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Company Profile of Dollar Tree -
May 5th, 2011
Dollar Tree, Inc. (NASDAQ: DLTR) is an American chain of discount variety stores selling every item for $1.00 or less. A Fortune 500 company, Dollar Tree is headquartered in Chesapeake, Virginia and operates 4,009 stores throughout the 48 contiguous U.S. states. Its stores are supported by a nationwide logistics network of nine Distribution Centers. The Company operates one dollar stores under the names of Dollar Tree and Dollar Bills. The Company also operates a multiprice-point variety chain under the name Deal$ .
Dollar Tree competes in the dollar store and low-end retail markets with the national chains Family Dollar, Big Lots and Dollar General together with regional chains such as 99 Cents Only Stores, Fred's and many independent dollar stores nationwide.
Each Dollar Tree stocks a wide variety of products including national, regional, and private-label brands. Some of the product departments found in a Dollar Tree store include health and beauty, food and snacks, party, seasonal décor, housewares, glassware, dinnerware, household cleaning supplies, candy, toys, gifts, gift bags and wrap, stationery, craft supplies, teaching supplies, books, and more. Many Dollar Tree stores also sell frozen foods and dairy items such as milk, eggs, pizza, ice cream, frozen dinners, and pre-made baked goods.
In 2009, Dollar Tree launched a redesigned with a new e-commerce platform. DollarTree.com sells Dollar Tree merchandise in larger quantities to individuals, small businesses, and organizations. Every single item on the website is still only $1 or less and the Company offers free shipping to Dollar Tree stores. The Company also advertises in-store events, specials, seasonal promotions, and featured products through the site and users can locate a retail store, research information about Dollar Tree, and view product recalls. Dollar Tree also recently added customer ratings and reviews to the site so customers can go online and read and write reviews about Dollar Tree products.
ollar Tree, Inc. (Dollar Tree) is an operator of discount variety stores offering merchandise at the fixed price of one dollar. At January 30, 2010, the Company operated 3,806 discount variety retail stores. Approximately 3,650 of these stores sell substantially all items for one dollar or less. The remaining stores, operating as Deal$, sell items for one dollar or less but also sell items for more than one dollar. Dollar Tree’s stores operate under the names of Dollar Tree, Deal$ and Dollar Bills. In November 2010, the Company completed its purchase of the assets of the Dollar Giant Store (B.C.) Ltd.
The Company’s store is between 8,000 and 10,000 selling square feet. Dollar Tree maintains a balanced selection of products within traditional variety store categories. It offers a selection of everyday basic products, and it supplements these basic, everyday items with seasonal, closeout and promotional merchandise. The Company’s merchandise mix consists of consumable merchandise, which includes candy and food, basic health and beauty care, and household consumables, such as paper, plastics and household chemicals, and in select stores, frozen and refrigerated food; variety merchandise, which includes toys, durable house wares, gifts, fashion health and beauty care, party goods, greeting cards, apparel and other items, and seasonal goods, which include Easter, Halloween and Christmas merchandise, along with summer toys and lawn and garden merchandise. As of January 30, 2010, it had freezers and coolers in approximately 1,400 of its stores.
At any point in time, the Company carries approximately 6,000 items in its stores, and during the fiscal year ended January 30, 2010 (fiscal 2010), approximately 2,200 of the basic, everyday items are automatically replenished. The remaining items are primarily ordered by its store managers on a weekly basis. Approximately 40% to 45% of the Company's merchandise is imported, primarily from China.
In January 1997, Dollar Tree began construction, at an estimated cost of $34 million, of its Store Support Center in Chesapeake, Virginia, ten miles from its Norfolk location. In April, Dollar Tree issued $30 million in unsecured notes to pay off some of its existing revolving credit facility so that the credit could be used to fund capital expenditures for the Store Support Center. In June, the founders, SK Equity Fund, and other shareholders offered four million shares of Dollar Tree stock for sale. While the company itself did not receive any of the proceeds of that sale, in July it issued a three-for-two stock split.
During 1997, the company continued to grow according to its expansion play, opening a net 150 new stores and reaching 887 locations. Many of the new locations fit the company's larger prototype for future Dollar Tree stores, which increased store space to between 3,500 and 4,000 square feet. The company hoped that by creating larger aisles, with more space for recently added shopping carts, customers would buy more. Net sales for the year rose nearly 29 percent to $635.5 million, with sales at stores open for a year up more than 7 percent. Net earnings increased from $33.8 million in 1996 to $48.6 million. This performance occurred as one of the company's variety store competitors, Woolworth's, closed its stores in the United States.
Staff moved into the new corporate headquarters at the Store Support Center before the year ended, and the new, automated distribution center began operating in January 1998. With an automated conveyor and sorting system, the new facility had the capacity to support up to 800 stores. Dollar Tree president and CEO Macon Brock, Jr., announced that the company was in the process of buying land in Olive Branch, Mississippi, for another distribution center to replace the nearby Memphis facility. The Olive Branch center, some 425,000 square feet in size, began operation in early 1999--the same year the company surpassed $1 billion in sales.
