Earnings call transcript Q1 2023

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Operator

Good day and welcome to Dollar Tree’s Q1 2023 earnings call. Today’s call is being recorded.

At this time, I’ll now turn the call over to Randy Guiler. Please go ahead, sir.

Randy Guiler

Good morning and welcome to our call to discuss Dollar Tree’s first quarter fiscal 2023. call Davis. and today’s and Rick on Jeff CFO me are CEO Chairman Dreiling With

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

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

stated, against ago. SEC to period quarter and for most be comparable year release we GAAP Unless on otherwise directly GAAP will Also first during provided intended These this stated, substitute these refer today’s comparisons call, results. otherwise financials we are will not earnings GAAP are a discuss a the of non-GAAP financials non-GAAP the Unless XXXX to financial non-GAAP to measures. items Reconciliations in basis. measures are fiscal filings. same a for all

that the number available Please our outlines note the portion operating key is IR a slide of on metrics company’s a of deck supplemental that website.

your prepared Jeff will Rick and Following take remarks, questions. our

I those one. ask to of your that that you would number limit participate, questions to like please large the Given

I to turn over the will now call Rick.

Rick Dreiling

our you thank Thank you everyone joining Randy. Good and for call. morning

Dollar its be be near at to XX hosting As of and headquarters. conference of will see conference I in you four are aware, many on many hope this important in Tree June The Norfolk, webcast Virginia our weeks will corporate investor event. you

investor productivity been taking of which the each a and next month’s investors. we for and will Dollar. hope has of Dollar increase shape the these Our conference and to speed the at transformation provide overdue we and our profitability with changes level Tree understand are I both anticipation better of gathering many you understanding making Family

We of have been we we the on need starkly the clear transformation dig hard the this drive realize most way to it. upon business. our becomes, fully building work to in, are more we team the opportunity The more and at

Our structural our they far to stores revenue our are progressing There understand of to no less gap. comparable goal. know are those close generate per size this of closest why, the how impediments peers We we and towards to but store.

market gain share. As will and we do, growth we drive

revenue and capital will leverage retail fueling the store higher our the in will translate operating With accelerating return accelerated embedded higher growth and growth. in store model, on margins, into increase margins per

and down way. we have this We before gone road know the

we improve pursuing are We and have of segments, to with a tremendous opportunity our that both vigor.

seeing is we are in already still early transformation results. While the our enterprise-wide stages,

and have growth early to begun gains. deliver market Our initiatives share

in in this retail We the career. have I are my driving environment most dynamic transformation seen

bumps way, real will is and affect it will ends. generate volatility While along this great this where not the adventure

shift discretionary of quarter willingness goods. the seen goods in pressure throughout spend market mix labor and to have of on from the just consumer’s challenges, to levels elevated addition the retailers further the retail. pressured discretionary historic shrink levels on In past inflation even Shrink margins have and and

We action closures, level. government and/or the resolved through be through local will merchandising, store are either no at defensive Ultimately exception. shrink

the over term Regarding impact and near consumer profile believe normalize time will unfavorable rebound. will margin the of we shopping behavior consumables mix,

attuned end, we our none the we each to acutely distract to transformation materially the we happen. these allow of what bumps. of we on not that do, are allow delivering unless We from In affect us them promise to this to have will and know will

growth top in sales We our quarter volume we on the on are three and three these and sales unit one foot square specific performance sales primarily bench or transaction growth. I pleased line performance our Based metrics: per direction headed. with count, metrics, am growth,

business are our clear have actions the taken and wages pricing gains level continue we fundamentals we unit share the a assortment, made driving The and in momentum. merchandise market volume ongoing gain line of our that the top are significantly, have our Overall, growth share of to are and on strong and store strong. and standards. validation market traffic improvements Most we service

commercial near speed. building transformation our we potential are we term success despite are that but investments remain focused our completely most today and sales margin and delivering the message factors important want that and at elevated is I on experiencing macro on the from executing on convey shrink, Now full our full pressures mix momentum, impacting to

for the I one. will highlights now quarter review

updated a and XXXX our Following financial detailed my will overview provide of performance remarks, Jeff outlook. our

our $XXX.X the matters an growth billion to EPS and quarter, distribution a $X.XX of $X.XX and pending $XX EPS adjusted of West in million of income enterprise of X.X% adjusting sales, related of Memphis increase X.X% with million, when we for accrual delivered leading operating center. legal $X.XX regarding comp For to

and remain with at at X.X% comp and Dollar. Tree merchandising of increases Dollar strong Family X.X% Our execution

Family both of in and increase growth Results meaningful in the ago. was X.X%. consumables driven by fully traffic comp fourth quarter up transaction cycling February, in Dollar a the at underlying The improvement Tree very segments. the this Dollar of was traffic $X.XX even increased from consecutive strength impressive traffic with as across Dollar Notably point X.X%. were customer count comp sequential more price remained XX.X% at favorable in sales concentrated Tree’s comps comparable After year by context

were comp count an in and trends quarter negative, point XXXX, the segments both was nearly all company year-over-year. for sequentially one both traffic of increasing important inflection For traffic with so

