, year $XX.XX to per legal share $XX.XX with to new the $X.XX And billion associated disposal, to an now full per just cost and expense XXXX, Consolidated full expected total for are compared Memphis of issued year the for lost the payroll billion matter. for earnings which range range to to to costs I $X.XX of an freight, estimated outlined. related the billion. share from merchandise from stock includes a $X.XX Executive for is billion our to grant range $X.XX our previous net Chairman. expected now

segment square increase flat X.X%. Family digit We of single comparable high or approximately less deliver is the comprised Selling single year to digit more expect the and the a sales expected Dollar in comparable Tree to by a store Dollar sales in grow for segment. footage increase a mid store

West a QX, enterprise. mid to per share estimate for same-store digit $X.XX consolidated the to for on billion in the based Diluted range be from net the For is to low in to sales increase we billion will $X.XX range of quarter $X.XX per Memphis single outlook to expected $X.XX sales the XXXX earnings our compensation and We approximately geopolitical the and Considerations supply and to cost share share matter uncertainty estimate we updated will experience this the related include chain expense. per factors. for that continue following: inflation, includes for $X.XX stock for global anticipate

utility business. to continue natural costs costs price increases throughout rise diesel seen are have we affecting example, and For the gas

have to experiencing and and availability balloon volume will been needs negatively the able affect sales. shortages the of and again, procure once helium, which not are We

Our third outlook round stimulus of that an pressures best estimated billion we of includes Recycle current $XXX begin factors. in of cycling our these the will totaled that the XXXX. from estimates In QX, checks expected March million the in to DC XXXX. $XXX began that store child in We advanced mid-July March our tax outlook monthly in invest original credit of in associate and we payments XXXX. that noted wages

an domestic the of we environment, we our of this XXXX. rates competitive we likely invest freight update, and amount XXXX present cost associates. As given expect will half Import retail will that in exceed as pressures first annualization the fiscal due in to

noted to for fuel higher March, As diesel year. this in we plan prices be

We have on market. increased the remainder the based forecasted current the amount of for year the

year forecasting we transition new Additional include $X.XX percentage enterprise, regarding The gross costs point. expectations the the outsized price SG&A QX to our the by for color operating higher margin partially improvements, business Dollar for from included a offset in by for the as margin of driven improved total benefit an gross revenue. the are segment Tree margin

year the and on gross impact the improved in segment matter. conditions; $XX is the driving moderation sales be and for SG&A. the QX [ph] operating the margins as impact The impacted expense strategic to year. gross West benefiting sales product from stimulus a We incorporated related to leverage QX expected $XXX margin the new expect as into Tree is dollars, are see store to year; margin Net its Family to a lower of on discretionary following: and as are Higher including expenses well deliver million mix the The segment Memphis Dollar as initiatives, by million level interest approximately operating to expected The year-over-year in be Dollar the freight prior such with from DC to business. the labor and and for gross improved costs, investments margin result and assortments needed expected value as in business greater

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

call billion we does include outlook of authorization. Our share turn have existing Mike. XX, repurchase. remaining And our the not any $X.X as now repurchase share to over in I’ll April back

Mike Witynski

Kevin. Thanks,

are in a the good to opening, Rick mentioned we company. Dollar from great Tree As company to committed a transform

working a aligned to and initiatives setting and off accelerated and key a our supply is DC for and and long-term for in efficiencies. network our flow. and paying and ability through the shopper providing cash reiterate, will The Rick sustainable growth. invest extremely stores, designed execute performance is strategic Rick to foundation I experience, the invest are growth. associates with Dollar in in strategic the committed, ideal believe into point the proposition associated focused. technology. while These initiatives midpoint exhibit Both going operating is we initiatives years XX% associate we and journey. is accelerate inflection to driving time And power fiscal incur I Again, an improved thing an we growth and increase. of delivered an XXXX. chain, be year this costs focused – this profits believe greater Family be Dollar We ideal this time and Our representing on now making right to are value pricing, Tree solid propelling and increased investments improved earnings to position to and our at $X, And believe of the $X.XX our and are do. It’s to our range I guidance the And are to EPS we’ll future. ahead. our investing our the both

