Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

Bob Sasser – President and CEO

Gary Philbin – COO

Kevin Wampler – CFO

Alan Goldman – SVP, Deal Stores

Joe Lampassi – Real Estate Manager

Tim Reid – VP, IR

Analysts

Aram Rubinson – Nomura

Joe Feldman – Telsey Advisory Group

Vincent Sinisi – Bank of America

Anthony Chukumba – BB&T Capital Markets

Matt O’Connor – Deutsche Bank

Guy Kelvin Raj [ph] – Goldman Sachs

Wayne Hood – BMO Capital Markets

Brent Rystrom – Feltl and Company

Dan Binder – Jefferies

Peter Keith – Piper Jaffray

Denise Tri [ph] – Bank of America

Dollar Tree, Inc. (DLTR) Capital Markets Conference Call September 22, 2011 10:30 AM ET

Bob Sasser

Gary Philbin, our Chief Operating Officer is going to give you some insight into our stores, how we think about our store operations, our real-estate, planning, logistics and technology. And then Kevin is going to talk about the financial highlights. And at the end of all that, we’ve got about 45 minutes set aside for questions and answers and we have the people here that are happy to answer those questions. So, as we go through the presentation, make your notes and at the end I would feel free to ask anyone one of us, whatever is on your mind.

And again, in an effort to make it more efficient, the meeting, we did a little video. I think it’s about 20 minutes, about 18 to 20 minutes. And it sort of gives you the story as we see it in a very concise way. So, we’d like to roll the video.

[Video Presentation]

Bob Sasser

That was great. It was an enjoyable video. Thank you very much. Everybody appreciated, informative. Great, I hope you enjoyed your trip to the store today. I’m going to talk a little bit about the merchandizing things about it mentioned in his recap of the meeting.

Dollar Tree, Dollar Tree stands for every things of value. As we celebrated our 25th anniversary, Dollar Tree as Bob mentioned even more relevant. One, everything is a $1. There are plenty of stores that sell for a $1 or less but we have a 10,000 to 12,000 preferred model where everything in it is $1. That is an absolute and compelling visit for our customer. Extreme value merchandizing, you visited the deal store today, you saw some of the great values of product that you may not even see any place else, when you look at it and realize that everything there $1, it is compelling.

Our locations are convenient, now there are some places, you shop where you have to park in the parking lot, you have a five or ten minute walk to the front door, at Dollar Tree, the store is located, so you can park conveniently, walk in the store, store is 10,000 square feet, you can find everything you want, faster as you check out. It really is an outstanding shopping experience. And the shopping experience that you’ve experienced today of a clean, well lit variety and well merchandized store is really a signature which Dollar Tree from many of other folks that are considered in the Dollar Channel. But at the end, high value, ever changing assortment of trend relevant variety merchandize is really why people shop Dollar Tree as often as they do and continue to come back.

The compelling concept, we’ve talked about it before. Over the past 12 years Dollar Tree’s assortment has expanded to include more of the things that people want, more Home Store, more party, more variety merchandize, more toys, more wow frankly. At the same time, we’ve also increased lots of things that people need. As you shop in our stores today, you see a compelling assortment of food, health and beauty care and you see chemicals and cleaning supplies. And everywhere you look, there is an opportunity to buy something you need. And we also try at the same time to give you an opportunity to buy something that you want.

You know, with Dollar Tree, even treating yourself as something special and exciting as solar flower, double wall coffee cup you saw today, some of the, to our customer, that’s a treat. And remembering that everything in the store is only a $1 whether it’s seasonal or it’s wow or it’s variety, excites our customers. If you talk to them as you visit our stores, we feel the niche that’s a good and exciting place to shop.

Lot of questions today as always about, you know, our compelling and flexible merchandizing sourcing model. It hasn’t changed. You know, we have a unique model. It’s different. It’s not what you hear when you go any place, you go other place, you know, you don’t hear the same story. We don’t have planograms in Dollar Tree, it’s flexible. We provide high value quality merchandize to the customer and it’s all a $1. We exceed the customer’s expectations with broad assortments. As you go visit the stores and you visit them. So you look around and look at the assortment within it, you don’t have a brush for a $1 and a shampoo at $1, you have a fairly complete assortment. You can meet many of your needs and get the accessories like at the same time, surprising value.

You know, as we showed you today with some of the anniversary specials and bonus buys, you know, in a world of rapid inflation and all the reasons why we shouldn’t be able to deliver these values, you saw for yourself today the values that we’ve been able to offer in celebration of our 25th Anniversary. And it’s compelling. Some of is corporate brands, some of is national brands. But it was not in just one category throughout the store.

