DLTR - Earnings call transcript Q2 2022

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Operator

Good day, and welcome to the Dollar Tree, Inc. 2Q 2022 Earnings Conference Call. Today’s call is being recorded. At this time, I’d like to hand the conference over to Randy Guiler, VP of Investor Relations. Please go ahead.

Randy Guiler

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

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

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

remarks, and your Mike Kevin prepared our take Following will questions.

now like the that participate, questions you those the ask Rick. would one. limit to to to call large turn of number will Given your please I over I that

Rick Dreiling

been together and I Mike quarter have Randy. for now. Board Thank one everyone. you, Good new and morning, just over our

and change is we pace. a moving As fast are planned and at underway, expected,

steps Dollar taking Dollar for Tree. We the this Family through term to are organization entirely and growing and improving focused transform on long the right

the call are action last further more opportunity to become clear. road days and down from continue We earnings XX needed and the our steps

chain, supply standards and value network our the the segments, are associates, priorities Family main proposition Dollar’s in distribution and Our store technology. both pricing, and

environments have work the more environment into these in to and most unique Additionally, patterns and courageous Inflation of build we at and one will And to experiencing I’ve are highest are go improve levels to detail, zag. dialogue. retail, empowerment, accountability, decades orchestrating shoppers two-way higher we strained zig food, inconsistent. great dynamic transparency Inventory in a experienced across fuel, costs been changes my continue deal related leadership of retail and to more. and is career. are its rent chains Mike fostering Company’s of culture, higher consumer shopping as an have the and and designed underway Supply in

Let me be very clear.

high not defer We half here order capital to and in to are investments measures operating manage return take earnings. to or

to returns shareholders. us steps customers, executing company the on by possible in greatest will honed great deliver risk-adjusted the this associates commitment, our shareholders, our opportunity and necessary great on taking we they And deliver for to are We to the seize and our our deserve.

waver not will this We from strategy.

some of about actions fix from Dollar. Kevin the Family call later hear in taking will You we’re and the Mike to

long July competitors. leadership move The business. decision you and most our moving investments shape in notable to is team Dollar our improve close value As our said, new carry to has to foundational ability improve proposition materially with call. in a Family fix this accelerate know, its to together do There been you team is half, Dollar the enormous beginning is positive Family in to about will and in be Dollar, performance to pay believe to provide to process, value. some hear the into and much is to and actions more a and will the results it team historical the feel second that the and improve the will and We began confident step of about and long enhance we that refreshed necessary key handsomely. to That price made, our action is gap the in term improvements quarter, for the pricing term later off taking very right forward create a action intended Family to

We are a growth company.

our for to call Family the enable happen value the profitable Dollar efforts change Mike. On for and their behalf making and want are to over now shareholder thank Dollar I’ll quarter. teams for to each second growth on waves the turn very good of of of We results create Board, next I Tree. our long-term delivering

Mike Witynski

Thank you Thank you, today. us joining Rick, and everyone. for good morning,

more all inspired We Annual since on meeting leaders, than The including here Leadership in-person things Dollar Field This the every days our have Tree. us XXXX. than Summit. of to ever. Dollar makes each are collaborate and X,XXX Family is in and gathered in dialed large manager focus for More first today learn, district me and and several from company, energy our excitement

for part company, event. of when is talk a We what about our at meetings, publicly is year, summit sets while I’m culture. will our we Rick of to attending typically all and these to strategy. about winning But in their Lead successes. important leaders fact, want is, a no our commitment, year mentioned moving Speed. focus it of culture our transform leadership something and this speaking collective At our that thank be I’m pace. just the company’s team. than culture. I apart comes retailer to we this share fast your great company’s with strategy together. this different. and points companies It’s our our This will less strategy. do their has to are But, we of proud and The playbook dedication participants theme proof Every

mentioned, accountability, and empowerment, a fostering of leadership, Rick committed courageous as to Just are dialogue. developing we culture transparency, two-way

opportunity for in improvement respect. have and we substantial have recognized acknowledged that We to this ourselves

got the address this courage field have and purchase the would customers their We this associates, price the look necessary at leaders holiday provide to and at our deliver they first deserve. new the greatness shareholders, we the point. for the buys summit, to the $X.XX on, culture head initial our Also

We and compelling and by very team and by our will great the values McNeely’s merchant relevant the the these all holiday Tree are sourced be assortment confident excited items shoppers Rick Dollar upcoming are by new over season. wowed

a have of a leadership call Board We few and change, first would was are undergoing changes. accomplished change, I our a A deal what exciting in period days number we of XXX-plus since the announced reconstituted. we ago, months great

of I General field and to the Family retail. leadership The perspectives, Tree Chief roles in help will October our for transform interest and our our useful I Gatta that to and Flanigan us new with company. our skill and right the we gelling in morning, just of the COO have Jeff few Dollar that CFO deferred next we deliver nearly Tree Supply department. actively candidates and Head felt Enterprise executive executive We including spring hitting for waves strongest talent, sets has upcoming announcements And leaders Aflatooni leaders and and we XXXX. a round with of John teams filled as attention the the Bobby Jeff are be retailers. The more Counsel engaged for new now the joining leads Dollar of out retail business. a Davis experiences of from organization look and experience with reviewed Dollar recruiting to productive transformation the growth decade of leaders announced team already months, as exceptional opportunity the have of Merchant, leadership a and are the as our could are before changes, ground great the one In years until Day as spent forward we Dollar’s roles. several as executive a Investor exceptional running. the Larry event Chain; attracted a enterprise if IT This many we CFO. light largest our In in key of the sharing substantial has roles carefully we Family