The turnaround is Dollar at traction. meaningful Family gaining

Family XX comp we In improving by X.X% ticket. private was addition driven brand Dollar, points. the increase our Dollar’s traffic, Family approximately increased a to in penetration average by At basis

quality private expect as forward, continue merchandise growing further we penetration Moving we and standards. packaging, presentation, to improve control brands

we across brand growth consumables, here excited are and Chesapeake about example, health test pipeline growing recently new a For private products beauty, in opened high categories. kitchen of other and our and

margin associated with our private the by encouraged brands expanding business. also opportunities are We

across value we line pricing at and standards, performance. $X.XX and bring with have long pricing price Last took Tree. most us point steps These taken investments in transition Dollar investments at at on store direct the year, segments to our critical followed Dollar Family we strengthened to Dollar actions and our our to wages more price Along our improving are both the Family offering with operating in financial term competition.

and are did as continues There available As I to a consumer them, going as dollars be fewer simply year two are mentioned they earlier, not the ago. under or pressure. dollars those far to

needs rounds tax combined are been multiple inflation the wants. reduced, government These impacts lower. refunds dollars running over families of and persistent past have are stimulus, with prioritizing We SNAP have more

solution as need close are Both Dollar and part for need the paychecks. to Dollar their to look shoppers buying for and of Tree they Family stretch

are stores to Our and provide easy value. tremendous nearby, shop,

frequency. with While the shoppers increased driving also these into factors to margins, stores more our contributing are gross our and pressuring shift mix they are

offering We value to categories tremendous selection. both will continue respond and across discretionary the great a of needs by the to consumer consumables and

clearly driving pressure. this shift While any promotional additional margin and it margin towards mix noting not a the is consumables that headwind, rational is remains environment is worth

this we Dollar over to the of multi-price add Tree assortments Dollar year. anticipate and pace strategy made this our great track more strides roll-out accelerating balance and we XXX At we X,XXX on remain another In quarter one, of than Plus the stores and items the Tree, added $X to $X-plus with year. to stores

$X, and our Dollar frozen Additionally, alone last we refrigerated initiative. assortment stores stores adding at $X and products, with year on this $X product aggressively X,XXX have Tree expanded

we Both drive Dollar average stores ticket have sales are and During XXX added assortments added incremental multi-price and frozen these than doors driving stores. frozen sales having more than the Dollar multi-price our expanded and responding that Plus at quarter, clearly at with Tree Tree we measurable our doubling first initiatives are more impact this a results. offering. already Consumers our refrigerated on

growth years. industry XXXX. add On new the share basis, XX,XXX Family are in Dollar three doors Family a in is to than quarter cooler share highest measured one on Family dollar by volume market to At quarter helping Dollar’s as highest This four one years, its in drive more track of close we volume. unit to Dollar, was

at XXX quarter. experience more We Dollar continued store in-store to Family and improve completed renovations the the in than

I rationale other sooner quarter’s each These call, greater we On impact the enjoy shared The strategic XXXX. implemented, our increased SG&A will sooner investments the be will benefits our is management as as pursued last bandwidth rapidly should the spending and of for investments. the allow. our

including All of our store this is come are starting associates of those our conditions, again interdependent. and will be and to on investments results Many in. the ultimately ongoing, connected and

seen momentum turnover. in associate already sales have We and reduced meaningful improvements

and drive meaningful improve am plan increase In plan. will we a growth, have I closing, confident this productivity, line profitability. top

executing vigorously are We it. on

road the distract us clear in slow work. We it’s will allow or down, it’s to to and not bumps us starting

begun stores, associates Our and our our already price, delivering investments have in merchandise, our results.

our the get are communities I matters of to the We where we cornerstones in get but we investments well. as in how retailer. successful we’re going, people serve there firmly that the believe will

a Dollar organization to wages comprehensive have places is increase for the and to improve and grow. engagement It benefits to and a associate people strong continued to Family our success and of work for culture. We taken make have to vital great our Tree Dollar approach

pleased is the be done, taking building to work our there we are foundation efforts culture are a that and future. thriving for root While

XXX,XXX-plus making has of our contributed efforts collective great am I deserves so associates, very whom and of each are our progress to the the Finally, whom of each tremendous thanks. proud of we

cover more detail, in While outlook remain to sales confident we for momentum. Jeff outlook I emphasize the in want business will our our our continued and that

and detail at our Tree vision resonating look clearly working consumers. and Dollar forward our and at long conference. are strategies next Dollar go-to-market Family more our with multi-year Our month to outlook investor term sharing on I

turn to will the over call Jeff. now I

Jeff Davis

and Thank you everyone. good morning Rick,

our and was an in Family was Dollar and both Tree in As and the market strong top growth traffic, gains, growth. in meaningful increase segments continued underlying unit driven by Rick share Dollar performance mentioned, line customer

points basis Traffic was ticket mix down growth average customer basis increased slightly. behavior billion comp deteriorating increased consumables conditions. sales and the increased approximately X% of $X.X on XXX our macro of X.X%. sales on based Across X.X% as sales Total store a consolidated enterprise, purchase to responded to