Thrill-of-the-Hunt, we talk about it, it is what we do. Our buyers or merchandize manager teams are very competitive about who’s bringing the newest, hottest, fastest, most interesting out in the market. And they measure how quickly it sells in the stores. We’ll get reports about daily sales, weekly sales the sell-through. It’s really as exciting and the stores get energized, the customers get energized. And it really is something you don’t really find very many places. We do all that and we deliver the margin that’s required for our merchandize mix. And we do it and we’ve done it for 25 years. You’ve asked us in times of deflation, inflation and the Solar store is all the same. I think if you look over the history of your experience with our chain, you’ll see that it’s not just a strategy that we talk about, we have history of proving it year-over-year-over-year. So, whether there is issues with inflation or issues with assortment availability, we always find a wide variety of high value product in our stores, always delivering their shareholders the value that we’ve always delivered.

Dollar Tree’s marketing, in Dollar Tree, we create events within our stores. Our store is our brand. We’ve said it before, you know, Dollar Tree, what’s the difference, it’s the store, the four walls. You know the difference when you go into a Dollar Tree store or then when you’re in any place else. So the combination of these in-store events that changes that very important in front of the store that we showed you today, the signs and the windows, the end-caps, the ever changing seasonal presentation, the first of the month promotions, that’s what we feature in our events. Now a lot of retailers have run these events and what they do to high-low retailers. So, it’s 30% off this, it was 40.99, how is that. Well, in Dollar Tree, everything is a $1 everyday.

So, we create value not by changing the price but by increasing the value and offering the customer in our promotions the added value but also things that they may never see again, that one time incredible buy that I can’t believe it’s only a $1 and it may never come back. During the spring season you’ll recall, we carried solar lights, solar stakes at a $1, those were things that you couldn’t get anywhere else and that’s what we used to promote our business.

Deals, deals, I’m very excited about our Deals chain. We’re getting a lot of traction. What does deal stand for? Deal stands for every things of value, not only a $1 but every things of value. By lifting the restriction of the price point, we’re able to provide more complete assortments, more brands, more value and it’s all that everyday prices. So you don’t have to wait for sale the shop at your deal store. Everyday values, extreme values, our customers recognize it. More complete assortments such as sheet sets, cookware, Christmas trees, things we could never do at a $1, but yet things that our customer really would like to buy at a store then they don’t have to wait for an ad for it.

More compelling values like our stock up and save in our stores, these areas where you can see bigger sizes, bigger savings. And it’s exciting for the customer and we see the merchants are just flying off the shelf and we introduced these on a monthly basis. Like Dollar Tree, we put our Deal stores in convenient locations and we offer superior shopping experience. They’re cleanly well merchandized and always a thrill to have an opportunity. Different price point strategy, same shopping experience, it’s a very compelling concept. It’s not all the dollars, it’s very compelling.

Deals, as the consumer’s first place to shop, what do we mean, we’d like them to come to us first, buy that what you offer and then complete their shopping experience someplace else. We strive to be the first on their shopping list. We have a unique blend of even more of what consumers need and what they want. Deals, it’s an amazing opportunity to go in the store. And we have Christmas trees for the holiday. We have the appliances you saw on the video, these are things we can never do. But everything in the store is a value. So, definitely just a unique blend of the things that people want and more of the things they need.

Deals, has the same selective merchandizing strategy and sourcing that makes this Dollar Tree, nothing is really that different. Yes we have more everyday basics in the store, but we still haven’t ever changed this at high valuable or variety merchandize, we still offer that Thrill-of-the-Hunt, we still can walk away from an item and make a switch in a moment’s notice. So, all of that still baked into the deals chain that keeps us that flexible and very nimble, more nimble than a lot of retailers out today. Just like you visit any Dollar Tree store, when you visit Deal stores, you’ll see that same Thrill-of-the-Hunt, you’ll see that unexpected value that you just never really thought about and may not be $1 but it is a great value.

Deal’s real estate focus, well, Deals, are a retail relevant model that basically live anywhere. Right now our focus is to expand in the high population density areas in the Northeast and the Southeast, the underserved retail markets. And also, Key is opening up at our existing marketplace so we get brand identity, get some density of the brand and also feel off that they logistic sufficiency is working out of those existing PC.

On the deals marketing strategy, deal has offered us a little bit more opportunity to try anew in different vehicles, for example here you’ll see our Deals Toyland book as well as our holiday gift book. At Dollar Tree, you know, we’ll be having different kind of events but this is really, we’re almost like a mini catalogue where it covers 24 pages, wide variety of things that people need for the season, for the holiday, we do spring and summer toy book. And these are just opportunities that we can do to provide people just a broader assortment of combination of name brand products as well as high value private label and variety of merchandize.