We on event takes will months ahead. as in the share it the more details shape

performance the as quarter while in of gross The XX.X% quarter board. households in across profit, Our of through XX.X% sales, reinforces profit brands in XX.X% EPS in of successfully pressures to increases X.X% continue millions another relevance second for they the delivered and team uncertainty. cost face navigating macro our operating of

our inflationary chain mix XX.X% supply an banner. to QX from compared comp represented this for the range from the in and challenges an decline of of pricing a as increase acceleration performance sales delivered X.X product Now the from Same-store QX, DC Discretionary in team. value in represented to of on swing XXXX. technology. a to people, environment. by enormous X.X% categories, positive In of discretionary year’s as basis. a were include, X-year quarter a turnaround through it value balanced of quarter, than offset OTC-related Dollar X- a Dollar shoppers focus quarter. X.X% Family is and average Dollar the comps stack transaction Family well as A focus I our the creation ticket The X.X. attention. on count. XXX and network and Compared the basis-point great am increased X-, throughout comp comps in deal positive more is we X.X% to X% mentioned, QX as to as saw A lever getting Despite continue quarter proposition QX sales chain, Rick pleased manage Components with to a transformation consumables positive declined and X% and prior consumables. the Family supply the consumables XX.X% relatively monthly by

improving Additional developing private optimizing much the vendor factors elevating store enhancing category our our partnerships, adjacencies, and standards, more. culture, brands, mix, product enhancing include

on forward these of each pushing are We fronts. one

important I Family in to about journey, last are at progress out, in the on enthusiastic We the just taken have have the we still I few early our months. made but initiative want call we Dollar. pricing particular, am in this

we it Dollar on decade. investments, better competitive in a price position has for been than is Family now believe over a recent the With price

over continue Dollar to will to to the traffic fully other expect proposition see actions We and benefits value drive we time. Family and will store these from productivity, and great refine

XXX resonate for Combo new than ended During more driving XXX XX with and more while opened we productivity more quarter Family shoppers Dollar, continue renovated relocated and stores. XX with Stores, the We to stores the which the stores, profitability. quarter

sales the points offset partially strong ticket, by gross a segment. Among by the driven quarter. highlights: XX.X% prior Tree quarter; operating comp a basis another Dollar The margin, more banner X.X%. over than year. traffic last in a a XXX QX The of average increase of was increase basis X.X% year’s XX.X% decline above to and the XX.X% now delivered Tree points X.X% a XXX comp; Moving Dollar margin,

was QX mix Importantly, Tree consumable represented the in XX.X% of categories comp of comped carbonated as the at exceeded in seeing The X.X%. QX, XXXX. time food. consumable business was This beverage, X.X% enhancing the of pandemic where at been and and at success onset demonstrates traffic-driving such in have increased Dollar our the merchants snacks Consumables, strong. discretionary key the cookies we last the discretionary which value, while active in are

than As limited which favorably the global consumables products our immediate helium, the our discretionary despite discretionary The proposition. the for shoppers indicator the more good merchandise. a health reminder, a strong continued momentum business Tree reacting the the that was cycle, to our are and of purchasing given of performance Renewed side banner. balloon reassortment and merchandise sales party-related of the consumables sales impact negative is been demonstrates supply has hindered of Dollar refine of long-term value the

comps with between to increasing comping similar each cadence, Family X.X%. month’s Regarding X.X% were quarter relatively throughout the Dollar, and balanced

not to retailers, stores the assortment half the quarter burdened we seeing XX season. shift consumable we are through of proposition multi-price to Tree, holiday expectations. performance sales for and seeing And line as to our value of gravitating stores, like in Like head the and we continue X decades. what be XXXX we fact, are speak by as I to inflation stores, in back the another experienced with focused increased in added banners mix. consumers X,XXX and relocated are XXX opened the impacting levels to in important Overall, the back There shoppers preferences to many on our would Dollar bringing as which for down is total Family are our to and into are half. environment. consumables, business for modestly expectations trade in we we During stores signs remains both needs-based Dollar stores have a new for in many margin product this we of

impact pricing are we supply we is containers a our commitments margins as chains, our term. expected from year protect business a lanes. from our the we year. transpacific competitive go had its hit get effects. working This, Over half back and the will believe manageable through the we value were Our inflation with margin for gross a into near regarding Kevin And along a merchandising to to being to negatively backlog. the suppliers to have backlog able be outlook ago, with updated thousands sourcing of the perspective, year, by time, of regarding more This detail shipping of proposition, well. our inflation in small, should

of mix banners. that for half remainder now on outlook. banner. to reduction our Family be call reduction more related long-term cost Family both dampens the will to over our on increases actions this as the taken Kevin None is and take more I’ll improve at inflationary prospects. shift to QX is our action color due and we to guidance my total, of The the provide outlook at differences hand of most to updated than Dollar. to Of pricing consumables due Dollar Our enthusiasm the reduced guidance with