know balance us while all that today. model and stretch We helps customers’ the a uncertain shareholders. resilient that invest sheet tremendous suppliers times; a a assortment believe customers, their our it as shoppers long-term store to enhancing roadmap in company will to needs, returns. best momentum bad, manage is strong initiatives convenient to committed footprint following are and for maneuver and times our investing worked sheet and that shoppers through initiatives their value our to We that has a Dollar and our balance and stable associates, deliver ability good growth to us meeting the in These at that effectively, time environment at XX,XXX for these Tree. enables to incredible combined supply a business, are delivering buying We current our in robust need chain Family businesses at position continued with stakeholders, improve for and value business deliver the we while Dollar shareholder is our performance the manage budgets, through offers challenging our improve

top stores ready growth again, initiatives. fantastic the XX% opening are new expect our and driving midpoint questions. line Operator, have take to a year-over-year and growth growth key We XXX this at And year alone, a story I Kevin of of sales now range. through earnings

Operator

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

Matthew Boss

congrats Thanks and welcome on back, Great. and Rick. quarter a nice

Rick Dreiling

Matt. Thanks,

Matthew Boss

for So back level been you’ve a But a the you I know maybe a organization you, for high months. only few Rick. Dollar described Tree growth as just one organization.

way what is sustainable across level, you’re it even speak degree that of profitable fruit a sounds a any the concepts potential like the about banners? timing at that the you is just of the So thinking your Or goal just high there low see to you? initiatives to How across hanging growth? to maybe assembling team around you’re drive

Rick Dreiling

here and Mike. a throw I’ll little Matt, over to it out then Yes. color turn

are taking at the hard organization. good We a really entire look

goal work the I quite frankly and people Dollar great going Mike, as incremental But we a got looking lot now exciting supplement Family that’s and true career. expanding banners. what It’s here. of you to really with my consumable long-term Dollar. And to on have we’ve reflect good this, sustainable been has is of I them growth. multiple is great. here been to A both I’ve the Tree fundamentals on to we’re banners to me. solid that do two treasure hunt. involved on We’re the would people at that? is with in done have points, and in team And fascinating retailing focus The price what you like think incredibly been And add very

Mike Witynski

well on will that stores. throughout and you guidance – we midterm timing it, quarters on I’ll in we’ll definitely gave thinking the in that’s the associates pricing. working can way – be our just Yes. Matt, to we’re short the the about our our And our that the as be as investing in in embedded initiatives, of

One of close chain that long-term IT. and now. competitors Flanigan pricing at the merchandising in actually And growth we’ll working of key John to is our on our Family especially Dollar. today looking is really then And things that that and initiatives to supply and several on laying be next gap quarters. The assessing our And at longer-term leveraging get storefront right sharper over key Larry’s one is plan efficiencies Rick, our our out our our systems. and all DCs driving of And our in chain. supply our systems, those we’re things, in

time we are you’ll those going see them. to take assess come I over bigger And they’re So next two to the but those three improvements years, as items, business. the think capital into

Matthew Boss

customer first that Tree? to you to that plan side, And speak That’s customer break bought in great to Mike, it’s was product Tree Dollar upside And what new bringing as could then comp front. or Just you’re relative the point? color. at seeing banner, the the quarter the just drove performance maybe that now in the from for the product down reception quarter Dollar that help product you’re the changes just you’re as at introduced, higher on seeing the been assortment price

Mike Witynski

got great delivering extreme units is around transactions Unit it’s value. what are it. we Yes, that’s responded the such a little our reputation better. X%. down than Unit decline were quarter expected. than had bit we Customers the Dollar for have the more shared declined, and better Throughout a that mark and exciting Tree’s well. part planned XX-ish of

Our XX%. average is ticket up

metrics And the feel items express almost traffic the seeing, through food. that. salty and after half recommending the responding round are at in telling XX declines second some XX% highly in of But shopping the externally, are likely customers likelihood quarter to were the And those in. because are seeing XX% Dollar in and we’re did months cookies prior And of we’ve in done delivering very very, our extensive last so change, us, going we our new reversed side snacks, more us. our shop, shared, to research, in price Those to we’re this customers we now categories declines strong the that also we and our continue a So consumable change, customers the store. our quarter, are in are and the responded all for favorably. we good – Tree

customers still So our and the the appreciate that extreme value great find, meaningful for assortment them.

we’re and we’re we take next take moving And excited looking this quarter It So items we’ve And forward, incorporating really buys. of one we add as while is where assortment about the will cycle coming right of going got we’re it our into under through new assortment our we’re our in. and belt our level reset the a new coming import to at and the downstream, year for to import about good as us throughout in. those items. margin our only really as to now course, then feel

Matthew Boss

of Congrats luck. again, best

Mike Witynski

you. Thank

Operator

[Operator Ciccarelli Scot Instructions] Truist to go We’ll next with Securities.

