Dollar Tree Highlights from Meetings with Management

Research evidence excerpt

Dollar Tree Highlights from Meetings with Management

rice changes last 01/27E

summer. It will lap this disruption in the coming weeks. Plus, it has tools in place UBS Cons.

that can support its traffic outlook including driving further improvements to store Q1 1.74 1.74

experience, enhancing its multi-price offerings, leveraging the nostalgia of the Q2E 1.07 1.09

Q3E 1.35 1.37

limited rollout of its $1 price points, and deploying enhanced marketing

Q4E 2.80 2.79

techniques.

01/27E 6.95 6.97

DLTR’s execution has improved as its store manager turnover has declined. Store 01/28E 8.05 7.67

leadership is amongst the most important factors that determines how a store 01/29E 9.20 8.49

executes. It scores its stores on a GOLD score (Grand Opening Look Daily). This Michael Lasser

scale ranges from a low of 1 to a top of 10. As of its Investor Day last year, Analyst

approximately 50% of its stores fell below an acceptable rating. This was down to michael.lasser@ubs.com

only one-third of its locations by the first quarter. Over time, it believes it can +1-212-713 2440

further reduce this percentage to 20% or less. Joshua Bluestine

Analyst DLTR continues to refine and enhance its assortment. Most recently, approximately

joshua.bluestine@ubs.com

84% of its assortment was $2 or less with the remaining above this level. As it +1-212-713 1297

looks to other discount retailers such as Dollarama and Action, it believes there’s

evidence that the penetration of higher price points can significantly increase. This Mark Carden

Analyst

potential expansion should push its average price point up from its recent level of

mark.carden@ubs.com

around $1.51. Importantly, the team believes that it will experience outsized +1-212-713 3218

penetration of multi-price point items around the holidays.