Kevin Wampler

morning. good and Mike, Thanks,

mark-on, At at XX.X% count for increases in to increased For Shrink transaction the the basis hourly XXX continue consolidate the quarter. in sales increased Dollar shoppers to offset billion, segment prior last X.X% the points. both consolidated are quarter, XX.X% more corporate same-store period in was the The increased costs, at Tree including primarily the total basis year, XX and higher higher partially due net and increased for result points year to capitalized expenses merchandise levels, Dollar year, XX% Family the $X.XX improved XX.X% following. billion XXX offset basis Dollar basis points increased slightly freight costs basis gas ago. to offset XX markdown costs. in margin to relation prior to decreased as to Family Merchandise markdowns. in the Gross QX, initial favorable leverage costs for partially comp consumable include freight, points partially prior and increased XX points consolidated banners, the compared sales Dollar for decreased of Family and on revenue comprised net Dollar freight, quarter. factors the freight XXX in the last to leverage segment compared for Family same $X.XX to year Dollar percentage favorable last increased results favorable action XX.X% primarily for significantly and year costs lower-margin a with than by sales by basis of from higher same year XXX by and segment than XX% from XX.X% to more higher more amounts period in as of results points to the billion to increased higher higher to offset X.X% Distribution a average Similar to ticket billion compliance increased decreased of Comps points higher sales decline more primarily rate Occupancy costs. costs due quarter than XX.X% promotional was XX trips higher Tree price points, a administrative higher X.X%. profit to increased And as shrink XX higher due The same-store and basis margin relation points quarter. XX.X% and compared compared by selling, QX Gross SG&A as the Dollar $X.XX Enterprise increase. sales profit the year. due basis inventory year’s prior basis and accruals decreased basis wages quarter. Tree higher lower-margin maintenance And the Dollar. mark-on. points, $X.XX Tree prices initial offset increased profit the in accruals X%. increase sales from merchandise, to Gross including from general merchandise. cost, in to Gross for costs of and margin of XX consumable primarily DC

from by second of the claims, Dollar offset XX annualization workers’ and resulting pressure expense the partially increased minimum Other and from claims points categories. focus XX the costs for SG&A, XX% X.X% segment basis SG&A utility on compared to inflationary points, store costs insurance across conditions. liability the primarily wage favorable basis rate we when approximately in higher as which increases XX quarter, to year’s investments improved of basis points improving on the and For Facilities quarter. development of and increased maintenance repairs development Payroll store unfavorable Tree XX general basis several points from leverage prior payroll. comp comp and improved the

the repairs due pressure fees, primarily expenses for fees, SG&A to points for XX card Depreciation store categories. renovations to capital increased elevated across legal supply as million other and was inflationary the prior segment, investment and improved improvements. credit Dollar higher points, primarily XX to quarter. percentage related store an by or expenditures of the Family basis store and and net consist compared The quarter X.X% to XX.X% quarter transaction points second basis and improvement increased of the compensation expense XX.X% tax amortization increase facility due expenses current was of costs Operating tax the an higher a costs comprised increased opportunity stock in associates. debit offset work of points Payroll points, tax rate expense points and a compared conditions accrual interest from in costs. utility quarter. the $XXX.X year favorable XX.X% resulting the year’s and for XXX compensation adjustments total million, earnings totaled compares lower we to of and diluted or XX% support several compensation expense year’s basis to our prior increased focus basis primarily state net to Non-operating ago. prior maintenance in $XXX.X from SG&A Store Corporate year per compared the expense X.X% improved payroll total higher in revenue quarter costs income year, revenue quarter, rates expense. higher the expense XX to primarily income to pretax share. expenses. XXX lower year’s of prior Other wages and the as partially workers’ X.X%. hourly and XX% Net in basis a share expenses For increased Effective compared an customers quarter, year’s quarter. incentive in credits of to $XX.X of and prior million increased income in per $X.XX increase improved on $X.XX to rate million percentage $XXX.X or This XX.X% second due diluted XX store as in in to basis

QX significant freight Total in $XXX.X under costs, to additional the in per at capitalized cash of at in increase Inventory fresh normalize QX import represent repurchase the pre increased at $XXX $XXX to QX average of transit expenditures inventory dollars XXth totaled balance approximately were compared per million are due inventory quarter-end as The is cost. of compared in in the but to $X.XX shares expected at are Plus half below million are inventory a distribution year store store million Company second go Family the authorization. year. last Dollar Outstanding inventory up Looking of in XXXX July last a year. and levels distribution QX Total XXXX. XX.X% XX% an units pandemic debt was average compared basic risk. quarter The XXXX are the year. and unit capitalized versus and and sheet. increase last XX.X% million Dollar price the an Capital of significant freight in and Tree million not at in $XXX.XX pre-pandemic up multi-price year, units or as at and to nature billion. levels, X.XX back to share prior does cash equivalents we to through levels. Combined repurchased and $XXX.X $XXX.X to costs QX the the to approximately million markdown Compared fiscal increased due end levels increased

expect we the Depreciation year. expenditures capital billion. fiscal that approximately quarter for will currently For consolidated last in $XXX.X of and million be to compared $X.X amortization QX million XXXX, totaled $XXX.X second

expect approximately we to and XXXX, be depreciation fiscal $XXX For consolidated amortization million.