Scot Ciccarelli

And guys. Rick. welcome yes, morning, Good back,

always to longer almost on guys you and from where may you an the of anticipate. to Dollar required that them magnitude take Family be get want provide investments the transformations outside operational any technological Tree retail tend of kind standpoint? than Can So more incremental Dollar and color us and cost regarding

Mike Witynski

as we've Dollar for the we've Tree said, working of a on quite because Well, been a this got side, lot while. momentum, on I've

and years, that and half we've got $X great enhancing were the didn't we've chain last out the $X COVID to we $X come we formats what in fact, and have a that about two this, disruption, assortments. of In $X.XX a is two broke supply Store and with two with I'm and of XXXX, Combo we during years excited

with cash and we in great got and sheet. a new We've some we've board about. are our So new strategies got Rick working We've talked flow strong. a momentum is board reconstituted the that talent balance got including our and on

era in we're a going strategies, coming balance sheet, a we're – of a believe I our board, new with of and place in we're out COVID where growth. great great momentum the So to our accelerate

starting forward. going So this not we're to We're going really today. accelerate

think at on that we'll we're the when And to into those on and really through how of get – and work in and be said along to going So we expect we in continue where more that's we will we day investments, that investments. detail look first goes October this nuts getting as the with over the have our more lay that I bolts of the years next benefit to as analyst quarters this. as according to we

Scot Ciccarelli

right. All

terms necessarily view incremental or of a much So give or bracket how costs operating might there's to general no investment in required? way be

Mike Witynski

at we'll John now, does No, in the not this Both year, and everything future. how right about looking working our that in and years we're embedded we've hard. and sharing those we got the Larry then items as beyond think are look outlook for be really

Scot Ciccarelli

a Got it. Thanks lot, guys.

Mike Witynski

Thank you.

Operator

Parikh we'll with Next go to Oppenheimer. Rupesh

Rupesh Parikh

questions. morning. my taking for Good Thanks

that? do you So their what than first think in just banner longer just to on Tree Is better any you QX you QX. where XX us terms I ballpark maybe Dollar then in the versus do moderate margins, that and thinking them gross are gross could XX sequentially, for know frame help a term for can or you you you on of that the expect balance saw indicated of there level year, to margins

Kevin Wampler

Kevin. is this Rupesh,

think through still and lot through learning to this work obviously point, as quarter this. in, we're As we a we one we're Mike's

land, hard of out some given uncertainty, environment think that begin tell the to the be don't that I such will continues the a hope would to So above value if to the a company. pieces higher be moving way is what of will be will a I macro investment going level of to product enough a that be I it. big know that that to that we be pretty point things and to at the always we into you it's the the is where price are minimum, be end as newness peg can on move the we it in would that again it, is to historical necessary marketplace positive there's the marketplace. fact to the but going overall exactly range. above we for a year, $X.XX there, this in And –

Rupesh Parikh

Family Okay, the great. the And that initiatives with to close margin make term? Dollar to the guys single-digit on banner, banner you you Dollar the follow you guess I investments longer think operating within up a capital given plan then your, line? just your Could just just on can margin some years. Family the of gap maybe my question, and Do competitor high coming you get guys over closest operating the

Mike Witynski

Absolutely.

Rupesh Parikh

you. Okay, Thank great.