Dollar Tree Direct, Dollar Tree Direct is an integral part of our overall merchandizing and markets. It’s not a standalone business by itself, operating separate from our brick and mortar business. In addition to a robust growing e-commerce business, we offer the customers 24x7 shopping opportunities. Dollar Tree Direct is our voice to drive customers into our stores.

Dollar Tree Direct stands for great value. Online exclusives, we’re building an online community of passion and value savvy shoppers, customer service is available 24x7. Dollar Tree Direct reinforces our brand via new technologies such as social media like Facebook and Twitter. Local search which not only tells the customer where their local store, it actually give them GPS directions how to get there. We use banner ads on complimentary websites and search engines. And we send e-mails to our customers who’ve requested about a particular category or just potential customers to give them a target of some of the things that they would like to see that we believe, that they’d be interested at.

What’s new for Dollar Tree Direct, for those of you that have been here before, you know that Dollar Tree Direct has really been anytime, we ship everything in cases, it was the way we started, it felt sales with our logistical model. But among the 2,500 skews that are offered on our website today, over 600 of them are now being offered in less than case bag. Now we’re not selling things in one, after all everything is a $1, but we’re selling in quantities of six or four. We believe that’s a way for us to target the retail consumer as opposed to just possibly the small business, the large organization and the occasional party planner.

What’s launched recently is our Christmas Corner 2011. We’ve also launched in June our Teacher’s Idea Page, it’s a landing page, it gives people helpful hints on how to handle, what they need for their classroom. Dollar Tree Non-Profit Resource Center was launched on Monday. You know, a lot of these folks, these small businesses or these private non-profit organizations, this provides them an area where they can get some help from experts, a way for them to buy products. So, landing page sort of just isolated really the things that means something to them and creates a sense of community. A year ago, we did our small business landing page, and we did a bridal page in March.

So, we’ve got about four or five of these landing pages, they’re really tailored to a specific clientele, they’ve really proven to have a lot of interest and lays within our business model. What’s coming soon, Ray mentioned of the Video Mobile, and mobile we’ll be launching in the next couple of weeks and our Spanish website will come later this year.

Online exclusive, online exclusive is really Dollar Tree’s record couple of things, some closeouts that are maybe not enough for the entire company or its tailored to like the floors, we do big job with floral bases on closeout. We’ll also develop things like Cobblestone Corners, complete sets for the Christmas Village and things like A Party in a Box for Lu hour or Birthday. Things that people can buy one package, and get a complete assortment of all the things they need for their events.

The other thing we’ve done is we’ve incorporated especially to getting our website – our e-mail blast, of first to buy approach on some of these incredible, never before seen types of items. The solar flower that you saw in the store today, well, that started out as a web only item. We ran it for about a week online only, got the hype going and then it came off of online, went into the stores and then it launched last Friday as hurry upon these last. So, we created a lot of enthusiasm online and made some sales, created the demand and then capitalized it on 4,200 stores. As Bob said, Dollar Tree Direct is an exciting part of our business but I hope you get the feeling that it’s integrated within the overall merchandize and marketing approach we take to the way we interact and communicate with our customer.

I’d like to introduce to you Mr. Gary Philbin.

Gary Philbin

Thank you Bob. Thank you all, thanks for your interest today. And thanks for coming down to make the visit to endure store support center here. I’m going to talk about a couple of subjects that we’re not strangers to but really that, our really either key business segments or initiatives to us and our key business drivers for us. And for us, it’s really about unit growth, it’s about how do we continue to leverage the assets that we have, logistics in particular. It’s international expansion, personified by Joe today. And of course the key piece here, those 50,000 associates that are touching over 700 million customers on annual basis. And as Bob said, we try to stay very focused. We’re only as good as a part-time care that we hired for the first time, last night, in one of our stores so we tried to spend some energy on that piece. And we’ll share with you some of our initiatives there.

I’m going to start with real-estate but this was, it seems appropriate that one of the first Dollar Tree was in Dalton, Georgia, there is a picture of our grand opening returning to the town after we had closed down a smaller 3,000 square foot store years back. And so, it gives you power to think about 25 years ago, of course Dollar Tree, here we are going back. But the only thing that’s the same is the name and the price. The systems, the product, our philosophy of how we reach the customer, and maybe the great product and I would say the things that we keep and hold here are added to judgment, commitment, philosophy of how we reach out to ourselves and our customers are part of it.

But something we’re very proud of is the consistency of store unit growth. And you’d see really the last few years here. And I did want to make sure that we called out where we were prior to 2008, remember when the world ended and post. Because in the retail world and real estate in particular, the world changed dramatically, all new growth after 2000 as you all are aware really dried up in the US. And our ability to shift gears and really recalibrate and get what landlords, you know, came to the second and third generation space, was a key part of our strategy over the last few years. We’ve always been opportunistic.