affecting the business. half the XXXX, we we of look to see As our following back

traffic impact accrue expect Mike our the we improve in are has on price our to mentioned, value productivity. to benefit. As but This for Dollar are investment Family These and drive it shoppers investments investments a accelerating business. proposition to long-term store profit, designed near-term and we

This high-margin at but also general, comping have a party consumer department. is stores our expected to while seen XX%-plus shift continue sales, shortage. conditions which Dollar discretionary those a more to the the the running effect purchasing on delta helium negative in one our differential directly margin. with In economic will basket We are largest in are Tree’s party both balloon a categories. comps. category, helium sales banners be on of without positive The mix helium comp negatively based entire halo global by product affects and affected consumable-based negatively impact has

We Our This over-the-counter and to investment category. challenges. half. dynamic, The market affected stores we being categories payroll our back proactively are in addressing supply our continue is out the and to remains by plan a retain associates. level our creating are this to chain stocks markets increase select negatively in in of attract labor in higher

needs-based following and $X.XX. the on now is is year to these distribution components: roughly repairs the Based environment. full diluted range programs and prior to adjustment well $X.XX on to shopping of at price XX% change the projected relates for impact outlook factors, shift change a the represents to Family shift share a towards great the Dollar, per of maintenance as as stores of to margin per back an a the XXX ensure from our business. this Family midpoint share the centers the basis-point shift the at and the to to in and impact basis-point consumables the XX% compliance majority expected expected side and Family half. be Dollar mix comprised Dollar We in the a earnings Dollar are the on investments This of of relates based making investments Again, through XXX of to working $X.XX estimated of is Tree be

We at are experiencing some the degree of in of to XX% adjustment. primarily inflationary-related product lower-margin cost approximately guide increases, consumables, contributing Tree, especially Dollar

we As including ability And alter items, impact. for on near-term we our few commitment a of guide hence decades, can this cost reassort or changes, have other the improve have conditions. component profit relates a the quarters, to adjustment to product the based store to small take but

perspective down result net Consolidated most in relative price the second a margin operating aforementioned now are offset the range square a $XX.XX to the higher reduced margin with half its investment, breakeven X%. growth footage for of As by slightly prior expecting guidance. $XX.XX half, approximately segment approximately our year of billion accelerated from comps, to be to sales from notably from factors, billion slightly expected Family we to are Dollar first

square the increase to for from due is footage by of year procuring guidance high fixtures increase supply to deliver positive a grow chain a sales X.X%, expected mid-single-digit store Dollar increase single-digit down to expect prior a equipment We and the the comprised segment. and Tree Selling to segment store delays related slightly openings. in approximately for the Family in Dollar comparable

the for net expected to approximately the on is our Diluted million for earnings in of outlook For increase sales for to be sales QX, million range include from we net consolidated QX year. will billion a is and Other expected to the share. mid-single-digit considerations range in billion enterprise. $XXX interest $X.XX $XX expense in based quarter share to the for same-store per $X.XX be per following: $X.XX estimate the updated $X.XX XXXX

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

any share not outlook does Our include repurchases.

As our to $X.XX remaining share over call in repurchase And existing of I’ll now Mike. turn had billion back XXth, July the we authorization.

Mike Witynski

Kevin. Thanks,

at it through As continued made environment, material Dollar relates positive this offering, and and team the assortment $X refine Family Dollar. uncertain progress and build to positive beginning at Dollar we Tree continuing enhance the is impact on we multi-price to somewhat continue the Tree, are and to the changes offering. as navigate our concepts about testing dynamic our $X At to excited the program long-term the be and to multi-price from various very

meals, For very example, sales levels, delivering line test frozen in store and previous to is such are improved ice tremendous with initiative attractive offering needs performance as At pizza of at commentary. meeting continues Dollar, multiprice portion frozen new productivity the Store as foods driving and cream. exceptional value drive family Family our Combo

now formats target fact, in beyond the concept. and locations, In pursued first our various markets of in iteration exploring sizes rural other are we our

at more and remarkable merchandising impact, marketing technology. being is Family to Gatta’s been time Larry the Dollar, notably improve the to to be and actioned initiatives chain of Some upon said, has and by That work will take done in supply the more the produce business beginning teams urgently. an

fact, seasonal assortments. space at a snacks shared and categories In sales Summit, linear store and enhance shelving version wide associates the adding Dollar. focal developing the Among field on increasing utilizing and enhancements as delivery the leaders HX food key assortments new satisfaction have changes through of consumable to the array we made deeper our efficiencies as support to traffic number to format. to store include offering, HX.X. consumables We optimizing the made point, refer merchandising store discretionary to efficiencies frozen customer and of drive footage, strategic productivity, dedicated enhancing and store expanding in-stocks, and to to our beverage better the a direct-to-store our the team Leadership initiatives improve offering merchandising a At Family improve