Operator

right. All

Short from of come will Karen question Next Barclays. line the with

Karen Short

for my wanted different angle. this taking very I to Thanks try slightly much Hi. question. a just

both press on in look all been terms So obviously your expectations I could operating investing. new banners. at look the profit But there's as have opportunities margin what focuses like today's that with release, of everything you at

So is the like. mean, Analyst of if talk every at could strategies that could I you high mean, high in And I you'll Day, investing a as what about of have I a investors I see – this header in then you bit. triangulate had wanted little see look terms actual clearly very opposed margin single opportunity to terms that the just but opportunity to operating margin and number

on helpful. color that any So be would

Mike Witynski

for EPS the to delivering Kevin a line earnings bit think it, I throw growth the we investing, but way of yes, throughout it and we're but are time Yes. I'll growth. color, about little also top

investing, for Rick in we EPS up. just the increase it's as have And line things said, a that growth. So you the our I top are EPS and range, we look – XX% midpoint return if long-term moved from will XX% sustainable under at a and a they our

but investing same be investing to in top drive we're and continuing we'll future, bottom at be going line with the time. yes, the the the of thought to So line that

Kevin Wampler

customers a Mike committee. have we would I sure mentioned committee deserve. focused stores as be because our do about do finance that we in standards can things we obviously some We This look which return we the want to think on to early on and are comments, need we as have do say expect our things. capital other new standards. at have is, invested There very we that keep is Karen The are, to thing you his store will it, make

about but the if store chain productivity and supply our level and in that's day. and So that it look this those are that you easier efficiency hard it's capital is the for lot make, working and team investment every there, and assistant of investments manager again, you a at making systems manager that, in store very

these at will is the payoff end have investments their to of our easier. where that's the a And make day. So the job big end job at

Mike Witynski

balance our invest We buy, and grow to can and enablers with buy close just our can chain to do flow growth key to we the account and sheet invest a cash store be growing supply and can company. keep to shares. would IT, I in And We shares Yes. enables our us this. back

So we've and It's got options just investing expenses. going simply not forward.

Karen Short

helpful. Thank That's you. Great.

Operator

Next, we'll go Michael to UBS. Lasser with

Michael Lasser

question. Thanks a lot morning. taking my for Good

seeing on the some now from of bulk from to skeptics Dollar that raising prices about year get benefits investments. going of talking some older is selling through of the assortment So timing a some Tree by XX% it's and arguing cost this growth are bunch its and inventory, its

enterprise both and that, investments? think sales can the year while making grow core I all say So that light should the in these you’re banner of next margins do you or

Mike Witynski

Yes, we do.

Michael Lasser

ensure question you And bottom some – do in competitive the your my you that environment to operate a that the competitors. Mike. in spark follow-up question light My of very really not with how race helpful, going that’s is follow-up as price yes, is to you’re focus you investments, large

Mike Witynski

meet be in to balance that’s And got works it, the make with invest focus to that’s other to the to And good marketplace. need Yes. very foremost. customer’s side, first And will on we’ve our the We’ll closely here where to customers and on. decisions manufacturers we important, meaningful we’ve who we’re Larry the we got right? what needs going vendor and

KVIs, and value sure make just then We’re it’s to value we a key just close experience the on our our going at items, our entire is simply shopping great gap for the to and a balanced. are customer where

Michael Lasser

you Thank very much. Understood.

Operator

going Next Haskett. with Grom Gordon Chuck to we’re

Chuck Grom

in talked great everybody. – years. during your questions the average I I’m on introducing X,XXX, new was more you hear think Tree after you it think morning, mix. light decline products it’s traffic for trended the the down good My I X%. said Dollar plan be, eight. particularly And to the would how think but SKUs, to tree really I all has quarter, you that that follow-up the curious Hey, the the about Rick, into voice store of at XXX of just you said about

balance I’m want of curious think like about that many how the just So how SKUs we you the and do rollout change over to year?

Mike Witynski

the went the in out $X.XX, it a our that make us entire at customers since Well, change. amount results. table September last our competitive – needed telling item to merchant is – call, X,XXX are sure went market on worthy, and put and to shop earnings value. the our the that that the our the it’s still last my we item Remember in and by great item And

items and months ones we and/or thought bring the that over had discontinue new X,XXX of weren’t or to turn to in last needed just the XX that the more anymore. So over invest are we value we

flow as we’re they also not was, through, situation with about what to are other So our right now. results. in the goal it. and through market getting half great And is X,XXX the and we’re remember – It’s going talked dynamic XX%, a flow through. halfway Kevin But

we’re pressures seeing. we So just what already, cost has of because thought changed six months ago the

value, it it. They’re ever a thrill customers at thing doing extreme go item changes $X.XX of our exchanging always and and and That’s the a mission And at and So it an our fixed Tree. a the done hunt. That’s need margin – the Dollar They’ve part that It’s they well. to mix carry Dollar price and Tree get replacement Tree. an of point, respond very have it’s merchants at the meaningful $X items to out. item. item don’t about working and it’s every at and exciting know the $X, at the drop we they our that it’s Dollar of always assortment used just