And we’re proud to say that we’re probably never the first person called by a landlord because we do drive a pretty good rent deal, hard rent deal. But we’d like to think we’re on page one that they’ll call because we can move quickly, we’ve got some of the best products that they can put into their space. And we can certainly build on our store with our capital very quickly and get our run stream going for them. So, a great effort by the real estate team to get us through the clumpy spot last couple of years.

I’ll take you through something we’ve talked about the last couple of years, but there is sort of a punch line at the end of this, so pay attention. But you’ve heard us talk about the optimization strategy. You know, when you’re talking about growing unit growth at the rate we are really what is the approach? And our optimization strategy is really the umbrella for how do we go into a market and start thinking about where should the stores be, we have 4,000 plus stores, so we got to take that into consideration, rents always. Where is our best customer? But we do have some pretty basic models, hey we got 4,000 stores in 48 states, we never really have a sale, we don’t reduce retails. And so, we do have some pretty good track records on our most successful stores. And really the lifestyle that’s around those stores that make those stores more successful.

So, a map of Tampa Saint Pete, which if you were here two years, you would have seen. And what we do is go through all these markets here that showed new store growth. And then Tampa Saint Pete, and what you see here the green dots are Dollar Trees and the red stars become the retail notes that with our model start generating additional locations that we’re and investigate what does the space look like, is there retail. But the model sort of paints our, the picture of a map for our not just real estate but also our operators start getting smart on. And as you get a little bit closer, you actually get down to you know, block by block what’d down there.

So, where is the retail space and where is the grocery stores and where is Wal-Mart and where is Target and where is vacancies. And so, as you keep going down, lower and lower, you’re able to see that. So, it has been two years since we’ve done that model. And now, where you see the blue circles, we’ve had, those are the active and open Dollar Tree stores in Tampa Saint Pete from two years ago. So, it does work. And our folks are able to go and canvas each of those blocks in retail spaces. It does allow us really at the end of the day to make smarter choices and that’s what this is really all about. And as we find are the track record on where our customers are shopping x and y in the lifestyle segment.

And you know, one of the things we’ve seen over this 2008 era forward is, you know, folks that may not have ever gone into a Dollar Tree are going to come in now because being thrifty is cool. And the idea of being able to save money on all that great products you saw at 502 and the items that Bob and team put into the ad, oh gosh, if we can save money on some of the things that are you know, your day-in, day-out, then why not. And that’s certainly some of the additional foot traffic we’ve been getting in week-in, week-out over the last couple of years.

We’ve talked about growing our chain to 7,000 stores. And this gives you sort of a 30,000 foot level of how we think about it. We saw the market optimizations have done, there is the top ten markets and some of the remaining. And all those red stars add up to 2,800 before we really start factoring how the heck do we go into New York city, which we are, obviously Red star is something that we got consider differently there. And really just considering as a one horse town, is also our bread and butter that we go into. So we certainly think the runway is out there and then it’s a matter about the function of what’s available and are there rent deals that we can get done.

And the visual on that, that makes it a little bit easier. The states in Greene really are the stores, are the states plus 100 Dollar Trees. So, you know, when we take a look at them, they’ll say oh gosh, certainly an opportunity there. And those are the states, the few poor states that have more than 200 Dollar Trees today. So, you know, I think it just gives you an opportunity based on where our population is growing in our opportunity and where all those Red stars are to continue the growth of our company.

And like Bob said, that’s all before we let this bad boy down on some of these areas. So, you know, the runway becomes better and longer opportunity as deals, you know, has the appeal in some of the markets. And one of the ways we’re able to get and do places like New York City with rents being what they are.

So, once we have all those stores, I want to switch gears here for a moment and talk about how we get all that products there with Steve Boyd and his team servicing all of our stores. You know, if you do the math, you know, 6 billion plus, we’re shipping over 7 billion items this year to our stores. Don’t underestimate the focus that Steve and team, the leveraging and efficiency really from whatever distance court onto a vocal into an important court here to a DC onto our stores, we do that as well as anyone in the country.

Our current layout, really you can sort of see the gravity of the stores and how it lines up with the 9 DC that we have and you’ve seen that map. I want to make sure that you’re aware of the changes that we’ve made really just in the recent past, store 9DC, but our Savanna DC is now currently being expanded to 1 million square feet, and that’s going to be coming online in the next few weeks, so more firepower there. Hopefully while you were sweating in the DC, Steve gave you a chance to pick, go into the pick mod, the efficiency of getting an item and going through our router to get it down to the store trailer. Three new pick modes are being one in Briar Creek and Juliet. So that efficiency of more pick modes which I see efficiency of what touches in the DC are a key part of that so, driving productivity. And that’s just a bird’s eye view of the Savanna expansion which we are very proud of and it’s coming online.