and ad our productive be Dollar’s in initiatives: relaunching are believe serve of Coupon good beginning increasingly four We to program exceptional teams partner proposition. on expanding program, an value key impact communities evolving their have customers and marketing to focused positioning, partnership we Clubs our currently better that is that refreshing accelerate are key & right stores Girls We believe Family consumers time a initiatives more a serve. needs. the these by America brand to Boys Smart Our providing to our actions an are to to the looking meet to

a demand allocation improving buy product banners; and labor through spring and to with Tree on service our our and transform the in a these to to supporting We Bobby through on as DC store promotional initiatives levels refinement include will complex field XXXX. support Family platforms. at team product customer to for more and B; great more in-stock both improving satisfaction and details Day replenishment our better in Investor I discount briefly success that improved Dollar And go get A leadership data enhancing These store offers, Aflatooni’s and the provide broader our support systems; on enhanced driving enterprise-wide quarters want of efficiencies Dollar at share plans for and ability initiatives the forecasting, a IT and integration delivering focused such systems continue ahead are into few stores. of and

has Before since joining in into CFO. and announced, growth the I his we role XXXX. Kevin as had success previously go out organization of will the Dollar instrumental transitioning in Company’s Tree’s be been Q&A, as Kevin

December than shares at adjusted $XX and to Kevin his for Kevin’s million per stores, and we from stores Tree stakeholders Dollar than to to X,XXX sales of to from publicly are of During more profits to thank would XX has commitment, a last share. trading than were billion. to Tree like annual annual $XX in from more $XX Dollar $XXX over ready just or Kevin I more Tree operating take the Operator, of grown stewardship contributions now and XX,XXX $X.X XXXX, years. When billion questions. joined significant split Dollar $X.X billion tenure, price its

Operator

Gordon [Operator with Instructions] Grom first Haskett. Please question go Chuck our from take ahead. We’ll

Chuck Grom

both and Dollar for the elaborate days network offsets steps us? surprises any biggest talk those help Company little both a negative? Family banners, the what at to the bit And Thanks. standards do for Rick, in about DC P&L fund curious see Hey. morning. positive been you, you ago, can the Good you and the you improve you store when actions? across more since I’m And have to joined XX

Rick Dreiling

and The Yes. their talking within people, the The enthusiasm willingness there’s not get then to has let’s I’ll it done. embrace we’re head, start here aren’t a that change. shaking and turn yes, Michael. of been, I interesting organization, thing go to lot tell things have Chuck, its over the to it you, about positive,

foundation of the that, me, major And to this. made to So enhancement. the culture is company has a commitment

trial, a about time right how In manage and how pricing day day whole And fact, great near the to whole be to larger on just a we believe gap for spent a bit want managed. pricing. to they’re need on we just we this and what negative listening customer is thought. talking be was people side, we a little hear the spent people Probably our also dealing to to people And we than with.

chain we’re the In chain. at looking supply side, supply everything the terms of in

in country. think We chain supply one best are I of the agree, assembling the probably -- teams Mike would

We lot modernized. distribution to need that have a updated be and centers of

I So, as in that The side, merchants we’re bigger classify a a good really basic approaching of operators and we’re that needs. surprise, bit little and on might lot the the feeling the chain need things there’s that. IT how information supply technology,

want know Mike, you I add if that, with to So, don’t anything?

Mike Witynski

I right. said Rick No, it think

is my Rick we’re to at biggest we’ve on Larry side, our and supporting putting the store everything footage going store make are on the committed district culture continue customers, and enabling then proof opening And associates doing our center On is them associates linear where we’re to in going to cleaner, management and store only yes, that invest, here points culture do, to everything and your about fuller run everything focusing behind from in supply shop. into can make in standards way we’re aligned logistics. improving importantly, customers see of the better, we of our store the more chain. stores. to, to our but pricing, we’re that And them from I we’re organization for them that. we need then, our they all with it and every they’re the a and to the to enthusiastic, Kevin sure that we merchandising are is, assortment, thing successful And property we said the -- the our nailed driving in right country conditions of perspective entire in I better do the the summit think I shared investing our here is I do we’re conditions. improving question now manager as more entail think said, to is, seeing better and not that’s And our are the

the they ultimately We’re over when efficiently our they to and everything and more it. efficiencies improvements doing need the to and all and supply we stores leaves really product drive can turning with need

Operator

on we’ll and with go ahead John question Guggenheim from Securities. Heinbockel And next our move go ahead. to Please

John Heinbockel

or -- wraparound, ‘XX, bunch a think challenging investments more right, benefit change Yes. as well? will pricing environment into your a a it here, then to bunch you do people investments be picks there’s think perception? how to the price that an maturity FDO Immediately, in then, play will recognize right, out? than other think comp the right? ‘XX investments drill limited will that inflationary it’s you to right? of most until of I do to How traffic and occur And out, the at and price So, up. Is FD at in that play the you just does deflationary, want do