Our points by positions QX. Family in the were segment Dollar particularly basis XXX points in XXX at service Dollar. basis levels strong In-stock improved and by Tree

also improved and Our DC Dollar. points for both service approximately at nearly segments Tree levels points XXX basis Dollar X,XXX by Family at basis

$XX income operating Tree, Adjusted outsized by West in center Recall income benefit year. distribution from legal operating disclosed decreased operating million. income a that comparisons QX, in Dollar $XXX.X and The XX% accrual variance Dollar we associated previously $X.XX we to related unfavorable Memphis, point million to cycled quarter million. with Family in first the our $XXX.X the decreased Arkansas. to proceedings of in at income Operating which given between full last QX resulted margin saw by XX% came adjusted price transition the

of approximately sales merchandise. unfavorable sales margin we freight the The to costs by Gross of benefited was contracted we merchandise the cost. The from and the mix were DC towards margin cost by closure profit of impact Dollar billion of lower $X.XX last current goods last as our partially higher mix In roll-out period, year. Tree. basis cycled points. Memphis $X.XX as margin gross offset XXX by shifted lower points QX year, of X.X% driver price at point basis our decline the markdowns gross XXX impact decreased biggest and consumable In West

On larger the shrink shrink impact basis last of expense impacted into represent to small In lower primarily on cost. initial transition to the a consumable segment points by impacting portion with $X.XX the spot a the from by approximately mix cycling and margin based elevated gross Dollar $X.XX rate Rick point, ahead. for per merchandise points a and distribution business elevated higher margin price EPS by We to second of half in modestly compared levels freight noted, our shipments, persistent the date increased share year, freight years basis from incremental basis, margin As negatively lower to this rates declines ocean relative and and an year. QX, the shrink savings Tree but only declined last of is challenge. come XXX benefited to gross from XX

decreased points gross Dollar’s with to XXX the by Dollar largely decline as Family same the contributing margin approximately basis factors Tree.

Specifically, mix, higher lower and offset gross by product shrink, margin impacted markdowns distribution higher partially and by lower expenses. cost negatively was increases, costs freight

percentage SG&A was points basis increased as store center driver wage to revenue The of investments associates. XXX distribution a for XX.X%. and biggest

also costs We as and experienced well as professional store higher marketing improving to conditions, expenses. focus higher facility continue we as store on

points approximately Corporate revenue, of and other from year. support XX down basis last expenses were X.X%

$X.XX $XXX.X The million $X.XX adjustment $X.XX related Net adjusted income in year legal million accrual. to Adjusted was was West net the ago. was EPS and comparison was to $X.XX. income Memphis and a was $XXX EPS

was stock-based higher by rate credits. points compensation Our and year. non-deductible reflecting effective the offset year, QX higher tax of or QX tax last last was year higher XX lower impact basis the XX.X% the this partially work West Adjusted rate opportunity for XX.X% XX.X% implied for tax Memphis deductions accrual, expenses, than versus

of end The flow, XXXX. roll-out Moving our and cash and increase high comparisons QX X.X% growth, volume sheet multi-price merchandise comments balance the reflect versus Tree inventory, continued growth. manageable. balance in the and an unit store the remains my increased QX inventory from primarily will Dollar sheet XXXX at DC cost, Inventory new quality to our of of

were $XXX.X million. expenditures versus $XXX.X million capital QX

For we XX% productivity and and expenditures growth, balance total approximately continue billion capital expect XXXX, approximately dedicated with towards the to to business fiscal to continuity $X directed optimization improvement.

$XXX.X shares did which $X.X QX, of to end. settle cash totaled equivalents billion. and In after compared until we for million $X.X million X million $XXX.X approximately Cash repurchased million, quarter not

Free increased end to $XXX million improved from XXXX share in $XXX expenditures fiscal million $XXX year. cash working by of cash the capital capital and from partially Our repurchases. by position improvements, QX led offset last million flow

expects for and EPS Dollar $X.XX. range on Tree our to store sales Diluted range the single Family the company to digit comp sales is for for second in the consolidated billion Moving net $X.X billion and $X in the to enterprise of from based will the be expected and a increase outlook, EPS second mid for Dollar quarter segments. to quarter $X.XX sales

savings second bulk half, the reminder, a As freight mentioned. year previously the will of the fall our in as ocean for

are respect Consolidated range full sales XXXX to With digit deliver store to expects The to year that a fiscal recall billion. the company to XXXX billion fiscal fiscal from for comparable sales growth to segment. guidance, has year end-weighted. expected Tree back to a a for mid a year low expected low single in in week. $XX to full mid increase now store is digit and $XX.X X% digit grow by single mid new segment of for the single Dollar Family the increase the Dollar comprised the increase with X.X% square year to footage Selling XXrd

intensified. midpoint two modestly given unfavorable industry-wide our are the shrink, of we in cautious near profitability. on on impact their of fiscal raised financial has impact the sales the the growing margin our our top of these line year, results and the outlook While factors mix incrementally shift guidance, our on of challenges we term more the Since beginning accelerating