So, with all that one of the most exciting news items for us is past year and efforts has really been Dollar Tree Canada for the acquisition of Dollar Giant and really Joe is down here but, actually Joe’s team is down here this week, merchandizing team. And they’re going to talk a little bit about the integration and how our view of the world up north is going to look. But we’re very proud to have Joe and his team and really what was the successful company. Now, give us a foothold up in Canada and what we see as the opportunity going north.

You need your geography lesson first maybe, so there is the provinces that we went into in Canada, so the four provinces, the Home Based, regard Canada is in Vancouver. And we also have the buying office in Toronto, the two green squares are the two third party logistic DC that supply the current store base and lower easy your theme just where we are in terms of store base. So, Ontario has 35 stores, Saskatewan 3, Alberto 15, DC 37. So, 35 million plus in Canada, they all live within a couple of inches like keeping toad of the border there. But really I can see the emphasis around the density of the population, Ontario highest province with density of population. Obviously what we’re aiming, Quebec is the second most population, French speaking, we might be a little smart on just how we handle Canada first before we get over to Quebec, but certainly a big opportunity up there as well.

So, really our opportunity to leverage the current infrastructure is all ahead of us. And we’re proud to say that actually this last couple of weeks is once the systems are going into the Dollar Giant store. So it’s very important to understand that all the things we talk about Dollar Tree land, how do you drive the buying, the ordering, the allocation, the visibility, all those things that make it work down here. Ray and team have made our systems work up in Canada. And so now, customer we buy over in Asia, we pay in US dollars. We ship it into Vancouver, get it to a Canadian store, we receive Canadian dollars, all that’s working politely as we go through the system. And really now, not that there is one system is up there, but you know, everything that you heard Bob talk about, sales by day, by category, everything you’ve heard of talking about the leveraging of that is in place now as we put the installs into each of these stores. Starting in couple of weeks ago, we’ll finish two weeks from today.

So, very exciting, great opportunity, it’s really a matter of point of not just systems but of course products. Another Dollar Giant store, so, you know, square footage, very similar to Dollar Tree. We average 10,000 square feet up there as well. So, it was a very nice fit. And you know, even the categories, it was nothing so strange up there but, as Joe to his credit copy does a lot on some of his ideas. And so, it’s a pretty good fit there as we came down here. But there is a Dollar Giant on the inside, looks familiar. And some of the categories that were in Dollar Giant before but are in stranger shelves in Dollar Giants now, you might say, oh gosh, I got to see bill. But remember, we’re also the only single price point retailer in Canada, really if you note. Dollar Arm is up there but it’s no good to 2 bucks.

But everything is $1.25 or less up in Solar Giant and has that for the last two years. So, that’s a difference but you see the Dollar NKP, key categories that Joe and team kept that dollar. So, food, snacks, beverage, greeting cards, candy, and so really a point of difference, significant point of difference for our Canadian customers and what they’re going to see at a Dollar Giant going forward. And there you can see a couple of new stores, they’re up and running. So, big impact and you could almost imagine a Dollar Tree sign up there at some point versus Dollar Giant. But we’re very proud of the hard work that’s really getting us to square one today I think, the effort to get product up there, to get the systems up there.

And really just to drive the business the way we know how to over our 25 year history in the US. And again, we kind of be more proud of the partnership up there. And leverage is everything we do. We didn’t have to reinvent POS or back office, logistics ties into the importing. Our buying group now integrated when they go over the Asia trips together. And so, the way we do store clusters, how we think about the merchandize, the philosophy of the tabs all line up very neatly now as we go forward.

And the other reason we’re excited is really the fundamental difference between Canada and the US and the amount of retail space available, to your American eyes when you go up there, there are less competitors and shows up just in growth reasonable space per person, there is 50% more developed in the US. So, gosh, when we go up, we’re not dealing with a drug store on every corner. And certainly there is not anything in the nature of the 20,000 Dollar Generals and Family Dollars that we see just putting up the pie in this side of the border so nothing but great opportunity out there for our people.

And you know, the result that we’re so proud to talk about early done our store at a time and just a couple of comments here as we go into important fourth quarter for us and finish what has the makings of another great year for us.

But we focus along just because when your company that has this kind of growth curve, you know, take the simple math you saw 350 plus new stores, Mike Retenski [ph] has to find a store manager for all those. And we’re going to have our best year ever on turnover, or our best year over wherever on turnover means that he still needs to find several hundred new store managers every year that drive that. And so many of our folks, we give them the first opportunity to become a manager of a unit. And so, that teaching skill is something that we spent some time on last year talking about our learning management system.