Mike Witynski

with right, And customer’s the inflationary change customers I to because it’s stores good new they’re feeling then, we a seeing question. meet the is like think at pressured relying for now. we customer’s and said demand eyes environment And it’s getting stretch, really and seeing And our Thanks way. because it the our this in environment, time our stores they time they’re an trends. like goals. In their our in have perfect right new never what earlier, perception we’re inflationary Yes. stores reason looked the wallet really new consumers budget our and to the we’re on shifting before. are And our is we existing customers saw customers,

about dynamic it term in now. -- said, in right. to ideal expectation, customers KVIs, our fully customers value this to environment is value the our decided inflationary -- position So, then We we on really begin them was to we the the budget. right. to in an market. as course, starting items. get your now we that to more close inflation, But the as the outlook, previously environment, pricing was meet we the and win are gaps move this think and XX the time, competitive and long long more the it’s were It’s I price And the anticipated known going are with, talked initially, time in our saw customers -- pressure this for and years we we we win like best quickly time than just customers’ We it do term to over question, of these over the to

there. we’re So,

And continue to here, right it’s managing rocking Now is our promotions. the on in assortment. it going and just getting the from Larry HX.X

a great in place now. right we’re So,

Operator

to we’ll Please ahead. with move our And ahead go and question Matt Boss next go Morgan. on from J.P.

Matt Boss

line the high half? single-digit Any Tree And confidence in on Dollar the performance back or top August was the during banner, then, cadence trends second drivers color in holding at quarter? just So, what on gross Tree And Dollar of of Dollar puts the banner? in at how any you’re year takes about gross thinking could touch you banner margin, to and Tree the half the consider? back just on margin multiyear of

Mike Witynski

I one throughout the X.X% to on that the for well largest biggest categories. supply, Tree season Tree. does and summer Dollar party, category, at say our impacted seasons. it remember the is was as question. over pretty really Dollar by That Tree, you a graduation. quarter, shared, halo were second comp, Dollar most effect we And so And and really largest Kevin helium And really our And Yes. profitability the Thanks has the around heard for of X.X%. stable -- in

one was of that So impacts. the

garden. the On one is top was And lawn other garden the news, good five categories. the and season lawn big season and of

in shift to consumable And when the have So that did categories said, as items is very, Kevin the said other responding merchants is, reassorted the the very product, our consumables well and drive reinvested customer then, our to we I well. and traffic. and

and candy, cookies top were beverages, other and snacks again, food. The X categories,

early we where the of than wasn’t and system. But this in we’re year, So, both. time in you inventory as month last this very at the Dollar responding far up. QX, yet. wasn’t even are meaning back, our think Kevin thousands well. really And -- -- shared, Tree origin as Family QX our better even customers at our so Dollar it origin, but about we remember, the containers is at it’s at very, trending It had early see into margins And at

system. our in is that all now, So,

We’re for half $X.XX. bought our amazing. at is Tree at product remember, the getting The on merchants seasonal time. back And it’s the Dollar also, our

assorted A, all thrilled. when we with product items, our see of they’re of us district blow takes we’re the associates the of our are our And will And field puts market newly B, here going are it. $X.XX half. excited All some Kevin and managers, and and kind margin very away, we’ve on now. and they of about the it; directors, to got the the customers regional want can back respond well. exciting in touch right

Kevin Wampler

Yes.

us. starts diesel little discretionary be you look Tree continues think helpful pop as but think still year that -- we quarter out. down, level it But I to the year, year gross a again, will set it, as bit see move Dollar last at in to year, is this headwind highly margin was if for first little QX and it be a the that talked be half, We it a big back look with at said rate, we’ve that. you As which Obviously, will rates, then and as which we as still headwind into I of lower QX, QX, you’ll than back well. last to a would freight, see half Matt, we annualized the obviously, and this

kind of see. that’s trend So, the you’ll

-- down gross again, we further Plus And the about the stores. now Tree I the to X,XXX $X.XX see as and point. have rates at, looking in price we multiyear look then, build to would as again, freight do look continuing it, year. -- the come to build looking Dollar you have that an really as about the stores traffic, margin again, assortment effect think of to start think changing next We the to we

are think to we specifically, but see play into of the pieces there talk moving are early A that will as them. those little I kind things really some So, that.

Operator

on to the We’ll Bank question next of with ahead. go Ohmes and ahead Please move America. from Robby go

Robby Ohmes

I more we was get little color. could a hoping

Dollar stronger you mentioned transactions in environment. why being think clubs. more discussion should Dollar at the versus about the if The much transactions. maybe down improvement transactions some Tree, was trade Walmart, Thanks. at curious warehouse Target are I And Family the so were and down and we just and some expect up I and

Mike Witynski

Yes.

assortment pricing and as and changes we’ve are that bringing in new got improvement Larry product transactions, the already. that the that merchants We seasonal especially in we our adjacencies, some our moves and have the expect making made,

good we do Just a excited, are coming both household customers you And a year. is last of of news little banners new lot third-party into income pressure, customer data $XX,XXX other. the And higher. as that pressured is see at have we a said, majority our we’re of none over is, or the like them

feel that. about So, we good

We row us a dollar the the And trying a see industry of inside years the private row. national have private that to on for a in even pressured. on tells them we’re same brands customer team we’ve store, they’re function. outpaced store. in their Larry decisions brands is XX powder seeing Then brands. national change weeks shift in into five the in our the working seen where And credit, which and the XX making private and they when then, last detergent. also inside and liquid the there, cash hasn’t We And weeks now, manage that’s hard outpaced in stretch brands huge from to customer see has their brands, happened budget. and That form from get are our moving

is XX,XXX not they’re and decisions assortment choosing we’re and stores and that those have we’re far, meet to are wonderful position making changes we’ll price in Larry now, them seeing excited the softener they the And right even softener it they’re about the detergents, liquid to in go meet And their forward. with to softener. have without are and our we investments the a just their drive needs, our We’re located new needs that things Dollar and making. customers -- at Tree, conveniently don’t where going think

Operator

We’ll take question our next ahead. from Ciccarelli Scot go Please with Truist.