higher improve of optimization, higher time, our through and to performance perhaps over will areas will that shrink. real shrink systematically expect discretionary merchandising We that our prices compensate mix normalize we efforts, and also of for defensive on estate

to consumables continuing is expect XXXX. higher unfavorable full and expected share earnings mix $X.XX in impact approximately be We per shrink and year combined the of

following. outlook the include XXXX Our modeling considerations for

expect to depreciation amortization is $XXX We the to $XXX million Net for from $XX range to expected million. be million approximately expense $XXX and and million interest QX consolidated year. in

tax a the for for XXXX. rate and Our to to outlook XX.X% XX.X% XX.X% second XX.X% assumes fiscal of quarter

for our billion shares of assumed share While had counts million not average be remaining share and the our $X.X are for XXX.X full as April QX under XX. million diluted to XXX.X included are share in year. our we shares outlook, Weighted repurchase authorization repurchases

XXXX, from inventory. that balance we of the work margin levels elevated For of discretionary diligently offset pressures come could to potential will

cost freight are vendor potential promotional as reduce and spending these impact We repairs managing of identifying mitigate further further taking the allowances, pressures costs, our maintenance cost. opportunities to actions and to optimizing such inbound and

year, weighted beyond. to continue this We $X the per half towards ocean of benefits additional and from see benefit full of an year in XXXX be could earnings and back lower significantly $X costs share per share which year freight the

EPS just XXXX revising which GAAP the from factors fiscal taken As the for XXrd expected diluted to I contribution a reserve of the legal the result includes to range outlined, in outlook $X.XX, and $X.XX we of QX. our are a $X.XX week

over turn now the will for Rick closing to remarks. call back I

Rick Dreiling

Thank you Jeff.

urgency continuing solid I to high at transformation, and execute level We and are with start around XXXX. a with to acting am business pleased our our

looking are analysts our we the for comprehensive investors business, elements and of of and multi-year with provide business. conference expect substantive our the forward next We a a key where to our month investor to overview outlook including

Our team the economic us have environment. levers sharing has value next detail power month. over greater We in retail earnings the we identified our that plans forward to business multiple positions underlying see in and momentum and more and to favorably three path a years next strong current unlock to look

at his opportunity Dollar new leader proven am and in confident thought record. to worked Mike continued also want expert our with on that success very supply to demonstrate a in and chain is I Tree have supply he past I Mike Mike previous I officer, organizations chain this will logistics. welcome take and Kindy. based matter subject

to contributions us to John thank his get we are for which helped where also today. want I Flanigan

short overseen serve a tremendous at over for chain the his a and desire our distribution us and network, the outset past impact. has early to to to led process optimize has communicated the John stages our supply of only year John period, the strategy had he’s While

We term operations growth. our fundamentally retailing are moving combined in fast reposition at journey to long our a for sustainable pace

productivity are already growth segments. paying both clear for efforts form Our the a gains significant off profitability. runway have of at in Both accelerated formats in share market and

outlook have that five three shape over to our leaders years. next the will factors complete Our ownership the for

forward to We have than who are a month and winning at eager motivated conference. next look team our more associates of sharing XXX,XXX I more succeed. highly to

continuing ample we share some company I congratulating months before joined go transition. IR Q&A. of in our you. Guiler notification want role note with his us communicated upcoming Tree. Tree with news with Randy through Investor This Bob of to and the on us his conference retirement to last advanced provided at join Several ago, retirement of the One Dollar plans. his his Randy service with Bob me on new role dedicated smooth Randy’s Randy that new facilitate us Tree. opportunity help Randy I at and June nine to his week a this Dollar with I to seek leading want function for Monday Please at pleased replacement. current thank LaFleur is as will Relations. our the to IR SVP of years share be investor to Dollar month on in pending am

and to ready I are now take questions. Operator, Jeff

Operator

Thank [Operator you. instructions]

take Guggenheim. will from first our Heinbockel question We John from

go is line open, Your please ahead.

John Heinbockel

not will question. do and time? in it mix think consumer, a then your to you distribution opportunity margin, impact and maybe mix remain goes thought bring that Fresh-like over COGS ultimately that penetration, I on your talk initiatives where but the consumables DG mitigating that think the only a of higher strategic label do about consumable the about What’s you then on goes will that, think initiative area? mix, help, to elevated, more the Rick, down private maybe Thanks. If that of and