Kevin Wampler

would’ve in likely traffic, seen this biggest probably dollars second in question the released. was the And the traffic you period by third affected the because about the the of And Chuck, period. Easter Easter. as as two very stimulus traffic weeks later decrease is your so more when on in well quarter in later, best Easter, were particular

probably those the two, pretty are that of So factors, are factors the those because I two in which that’s in kind lumpy but it’s QX. of think that, kind of play

Mike Witynski

rollout year. they our at more than our things then another excitement the around rolling X,XXX of of that to seeing to accelerating meaningful seasons items our assortment. that $X.XX we’re and stores and we’re the And $X One the with out used $X this really are

– from given customers. back setting we’re but two business July school So $X and really the about saw in and Christmas lift if Thanksgiving a to ourselves about. $X.XX, the talked we’re response then we got $X up us one, of back Memorial and is And have Day Valentine’s, there’s summer, Quarter half. the to the of is X, great great quarter and year Kevin you and Halloween and and that in a in that back combination excited when half really the great our two, Easter you think a seasonal quarter has and

Chuck Grom

And if a at a question degree. That’s environment going how trade long periods great. what that would a think maybe decade other begin of be macro middle [indiscernible] down. it back and consumer you of look customer you we I’m upon my saw lag historically saw we current them to to And to different over speaking, was ago. this is before be lifting curious than just this income follow-up on

Mike Witynski

XXXX But – XXXX XXXX, store XXXX and Tree different it’s saw then – just and sales. acceleration pressure XXXX different a a what’s sustained. saw when There’s in And and bit to it’s XXXX, because for their was drag, in it was a but slight now Dollar reasons. little predict just hard right Dollar you’re XXXX, a just they’re it comp happening. was Yes. year. an Family there happen pressure to going it And they this in It’s being both

Chuck Grom

good and Okay. Great. Thanks much very luck.

Mike Witynski

you. Thank

Operator

right. All

next Edward Wells with Kelly We’ll Fargo. more just go Instructions] [Operator to few We questions. for have time a

Edward Kelly

and hear your Hi voice. Great good great everyone, Rick, to day. morning

about ask the elasticity First is in wanted thing just to improving where $X.XX value. you’re I the and adding

opportunity do. then number more is in Just adding the be I potentially to powerful value where you’ve back? detail of – much like back within seem the the like left and bit categories mean of bringing done in terms a little discretionary how bigger would value items more you And impact. that there’s adding does terms are it area what’s on more of

Mike Witynski

Well, actually thanks – for well, the question.

to our the happen Our lot much. of the discretionary there that focusing in XX% customer really our comped and that business X,XXX we’re and wasn’t – at value discretionary are we concentrated our consumable and that’s it touched really that’s categories. haven’t rework in discretionary, mostly why evident, a there Where needed recognizes items

and beverage categories, in add the So have the where salty carbonated in, in really in food. but SKUs to we snack going we’re of that’s the and these food, XX% the more

help snack to and in consumable. salty store, more that time, beverage time. that that’s just take the value believe a carbonated we and driver traffic categories. we more drive into over drive in the the that as experience appreciate going those them, giving We’re will And add the really will to I we’re believe not overall and customers traffic it – items

Edward Kelly

faster? And Can a and be good. follow-up go Response to seems quick go not $X. Why just $X then Okay. faster? on you

Just updated there. thoughts

Mike Witynski

question. fast as It’s we great can. go Yes. We a as would

We are as going we as fast can.

right so up through if – speed. we really our year, slowing year, customers now. that supply chain things was That’s last you we wanted XXX. it’s supply selling responding And open tempering remember we chain and Last well you If the to down. remember, the were

XXX acceleration our we the down still slowed up ended rolling out we stores. year, but So of throughout it at

side to depending – continue as do, it’s to going roll Day what throughout something the roll X,XXX this seeing we year to that’s $X putting are stores, X we and benefit and on buying it’s the a at accelerated to have like going as this possible. months get is every our this entire can that October the that we’re supply network. the share to But really out probably it, products it. looking done we’re about And And rolling soon where – out, we’re $X our seasonal we’re where that we’re product really to in we’re out. excited we expectation XX Analyst really our to that we Because like? what’s these of because on So in expectations And chain, this out.

is those combined and respective our entire sales value our $X So seasonal lifting $X.XX items at stores. just in great $X the that with

a we’re to So the going going absolutely dedicated learning the lot store. it’s on be of we’re the enhancing keep to discretionary and product, side

Edward Kelly

Great. Thank you.