Scot Ciccarelli

Good Scot morning, Ciccarelli. guys.

that to wanted question the last I asked I quarter. revisit actually So,

I cost general, in when generally it embedded the all asked that, quarter, in that, outlook. for take that was expect. your for investments more turnarounds what about comment retail your last And longer, know people ‘XX, was than we So

investment to standpoint? Dollar given be made, more that you’ve and and a may to Family had need you of that operational time Dollar view change how more this improvements get the So, from better to fact them the the an have now evaluate do be needed Tree much you and technological where morning want

Mike Witynski

perspective, investments OpEx to. be continue great a think where we’re Yes. that’s forward. And invest our need an And And labor I there going to team question. And will -- Bobby’s in is payroll now. we right forming to from going

worked do merchandise. think because supply of embedded are For our and and he we what at what I And the knows the before executives the as Bobby can far and this in supply IT And in markets From going is chain, year, it our is, with at right knows and forecast. he now, it, news two he’s ones. big two those good think the I the every Bobby dynamic chain on, see Rick mentioned one this as is looking exactly with systems. to retailers, needs other done he’s

is and same owe longer majority going that it And we Bobby a be when to I our then, you term working because the to with CapEx. really the Day, of will in chain. going in spring that And hard. So, is the outlook have number be thing Investor supply probably is up

information We’re Combo what’s network use Plus we two have Tree our spring to have Dollar stores, and looking stores. most the And we’ll best and that way and the deliver our Tree our from and on -- deliver at knowledge stores to more the is now leaders. as Dollar Family our course, our to to way the it Stores, working more as efficient out, Dollar traditional is on what the modeling probably of John

to two we going look in that repair certainly big impact coming there’s to those a on maintenance OpEx it, and in that those in, is investments. just our say the at and we and are want a But CFO any in and store embedded back board and have will Our But that. come we forecast, to term you be conditions will from perspective, our have if it. initiatives will will longer announced probably other and

Operator

on We’ll with move our Simeon to Stanley. next Gutman Morgan question from

Simeon Gutman

everyone. It’s morning, Gutman. Good Hey. Simeon

and the multi and to For Is question. some may Rick, like more that’s we’re breaking the looks theoretical of Because the lap on end that Mike these price then tree. more It going will buck or the the up part some transitional, being ‘XX of continue, is sequencing. one this and of and investments -- fair? timing maybe at

leaning speeding for I investments, if how think assumption, in, do about So layering guess, for ‘XX fair the a path clear up ‘XX? that’s you -- to maybe

Mike Witynski

to in, theory, going is you’re it. that we’re pricing right. then just in forward that investment on and And But manage I Yes. our of think going side

on these Rick that our systems. of it’s and systems touching. are it’s it’s our just amount we our and said, you IT, think things chain on our our and retail chain will lean the as in then that -- systems systems, supply supply And but are I take time because of merchandising store investments

to distribution and network rightsize and then, when we out roll our will decisions our take continue we supply will will capability. will make forward. open and going So as And stage new that time, we that that’s over chain centers, the be

as speed we highest give move us will as quick So, the that return to will possible. with continue

Operator

our take Goldman from Kate next McShane We’ll Please go question with Sachs. ahead.

Kate McShane

It again the change. with looks elasticity $X.XX improved sequentially like response the

meaningfully your were Just response for last second we changed if for half thinking when what the you expectation that’s the last wondered from what spoke is you to quarter. and

Mike Witynski

No. Yes.

in I shift Dollar is some intercepts to discretionary the think $X.XX. experience. and of them not customer on the marketplace in-store about Tree about price, huge dig were consumables, the dynamic the of and them assortments, have all the from We research change assortment and -- they’re and shift our biggest did focused not clean, I the we stores. of when they brand And and of customer the up beginning one the quarter. what brought into wanted really in-depth up new the to $X.XX. shocked. the brought seasonal at Not the was service one They And the of

changing. understand big early the an did value your off. I’m tested point, why and these change we season. back leaves taken leaves And because the the why I on ever. not the the the about as value. That’s Dollar items all all on, any We In And customers all and they excited than Tree they have see So, dynamics, think that half are beyond trees. in more to really that is exceptional second like aren’t the move about $X.XX quarter is summer, today’s the seasons. new consumables

graduation impacted garden and graduation got lawn then by and you’ve got You’ve and was helium.