Rick Dreiling

John, great you meat lot of that There’s Thank a question. question. in answering

us like to the in discretionary. are I’d to The in The our the strength the we in step the with consumables, weakness first consumer consumables is Dollar nothing do significant the consumable Tree forward side, that for products, is the that responding thing shift fact to are a is we’re introducing to. needs especially that responding on experiencing that say consumer, towards which is has of we really

in about important marketplace. than is talk on think you’d what discretionary, Now, to for I call when also a that this the it’s I discretionary different little see realize our our bit everyone out

of Our see operator, to with the can another discretionary on and the still I’m a are value bullish where we discretionary. price difference significant you be to another that retail so items point, tends high in part compare very reason retailer that’s

brands continues, side. to not like the being advantage one, us of amount the done twofold: as brands, what for this and shift it’s number Now on consumables and work private on I’d just say, that’s the private

that’s the way Our private all margin private another brand on the the to margin us effort includes products, of HBC side. and accelerate consumables for higher label so

onto and to not it out through I of it, think fascinating. an and pretty I’ve as at four pressure shrink. so passed my talked that uniform be impact truly all that shrink margin, we keeping stores, the When shrink what cyclical, happens four be say, the All seen forget taken being you career, shrink to if we’re which with classes eventually, in all classes, you can’t highest. experiencing, is eye that John, about Let’s issue, work can. about get is we’re tends The consumer would shrink shrink mitigate the with four is on never the which we have we again costs

committed to food of and frozen Fresh the growing is are which our to consumer. now highest we with concept, refrigerated, categories regards one right particular In the

Thank you.

John Heinbockel

you. Thank

Randy Guiler

Next question, please.

Operator

We next Stanley. Simeon our Morgan Gutman take question will from from

open, is ahead. Your please go line

Simeon Gutman

maybe of speeding some more how some higher roll-out Dollar the the you. given trade-off Plus price given $X.XX stores? Plus. the a accelerating and then guess, I cost morning Can good move at headwinds, I margin wanted given just of about, morning to Tree points also price you up ask about Good to Thank Dollar talk about the of trade-off Rick, pressures, to higher the behaving ask Tree. consumer point to here Dollar is Jeff. wanted Tree the I maybe

Rick Dreiling

Yes, there. two good questions

with to same along we $X, Tree as seeing very we’re are food change $X, that excited We what the fast our Plus, the - thing, and the in with intent frozen move there as our thing is Dollar $X is points price can. point basket is in a actually go with Chief certain Rick in been when those price and has no consumer significant. more stores, Merchant resistance. items McNeely, experimenting The couple The

think priced the I bigger I Rick that that us, already backlash and a basket SKUs, so we and incrementally is shopping not a is we’re broke think experience. any are doing, once have, a dollar, what on behind broader repetition of what we creating

Jeff Davis

and relation a where higher against marketplace. add just continue things in value value previously breaking could to more one we price were team have while in our dollar they’re I is in the separation the at situations at to making in is on that competitors that, prices really the If of price point, to some we other separation of a giving price, sure that and in always to every the market merchant relation all focused

Simeon Gutman

you. Thank

Operator

will We from question next our take Fargo. from Wells Edward Kelly

is line ahead. go open, Your please

Rick Dreiling

Good morning Ed.

Edward Kelly

Hi guys, morning. good

just I walk through surprise as count, First happened on could tied quickly, think that year-end be you inventory curious there. so the what shrink, to would just just there? to the us shrink would I’m

been changes potential down, going sort you that going the be know, at hear and that looking to I’m for is I we’re the begin higher you sure we $X this question big for but you’re see mentioned see because the and picture, to this, you the do nothing you you, Then you that Rick, acceleration? here all than, we think point year. around base of you but has guess three the timing inflection, and all saw at joined potential as a earnings years, with starting significantly how can quickly we But

Jeff Davis

see XX% first our taken that is than question year, I’ll shrink, When year. regarding inventories in did Jeff. in had shrink. that while our the gave for guidance elevation was This of our of we year, their we had for approximately the we the part for stores and take some the the guidance embedded less

being and quarter, shrink the out through we were stores, across had of as was pretty That’s Rick reason normal all make seeing the we to that we really the was needed the saw classes, level of As moved in the the the course increase shrink a why by rapid of that adjustment. for which us. we experienced said,

of time, taken stores of have XX% Through inventories. than have we less this only that our a little their period

anticipating But we’re most that for have reflected shrink the class number still could our still of had leading adjustment what is we that what’s that’s some upon higher further the are today adjustment We in even seeing we appropriate. that being we upon accelerate and the what know based indicators, other a left, made based we because stores year. we today, believe

you’re is retailers not This unlike what seeing in other many across the industry.

to it it all control the of can. taking we’re can of is and this mitigate course us, and Some of that appropriate economic, particular is we of we is societal, some steps some to this where

Rick Dreiling

give to it’s day, to the say of like Ed, a highlight at second little and thing that how first to going on your going the part quick shake you will clarity how the more question which is I’d intend it’s to Then to question, of investor a come. we lot down

frozen SKUs, facilities. in of in--and to the Number believe all here, cooler, XX-inch we’re shrink them is think throw this A do opportunity couple impact on X,XXX I food, Then comments, do doing. The what expanded not the going bullish realistic, move this, almost store though, prior very to be and add accretive are physical expanded work that I now. Dollar with on if shift the motion the living in and we’re and Tree [indiscernible], transitory. you are is this consumable forever, Ed, Plus, to to we all to new that. we’re the the I one, improvement am the going

optimistic, by We’re in that help like say, the proof we’ll and many reducing made, a so other which in what you our and at detail I already going so am I’d the is wage motion. there’s of investments more investor incredibly to lot day. for we’ve turnover this out - there’s areas, confident to lay us in

Edward Kelly

Thank you.