Operator

We’ll go next to Markets. Kelly BMO Capital with Bania

Kelly Bania

for Hi, us morning. fitting Thanks good in.

– and about to with maybe that’s There Just quarter. freight annualizing the increases I think about first last wanted a was just ask from last year costs. comment consistent

versus for help state that. backdrop us this from just just the from overall cost contract seat, you’re So if understand the how curious view just you year the what your global can of expecting spot shipping you and

Kevin Wampler

on of our of with with the and Yes. forecasted it the I’ll expected but half Really, affected that. start year And was saw as to information again, up, we by it. in in half had some was we about we Kelly, QX, particular talked this be last we XXXX. the in very in the is freight first how consistent rates March, annualization Kevin,

has something about maybe kind a diesel diesel market So that of a you increased of give for we’ve like Obviously, kind current and the to increased place a freight. good And metric rates. forecast to our a all – fuel start. of feels here’s think

be in So just would $X for rate about year $XX a the a headwind. change million

number. So annualized the that’s

point. math as on gives prorated we do of embedded we market basis, in rates see feel completely that on guys you our definitely means In the kind was. ocean it’s but carrier you the better this the at significantly for pretty forecast so contract less but ago. with It’s can current what a it unplanned guidance. and year that. than have But been regards a has definitely gone, It’s a backlog freight, to in it much And that performance early our not is than

are to at been helpful successful the much been this We goods. been pretty continuing line in And have and which them move budgeted time. we with using rates point has still way and the in chartered have NVO vessels,

the with where at moment. it, into Obviously, point we’re our from we where about the the we we’re we’re change year, way of So at at. feel it’s view rapidly, good looking comfortable and market the came can but

Mike Witynski

what from freight anybody add ocean just said, probably this price add X.X fixed would containers amount been years battling onto everything I import. and of else Kevin the Yes. did that, we for of it we’ve our and just felt we because before

it’s of So And chain. that of our of we’ve as said, needs. contracts, this needs, the more dedicated charters. our than the anticipating year, because will voyages some Kevin to continuation blank NVO we’re slightly a disrupt And continue contracted fill we’re our combination to and at own supply using

that So – to and smoothed the the out and out be – smoothed carrier. for more dependable we’ve our we purchasing of consistent what We’ve need.

said, experience. handle forward. without we on think this that of into any we’re we disruption And good could with of X.X disruption – going years happen cost unknowing gone it a year we’ve Kevin as So have the

Kelly Bania

helpful. then you. Tree. maybe That’s And one very, ask more I about just Thank Dollar very

points against merchandise even Are consider more $X.XX you margin price this And given maybe the already Just for or is price as some $X? XX% this you you how new point. at you higher Or costs do going? do cushion leave As that targeting gross a today? testing well, in future? $X.XX little

Mike Witynski

next can $X then $X the we point after that that we rolling fixed Well, are price years, fixed moved out points we we we’ve as fast have that price and over the XX as years. $X.XX are a points price got couple and

we our and for So customers we thrill assortment and an that’s deliver can value delivers feel extreme unbelievable on a still meaningful really exciting that the and of good that hunt.

we’re bottom those continuing So line margins – to And deliver our to needed as drive think excited keep about about about line the and two we comments mind performance, we you in things. will always that. top

Kelly Bania

Thank you.

Operator

questions the all we that’s time this And at have right. for All time.

to like any for additional Mr. Randy I’d to closing remarks. So over or back Guiler it turn

Randy Guiler

joining And for all Thank today’s for you Alan. us you, thank call.

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

Operator

their We conference. everyone today’s participation. conclude thank again does for That

Dollar Tree (DLTR) 26 May 222022 Q1 Earnings call transcript