But really as we go into this year, I wanted to share a little bit more of our customer survey response because as we promote folks and talk about what’s important while we got to teach them to merchandize. And we got to teach them the systems. And really those are sort of the easy things if there is such an easy thing in retail. But we wanted to get the connection and how do customers grade us and what’s the initiative that happens in store to drive results.

And so, starting last year we had just begun customer surveys with our customers, what was important for a Dollar Tree customer. Oh, this is the secret sauce for us, this is what they think is important. Hey, there is nothing magic here in retail, is there. But it did help us focus on what are we going to do for each of these. And for us, it means really happens that day with that cashier in that store.

And so, one of the biggest things for us was customers came into the store and said you know, what, I don’t know one of the great merchandize what is your best thing going on today. And so, we’d always been probably having a drive on and what’s the thing that’s being offered up by our cashiers, but really what surprises on the research was our folks wanted to be told what is the best item in an offer to make, to see all that stuff. I need a way of focusing what’s a great opportunity for me. And so, we really have focused on drive items. Well, how do you really get that done to store level other than thing, go sell a drive item well? Invented by one of our Regional Directors was cashier corner.

How many are we selling by cashier over the course of their day, they’re given an assignment of how many are they going to drive, all the staffs that are hard to read but you know, guess what, people like to know they’re doing well. So, whoever is selling, average transaction and whoever is willing to sell me the most drive items, they get the recognition in store. It’s a simple thing. But this is retail and that’s what our success is built on one of these things, one after a time. And so, the difference has been in this region, our average transaction, I think in Q2, we reported up 1.1 and this region had up over 3. And so, that execution store by store, by region, by company is really some of the upside we still continue to see in front of us.

And how that looks, again how to read, but the same way we track skew sales, our sales by store, our store manager, district manager, regional directors all see their scores being scored by their customers across region, across district, across store. So, I think you have an average transaction issue, go see how you’re doing on your driving and line item. I think you have sales going down it’s climbing an issue, quarter isle, the key item that completes that feedback. So, this is part of our DNA now, it’s part of our folks get reported on our weekly monthly basis so, a great way for us to drive results. And it’s all based on what we call our Greet at Sea bank program basic again, on the back of those associate thing tech 60,000, we have the story minor greet the customer, achieve their expectations, thank them. I wish we were perfect at this, we never are. So, it continues to be a strong focus as we go forward.

So, here is the Green team. We also have some blue and deals and we got Dollar Tree Canada with a little maple leaf on their logo. But we’re very proud of these folks. And we started really with the store, the powerful assortment and great associates. And we think when we had those three things up, it’s one of the great North American compelling retail entity that’s out there today. Thank you very much.

And I’d like to introduce Kevin Wampler, our CFO.

Kevin Wampler

All right, thank you, Gary and good morning all. I want to take just a few minutes this morning to run through some of the historical financial highlights and you know, give you some color on that. And one of the things we are proud of is our sales history and the fact that since we’ve been a public company, sales have increased every year. So, the good economies, bad economies through a change, a major change and how we do business that took place within this timeframe, we’ve always seen consisting growth. As you can see here, over the last five years, the compounded Annual growth rate has increased 11.6% to the point where this year, we’ll do roughly $6.5 billion of business.

Along with the top line growth is the fact that we’ve also seen consistent earnings growth or bottom line growth as well. And while, what’s been interesting while the sales growth has been somewhat linear, you can see here obviously that the sales growth has not, that we’ve occurred has definitely increased over the last several years. And you can see where the five year EPS compounded Annual growth is now 24.7%.

And this is one of my favorite slides and I think it really kind of does tell the story of change that the company has gone through over the last 10 to 12 years. And the point in time when we were small, very productive stores in the mall to a very strategic decision that was made that said, listen, let’s go get bigger, let’s go outside of the malls, let’s go where middle America shop. And let’s introduce consumables to the stores where, in the small stores, we didn’t necessarily have anything you absolutely needed. We have a lot of things you wanted maybe but not everything you needed.

Obviously, we’ve made significant investment here. We got much bigger in store size to average 10,000 to 12,000 square feet. We did a lot of systems work in these years. And we also did a significant investment in our distribution network over this time, building out many of our distribution centers so that we could become a nationwide company. And so, you can see where that investment let us, where our operating margin decreased slightly over several years. But now you can see where we’re actually getting that leverage. And so, we’re very proud of the fact that every store we opened leverages that logistics, that network even further than it has been and has laid a great base and foundation for us as we go forward.

As far as historical performance, you can see here where we’ve been from fiscal 2010, where sales were $5.8 billion, an increase of 12.4% in total. We had a comp sales gain of 6.3% on top of 7.2% year before.