Rick Dreiling

Thank you Ed.

Operator

Securities. next Ciccarelli our take question from We’ll Truist from Scot

Your line is open, please go ahead.

Scot Ciccarelli

Good morning Scot Ciccarelli, morning. It’s guys. good

sales to of be look But doors starts an focused sales foods, more do consumables and your once but to driving consumers to until and then shift consumables as been so you’ve sales A change frozen the you the actually you like buying obviously we growth goods, up if back the General pandemic, lot become to gains as year continued initiatives, transaction Dollar consumer Rick, their trend stabilize, their how to a have spiked of theory consumer because the sustainable, consumable do how behavior bigger driver expanding part the consumable in should your on and cooler example, during discretionary starts that every at that’s as highlighted. Great normalize? Recession pie the sales,

Rick Dreiling

I to and question. great anybody to offence prior this value Another somewhere the cheap. me, would say have confused along line no we -

at feel they’re people and the be took this, How the and to with better a consumer value used one hold of a broken. to China but into it story store. means the was stores, bringing of it product to we’re The face somebody looking years is and years, home, right excited are able see really in bought stand Our trip over for our can cheap, we was bring value, making one their and to and what it selection ago, that going we’re value. and and doing and going able vendor to in. are that’s now manufacturer manage not be they’ll job the that--the day procuring remember Tree to Dollar I face rake to three classic first in Well,

thing, we right the selection frank, value, If make going Scot, the to have we that other anyway. is the right Then to consumer the the going consumer be gravitate products, is choice. and there promote to

Scot Ciccarelli

it, understood. Got you. Thank

Operator

We’ll Keith from Piper take our question Sandler. next from Peter

Your line is go ahead. please open,

Rick Dreiling

Good morning Peter.

Peter Keith

can you to down The new Is customers Hey, stores. seeing. you’re and see. repeat the good you’re were pretty getting what impressive nice benefit see backdrop, economic track or type I’m behavior on? more morning with behavior trade-in/trade curious to this in are you customers that comps Obviously everyone. transaction starting of

Rick Dreiling

seeing We’re customers. actually new

Our customer core coming is more frequently.

is any now $XX,XXX and wrapped come, spend they is target we’re to that come that consumable That actually they more they up and in but often, range consumer. business. down what more beginning in when Now, more the don’t we’re trade income consumer the seeing

they’re a certain a used better the highlighted rate that that, income things a happens we’re Jeff everybody now to the was of I comes it, which that and they to what now. our service giving in, hope in from of they’re consumables caught level at level higher in-stock improvement and down. Then to job the order why able seeing comes higher consumer and that significant. they trade much improvement level One drawing we’re when that is stores, stores want That when satisfying do what the which is service

Jeff Davis

coming to that just to new customer, more banners, new Peter, million over Now X so give a XX-month net you are little dimensionalization about customers you customer us. across seeing both trailing are period, a averaging they

and we store they entire the Rick seeing across why make for discretionary, and service environment mentioned, an to improving that right store, continue sure customer We’re thus across is that that will stores. we consumables our the reason and to have us, our standards the shop store such want come back want to delivery ability to element has and important as their

Scot Ciccarelli

you so much. helpful. Thank very Okay,

Rick Dreiling

Thank you.

Operator

from next Suisse. from take Short We Karen will question Credit our

open, Your go please line is ahead.

Rick Dreiling

morning Good Karen.

Karen Short

few morning. to forward Hey, weeks. and in very Thanks much, seeing looking you a

more Dollar fair you’ll couple overall what I so banner, we to get Tree to the as the ask On is through just within things. year, wanted structure have benefit freight, it of from a margin say not at on be a impactfully second the that there then half little shift, in more the right and will is of mix necessarily but offset looking now run year trade? rate is the we’re a

bigger give that the could then bigger test second if relates as like and we roll-out go on to to you wondering But a consolidating that know as doing distribution look a ask much wanted a update center, on thing forward. you’re some is I it I as could what

Rick Dreiling

I’ll take the second one.

Jeff Davis

a the we not manage of expectation earlier to be elements. that our business cost Dollar a product the of question had Yes, was that XX% course, some the of we’d goes and first Tree, rate. shrink, into other year margin to gross so with at to course on able but margins the only that, lot XX% over portion markdowns, There’s that stated respect to

at the we we previously of at how have able of some our and offering we to but just XX% would that that offering we so look lower little where to in our comfortable say as that. still range, been believe we end do There’s of number would work be a margin behaviors to the have end XX%, points. to of that able new at feel I continue points guidance, of based capture weren’t upon lower range, we from we product as basis bit that look the Today at able lower the introduction price and that a be will the the product we customer elements managing price a more to business

Rick Dreiling

process of center we’re to converted building actually far regards share What down in more done Utah and difficult have which that of [indiscernible] they’ve is gone--and one at and John we’ve we’ll the the but total of makes little Mike really boils from easy, us It’s a propositions the warehouses, day, had at to distribution to sounds sense, those only. it for we concerning to Then the and the analysis away it system Florida. day, one is done the a the in We question the of in how be combined end investor stores. Family and in tends to one execute. Dollar this

not spend sold more it, that that do need to need we no but I’m little it. need we with do it time a I’m I to we not sold have but to opinion, don’t

to our a conference, the on where in going six warehouse. basis go a and to probably at investor combined broad an answer seven more want we ultimately or you have We’re give we’ll on months the next thoughts then

Karen Short

Okay, great. Thank very you much.