In March 1998, certain shareholders, including Brock and the other founders, along with SK Equity Fund, filed to sell 4.5 million shares of Dollar Tree stock. "There's nothing wrong with the dollar-store concept," Brock told Chain Store Executive with Shopping Center Age. "But the way you execute it can mean the difference between success and failure." By concentrating on finding a wide variety of merchandise it could sell for one dollar, by making its stores exciting and attractive, by closely watching costs, and by locating its stores in centers where their customers were already shopping, Dollar Tree obviously had found its niche. As Brock summed it up, "The failure of the traditional variety store, as seen in the recent closing of Woolworth's, and the dominance of the big-box retailers have left a huge gap that we can fill."
Indeed, Dollar Tree continued to strengthen its foothold in the industry through a series of strategic acquisitions it made in the late 1990s and in the early years of the new century. In 1998, the company purchased 98 Cents Clearance Centers, a California-based chain owned by Step Ahead Investments Inc. As a result, the firm expanded into California and Nevada that year, as well as moving into markets in Oklahoma, Connecticut, and Massachusetts. In 2000, Dollar Tree set its sights on Dollar Express Inc. The $306.8 million deal added over 100 stores in six mid-Atlantic states to the company's arsenal, bringing its total store count to 1,729 units by year-end. Perhaps its most important purchase however, was that of Greenbacks Inc. in 2003. The acquisition gave Dollar Tree a presence in Colorado, Arizona, Montana, New Mexico, Utah, and Wyoming, effectively positioning it as the first dollar store chain with a national reach.
While the company focused on growing both organically and through acquisition, it also made technology a cornerstone in its expansion platform. In 1999, the firm automated its distribution center in Chesapeake, Virginia, in order to simplify its supply chain flow operations. In 2001, Dollar Tree began implementing a point-of-sale (POS) scanning system in its stores, which allowed for better inventory control. By 2003, nearly 1,500 were utilizing POS systems.
To keep pace with its impressive growth, Dollar Tree opened additional distribution facilities with automation capabilities during this time period. In 2000, a facility went online in Stockton, California. Two additional warehouses were opened in Georgia and Pennsylvania the following year, while Oklahoma became home to yet another facility in 2003.
Dollar Tree broke the $2 billion mark in 2002 as sales and net income continued their upward trend. Bob Sasser took over as CEO in January 2004 while Brock continued on as chairman. An October 2003 DSN Retailing Today article commented on the management shift, reporting, "The change in leadership at Dollar Tree aligns with the way the company itself has matured and realized the importance of becoming a sophisticated retailer." Indeed, Dollar Tree's actions during the late 1990s and into the new century left it in an enviable position among its competitors. With an emphasis on increasing store size and utilizing cutting-edge technology to simplify operations, control cost, and maintain merchandise quality, the company appeared to be well positioned for growth well into the future.
Principal Subsidiaries: Dollar Tree Distribution Inc.; Dollar Tree Management, Inc.
Principal Competitors: 99 Cents Only Stores; Dollar General Corporation; Family Dollar Stores, Inc.
Market Cap (Mil.): $7,168.70
Shares Outstanding (Mil.): 122.04
Annual Dividend: --
Yield (%): --
DLTR.O Industry Sector
P/E (TTM): 18.84 31.68 13.77
EPS (TTM): 30.69 -- --
ROI: 21.70 9.94 1.32
ROE: 27.51 15.69 2.19
Incorporated: 1986 as Only One Dollar, Inc.
Sales: $2.32 billion (2002)
Stock Exchanges: NASDAQ
Ticker Symbol: DLTR
NAIC: 452990 All Other General Merchandise Stores
1986: J. Douglas Perry, Macon F. Brock, Jr., and H. Ray Compton establish Only One Dollar Inc.
1991: The three men sell K&K Toys in order to focus their full attention on the discount operation.
1993: The company changes its name to Dollar Tree Stores, Inc.; Brock, Jr. is named CEO.
1995: Dollar Tree goes public.
1996: Dollar Bills Inc. is acquired.
1998: The company adds California-based 98 Cent Clearance Centers to its arsenal.
2000: Expansion continues with the purchase of Dollar Express Inc.
2003: Greenbacks Inc. is acquired.
Name Age Since Current Position
Brock, Macon 68 2003 Chairman of the Board
Perry, J. Douglas 62 2001 Chairman Emeritus of the Board
Sasser, Bob 58 2004 President, Chief Executive Officer, Director
Wampler, Kevin 47 2008 Chief Financial Officer
Philbin, Gary 53 2007 Chief Operating Officer
Rudman, Robert 59 2003 Chief Merchandising Officer
White, Stephen 55 Chief Logistics Officer
Saunders, Thomas 73 Lead Independent Director
Compton, H. Ray 67 2002 Director
Whiddon, Thomas 58 2003 Director
Citrino, Mary 51 2005 Director
Lewis, Lemuel 64 2007 Director
Zeithaml, Carl 60 2007 Director
Barron, Arnold 62 2008 Director
Hall, Conrad 66 2010 Director
500 Volvo Parkway
Chesapeake, Virginia 23320