Operating margin last year of 11.1%, the highest has been since I believe 1999 when it was roughly 13%. So, definitely we’re seeing some nice growth there. EPS, $3.23 growth of 36% and you can see the fact that’s it was from a share repurchase standpoint, repurchased $415 million of our own stock last year.

So, as far as this year-to-date, you can see here, second quarter results, which was our most recently announced quarter. It was a great quarter basically total sales increased 11.9% and that was the comp sales increase of 4.7%, on top of 6.7% a year before. And if you stacked up the comp in Q2 for the last four years, you’d see they were up basically 25%. So, our comp stores are doing 25% more business today than they were four years ago. So the throughput of our stores, we’ve gotten much more efficient and much more relevant as we’ve gone forward.

Gross profit, you know, this has been on an area of concern by medic people in the sense from the streets perspective in the time of inflation and higher fuel cost. We’re very proud of the fact that in Q2 we actually saw our gross profit increase. And you remember that diesel fuel is roughly $1 higher year-over-year per gallon. And obviously that’s a big input that we have to overcome. And we also know that our mix shift continued to trend a little bit more towards consumables than it was at prior year, it shifted about 130 basis points in Q2. So, we overcame those and actually saw with the leverage on some of the line items of the fact that we were able to increase our gross profit in Q2.

SG&A, what we’ve seen so far is really strong control over payroll and related costs. Our stores are doing a great job of controlling their payroll and becoming more efficient with how they schedule and how they use their help [ph] and that’s really been a big help for us in the SG&A line item. Operating income for Q2 was of 10%, an increase of 70 basis points over the 9.3% from the prior year. Again some really nice growth there and our EPS grew 26.2%.

First half results look pretty similar. It’s been a great first half, sales, first time for the first half that we’ve ever cross $3 billion in sales. 13.1% increase in total sales and our comps to an increase of 5.9%. Gross profit, you can see roughly just a tad down, 10 basis points down but again as we talked about higher fuel costs and higher mix from a consumable standpoint. SG&A again, for the year has been very consistent where we’ve been getting our benefits, we see benefits from payroll related costs as well as depreciation as we’ve been able to leverage all the investments we’ve made in the past. Operating income, 10.2% increase of 80 basis points over the prior year’s first half and EPS of $1.59 versus an increase of 30%.

So, as we look at the 2011 guidance, you can see that, this is the guidance we gave with our earnings call at the end of Q2. Third quarter we set sales range of $1.56 billion to $1.6 billion. Earnings of $0.77 to $0.83. Same store sales increase of a positive to the low mid single digits. And stores grew, footage growth of roughly 9%. For the full year, we’re now giving guidance of $6.53 billion to $6.62 billion as an EPS range of $3.82 to $3.95. And that’s takes into consideration of positive low to mid-single digit comp store sales increase, as square footage growth of 7% and for the year CapEx of roughly $220 million to $230 million.

Couple of other data points related is back at the guidance assume the tax rate of 37.7% for the third quarter and the year. Weighted average diluted share count of $122.5 million for the third quarter and $122.9 million for the full year. Now that does not take into account the share repurchase that announced after the second quarter, so we’ve not given any guidance what those numbers are at this point.

Look at the balance sheet at the end of Q2, so you can see obviously cash investments of $545 million, an increase of roughly $65 million from the same point last year. That’s in consideration of the fact that we built out over 300 stores in that timeframe as well as the continued stock repurchase that we’ve done in the marketplace. You know, our balance sheet creates a lot of opportunities for us, landlords and vendors and people we do business with look to it and understand the financial strength that we have. And it is a big benefit for us in that regard.

Another aspect of our balance sheet that I think is very important is the fact that we continue to be more efficient with our inventories. So, if you look at the end of Q2, our US inventory was up 5% in total, per selling square foot basis actually down 1.2%. So, we are getting more efficient with our inventory and being able to continue to drive really good comp sale growth. And another part of that is the fact that we’ve been able to increase our inventory turn. And for the past five years, we only expect that to continue this year as well for a sixth consecutive year.

So, managing our capital as we look at it and try and really work hard to enhance shareholder value, you know, obviously our objective is to deploy our capital efficiently and for the benefit of our long term shareholders. And that means, solid execution of our business model and managing our capital in ways to enhance shareholder returns. And you know, historically the way we’ve looked at it is, you know, new businesses, new stores I guess is really the best investment we can make with any dollar we have. And we always look to that. But actually we’ve been able to generate free cash flow even beyond that. So, we look to develop new businesses, obviously most recently with the acquisition of Canada and starting to build out that model. And we look at leveraging our infrastructure and investment.

And so, again, we make investments where we believe it will pass a big dividend, last year we opened up the new distribution center in San Bernardino, California a very strategic move from a positioning as to where the ports are and where our stores are located from a density standpoint. And also as we continue with our share buyback plans. You know, last year $415 million, roughly 9.3 million shares for the first half of this year, $96.7 million of share repurchase and then the additional $200 million ASR that announced in late August. So, we’ll continue to look at repurchase opportunistically and as a way of building shareholder return.