Operator

our Matthew from take Boss. next question will We

go open, Your is please ahead. line

Matthew Boss

thanks. Great,

Rick Dreiling

good are, morning. Matt, you There

Matthew Boss

to decline at acceleration that obviously support your trends banner, comp guidance quarter you’re which to the the Tree Rick, Rick. between seeing are dichotomy is Dollar you’re second Dollar you the and you positive, just at the traffic that morning recent Good average sequential a could relative you then experiencing, the with in Tree ticket speak seeing what banner? embedded that nice improvement, to the

Rick Dreiling

only pleased tell want not I Yes, give very have here I a we’re don’t the transaction guidance and three to and will changed. with the I counts quarter, trends, the you mid-quarter - half but weeks into am

of Tree. and have always footsteps look the at driving and that I I we’re look banners that transactions, comp we’re very ultimately to at this, transaction is we on both drive very, what bullish the basket. always I we the game. seeing I’ve basket, want when at pleased the Matt, believed very at stage think I growth am sales with Dollar remain the leading to this with

Operator

Joe We from take question our next will Feldman.

line Your open, is please ahead. go

Rick Dreiling

Joe. morning Good

Joe Feldman

Thanks Hi, good the morning question, guys. for that. really taking appreciate

like mix quarter wanted you I go environment what consumables on expected. the understand pressure. it accelerate as little It curious guess in in, all the seems I the mix. to and to was I’m guess than back We a we’re I different the did

wanted that more bad could and on still--the discretionary sounded You that an perspective, you you a discretionary, like it. business guess, wasn’t if also your it from performance little I of question made I reference to color earlier share were

Rick Dreiling

team I’ll that’s okay. Yes, tag that, maybe we’ll start. if

drive the If shrink we out and starting a towards see last back consumables. to call you were shift in go call, earnings did the to that we

in of doubt and Now, now We’ve XX that lot and needs weeks is tax things returns now call-out those as smaller needs focused benefits, last we’ve this of more taken the consumer a is real all the last shift as can is all on wants. that I and the feeling year, close that than have are pressure system, the there accelerated, of change over to That’s versus the root, that time is think place. XX, the and had no the buying SNAP consumer stimulus has they of seen. absolutely out is taking

to that worse. Now, while. get to it’s a any shift going we We going is think continue don’t particularly believe for

I the the second can’t part remember of question.

Joe Feldman

yes. discretionary, just asking was I about

Rick Dreiling

really bring really Yes. I The discretionary, I important up it’s important. reason think -

the strengthened we we Our no that is cost, so discretionary be discretionary fact business our by low still the have are side and needed pertinent they’re It’s the that the more customer. is buying consumables wanted or making good, shouldn’t longer consumables. items assumption

add? have don’t if I Jeff, anything you to know

Jeff Davis

points that a on mix, their flat in quarter, the XXX Tree Yes, Dollar into Family on just was consumables. going consumables. to for basis, shift dimension a little the acceleration they were of add was I a recall Dollar In little--provide may year-over-year fourth basis and about you

of financials now year-over-year that of basis a Dollar consumables Family into have what this year, XXX shift is indication points, on fast was should pretty consumables, quarter give basis more shift of Tree you significant You That hopefully you that’s first the reflected. what forward to Dollar quantum into and just our saw the and is. XXX so shift point basis a an

your initial think what there’s average into you’re points when margins that losing margin. basis differential on on you full XX XX-point for you, dollar initial shifts that it’s a consumables, a discretionary in from If does between margin about so that discretionary consumables, of and

Joe Feldman

guys. for it. Thanks Good Appreciate helpful. really clarifying quarter, That’s that. luck this

Rick Dreiling

Thank you.

Operator

Lasser our We question take next UBS. from will from Michael

go ahead. open, please line Your is

Rick Dreiling

morning Good Michael.

Michael Lasser

Morning Rick.