Kevin didn’t that Pluses On said we X,XXX got -- the X,XXX we’ve half, back actually, have. Dollar Tree

And like inventory, be $X.XX. they this going the back with to got -- half. Valentine’s inventory rally will that’s in at just did seasonal the off our our quarter merchandise, So, seasonal then, that’s the And all first around Easter. of they we’ve exciting and

position, some from last inventory then, consumables expect that this is response spectacular. that the have at side, And great time. didn’t exciting basic and value we in We we’ve we’re year because on on our things the the answered great customers a

half back of So, about I’m Dollar the Tree. excited pretty

Operator

Mushkin on go ahead. RX question to and Please ahead with from our go Capital. Scott We’ll move next

Scott Mushkin

So, the labor try wanted it the more kind more labor be? to of get on to of a and And labor, might bit at I said you you where you some you comments to as what put little just that want about get pressure competition. into about

Mike Witynski

it investing we’re under we shared feel the it just Yes, in Scott, our majority $XXX and that million, of $XXX store on, million thanks. our associates payroll, And early in of over some didn’t to We in have roles our got centers. of our this at positions. where all last in we’re where DCs. open good really we year compared distribution our filled We’ve time

invest to continuing and we where in are and stores, that the in retail the stores will the We need. do continue we markets to see

the out of already back over half year, forecast. adjustments Looking make where we the in is to need our

a it’s dynamic So, environment.

are people back economy. a because in Now coming just little to the bit going what’s of on work

a to to. I bit, but where think going So, continue shift that’s little to we will invest need we

forecast. the far, so year, the rest have the in looking invest of we to we months, six the what And next in need for

Operator

our Montani ahead. Please with ISI. We’ll take go Evercore next Michael from question

Michael Montani

realistic traffic of the top both bit pricing Dollar, Tree. three the Obviously, further, actions of to Just I have kind shift. banners then anticipate up doing dig moving a you’re wanted Dollar into to the Family two at time gone could, little what to at and line if forward for but kind prices of drivers there’s

you those what what’s line of to and talk confidence kind the could you gives there, just about Mike, turned get things So, Rick the time if and up?

Kevin Wampler

Well, ahead. go

Mike Witynski

going the Dollar the done to side. got just Tree I just Yes, saying say, excitement on I was

that of Our traffic into put side And seen in that assortment pre-pandemic. since on to perspective, and consumables, investments in improvement we’ve $X.XX kind driving which the traffic. consumables the haven’t made just is the new drives we

is value, inside investment, our that’s store the coming And else, side, ourselves to best they’re Dollar the be the we with this unlike then to tighter most assortment, unbelievable seasons for seasonal position in coming more product put we’re that the the Family our shelf excitement. best the Dollar pricing, Tree is at what price getting that’s then assortment how wow best more looking our again, with and a advantage on on the So, with and going the anybody prices, a XX along mentioning $X.XX up doing just getting HX.X traffic, that and front enhancing see driving up drive up, and years, a will the foot, of and so merchants linear to alone are traffic, the customer even taking over market and more the Larry not center. that for Gatta meaningful

made. excited we’ve about really moves I’m So, that the

you coming Larry marketing, the customers know, will that get see position side. the for Now, Family takes what is marketing, being as we’ve customer and on on and Dollar better I got it with for right, print are time do we mentioned -- And better is going on really got we customer recognizing credit over advertise perspectives in time, new priced assortment, And then it. responds drives our exactly our the with marketing digital to Larry ad, -- and four need we’ve purposefully working that great to on that traffic.

and the on, what to on about just Tree the on growing. and thrilled Family Larry that going merchants I’m levers the all Dollar are keep side got pulling are side, Dollar those So we the

Operator

last go ahead. And comes UBS. with Please Michael question our from Lasser

Michael Lasser

lot Good for question. morning. taking my Thanks a

So around Dollar Family we retail the you this Rick, run and you’ve a Tree order Family over use said, Dollar investments are potential and long margins time. a this that at in space the of been XX spot the you price expansion perception can long Dollar. Presumably, and value fund to to realize came for opportunity look, gross over last the we to we expanding, days, have asset in get full need at better because

and gross rate, rate XX% sustain Dollar Tree exiting this margin margin run? the a to rebuild with Dollar Dollar’s now, with on exiting can low-XXs investments? Tree gross a gross XX% at generate Dollar long over is, a can the this these rate you margin XX% So year gross XX% And the to year order rate long suitable question Family Family the to run in over margin return

Rick Dreiling

margin very year and Family margin And will community vendor we half are for are of the going support, say, in we’re working I time. Dollar is that and forward. over to on with way anticipate answer will the the the improve back where Tree comfortable we think gross that the I with with vendor the we our Dollar

Operator

I with presenters our back And additional it to that, like that does closing would conclude for question-and-answer over session today. remarks. any hand now or our for to

Randy Guiler

Aly. Great. today’s you Thank Thank call. you, for us for joining

Our next earnings call you, for Thank have QX is day. tentatively scheduled for Tuesday, and a November XXnd. good

Operator

does With you you participation. now for today’s that, that Thank disconnect. conclude call. may your And

Dollar Tree (DLTR) 25 Aug 222022 Q2 Earnings call transcript