Dollar costs, that performance. year? your tenure At this consistency? in your the and mix. like that would under-promise as hallmarks you colored realistic team’s situation and to going into and by retail is do factors Is such it point happen half second One experience of of unanticipated and cycle think and shrink the the of Tree that you get could is the what greater to previous has of in This been reinvestment surprises consistently reliable generate over-deliver consistent, due

$XX going to Dollar Also Tree’s as focused The this ability a in potentially in I’m ’XX. market part was second $X put and one. on ’XX to of question, in earn

market that push expectations those outlined factors Given you know? that you’ve of should the light these is it off today, in realistic everything

more you price above alluded that’s below this this you that? much. incremental detail far $X. above lot Then so presumably point $X.XX $X.XX give - of to but Can on lastly, interest a us It’s so sparked morning. you’ve Thank

Rick Dreiling

mantra been take of part think deny over-deliver, I career. Under-promise, I handle second. make that, the has will I I’ll and a the Jeff my comments. but couple first cannot the let

what lot previous employer, believe what on of the one, it do ago. path. you’re all not there we do like We through investor journey are the did going started I’d and show you the that graphs can a charts day I the payoff the believe and that and you arena, a things show maturations will we a we and long there’s on do at to path, time, is up when so hold I of are public stand do Number believe we are journey. right, were with and in until coming. we we is doing my Michael, do we seeing we’re I long, went right at private. What the is time to the do

and just all we’re in are about four you dying got little led, right I’ve of this lay about, it now. for getting me, and people XXX,XXX are we a we are out need journey. that around a new we go be where people level you that set Every we something excited, and have is to going out know to fixed, to think time the didn’t this weeks. day I’ve bit I got get find and it

Jeffrey, you handle the-- I’ll let

Jeff Davis

actions thing to only EPS. able add The to are upon I embarking that that is there, double-digit The currently. very we confident that we to we are would get be will deliver

anything there you’re we near in day, we are away The investor of is are we confident frame confident term of want get that But to that will and time be As get best the perspective. we’re we results take to the EPS we our that double-digit from we illustrated don’t horizon. in see to from time. get period when some and the components a top Rick how what starting has line said, there doing, of

Michael Lasser

Okay, and price Jeff? on point, the

Jeff Davis

question I’m multi-price? sorry, on specific the

Rick Dreiling

Yes, say you could it again?

Michael Lasser

points. those $X but $X.XX above it are so if elaborate Yes, helpful. is this you test, interpretation times to Tree alluded incremental The price be super several price that $X that the on Plus have Dollar of you and below testing so point could call would items, on

Rick Dreiling

the all is duplication correct that’s your this stage $X.XX said at we’re is game, and that of and we’re where $X, the and going yes, Yes, we $X.XX is of very to where but than with no Between question, this SKU. right $X assumption. land mean are--that’s of less answer a north fair. to at done, now, doesn’t when That

Michael Lasser

Understood, you much. very thank

Operator

our next take from from Deutsche Katai will question Krisztina We Bank.

go line open, please Your is ahead.

Rick Dreiling

morning Good Krisztina.

Krisztina Katai

morning and Jeff for Thank my good you Hi, Rick. taking question.

talk you increased of players Just you said steps from view just potentially onto the can wanted Thank to think, rational, your case can some how pressure take evolve that you. of margin. some to much some on can I better you but here? see I the up now mitigate Could about lean know Rick, points that you environment larger in follow you something still just on do it? of about take right said the shrink quickly talk vendors, about can you you is promotional talk but you source? that currently the how up very just you investment, as that cyclical, it’s price

Rick Dreiling

you I’ll Yes, environment. very tell reinforce also right that stable will the I’ll about now, it’s I talk and this. promotional

print. for to on to the the commitments go and the in incremental incremental we make you have that’s in support ability to markdowns get manufacturer, in long on time this generating by are relationships our very execute are have Family in We side Those relationships vendor vendor had not the driven banner. vendor and the how case you battle a very, we to Dollar

However, I that. do not see

I’ve I ever market rational seen as think it. is the as

to want you take the-- Do

Jeff Davis

it’s shrink, approach. a multi-faceted on Yes,

with display how what the because displayed. we that know off then that kinds have restrictions don’t you we things and but where impacts of it’s are sales, start of to you the inevitable types particularly is that definitely it items, how some Those there’s situations, for portion. opportunities merchandising an us care for You in

us and helps of helps turnover be and perspective, our have local alert. which how levels law We we honestly, to really as getting some of also extent store on introduced positions focused some elements support there also is within to new the and in of key closely technologies also position, in enforcement but our that continue that We steps, elevated the internal we the the shrink. more monitor been filled with working turnover quite communities, within such from a take

to we onto Once how In of work that. at element to elevated and multi-faceted of the is something have our consumer, will price some that have have we’ll pass we’re again, eventuality we to very this will merchandise. this that ultimately all levels some into our about and we across going this think

Rick Dreiling

into to tends category right do our assortment looking last certain same are Jeff’s fall higher point, problem. the categories, to exploring we’re shrink a store. in one the we’re the of things I’d need actually looking--to kinds thing, as we’re low add shrink Those Krisztina, and mitigate now stores at too. we Shrink everything

Krisztina Katai

so much. thank Great, you

Operator

hand back I Please over Now will go Randy to ahead, Guiler. sir.

Randy Guiler

today, investor and June we at Have to our conference us see on you Thank a good you joining XX. hope day. for

Operator

Thank today’s call. joining you for

now You disconnect. may

Dollar Tree (DLTR) 25 May 232023 Q1 Earnings call transcript