And with that, I will turn it over to Bob for some closing comments.

Bob Sasser

What you know, I started off by saying we’re excited about our business and I hope that comes through as you listen to our plans from our merchants and our operators and all the people in the presentation. You know, we have a concept that customers love, it’s just arming, everything is a $1, 10,000 to 12,000 square feet and you never know what you’re going to find. We amaze our customers’ everyday there is nothing better than the Dollar Tree. The concept is where it all begins.

The strong and flexible business model, we don’t planogram things, so it gives us the ability to move definitely between product categories offering the most value for that moment in time. We don’t have to wait for change of planogram, we don’t have to have all the bureaucracy in the middle. It has to be value and value for our customers and that’s the criteria. That’s also the key to how we’ve managed our margins to sector leading margins really for the past 25 years. And then, we don’t change the price, we change the product. And always for the time is offering that great value.

We’re positioned to be relevant to customers in all economic circumstances. I believe that we are more positioned, we’re in better position today that we’ve ever been. About half of our business is needs based products, things people need every day and that they buy frequently. The other half is discretionary product, things you don’t need but the things that you like. And by the way, yes, you can afford it because it’s only $1 also.

We’re strategically located to serve Middle America, the broad middle. We try to put our stores, where Middle America lives, where Middle America shops. We continue to invest for profitable growth investing in our business as we can continue to grow trajectory appropriately. We have a solid foundation that we built that makes this all possible when you look at the infrastructure that we built back in those early 2000 years, we’re really seeing the return on that now as we open up new stores and leverage all of that investment.

We continue to generate substantial free cash. And our capital is focused on the long term benefit of our long term shareholders. We continue to use our cash flow for the benefit, the best use of our cash by the way is to continue to run our business profitably and to continue our growth as we continue to gain market share across North America.

So having said that I want to turn it over to you for questions, I think Tim’s at the back of the room. He’s got the microphone. And by the way, feel free to ask from any of the senior management up here. They’re here to respond directly to you. And I think we have a question back there.

Question-and-Answer Session

Unidentified Analyst

[Inaudible]. On the way driving over here, I went by something that was called Dollar Tree Stop and then I also saw, you had a picture of Dollar Tree Stop up there. Can you tell me what that is and what that’s about?

Bob Sasser

Yeah, in this game of everything right now, it’s a very miniscule people of the businesses, there are a few of those that we’ve opened up. We think there is room as we continue to grow our concept with the 10,000 to 12,000 square foot stores as we continue to grow our Deal stores, as we continue to grow internationally and our Dollar Tree Direct, and those businesses. We think there is also room for a small buck out there, more of a location that Dollar Stop that you saw, probably was over here next to the big discount that we all know. It’s a real estate area but we’ve got large stores within a mile or two all around this area. There is real estate there, terrific real estate. There is a lot of people there. So, we’ve opened up over 4,000 square foot store with really the best of the best, some of the things that takes advantages of the traffic in that real estate location to give you one more shopping trip in the customer.

Unidentified Analyst

Is it the same merchandizing which was brought forward?

Bob Sasser

That was a smaller assortment of 4,000 square foot version of a 10,000 to 12,000 square foot Dollar Tree. It has more of the discretionary product, lesser the needs based products. And again, we see this as a way to get one more visit from a customer. We’ve only got a few of those, it doesn’t show up on the radar yet, it got good potential though.

Unidentified Analyst

[Inaudible]. My question was as I visit your store that really reminds me of the niche that the Five-and-Dimes used to serve. And except the way the sourcing scale and with more consumables. Is that the niche that you’re trying to build as you moved out of the malls and into those? And then, the second part of that question is how many of those stores does the big boxes drive out of business. And does that give you, is that where you get the market size potential or how do you calculate that?

Gary Philbin

Well, very true. It sounds – customer that we’re able to attract. Our stores are a mix of variety of things, you need things you want. And as we locate these stores, you know, we’re different. We like the variety the old kind of Five-and-Dime, the Woolworth stores that I do, when I was growing up. The customer that we’re small and we’re convenient and we really want to offer shopping experience. And we’re so different because everything is about the Dollar Tree that we can locate, we prefer to locate and realize here we’re Middle America shop. So, if there are other retailers around that are bringing traffic to the area, you know, that’s what we’re looking for.

We want to have people that are coming to our stores, driving by our stores, the local system right here. And we really love it when we can get a really nice big beside on the store, get attention. You know, the shout for Dollar Tree brand. And if we can get them in the stores then we can thrill them with $1 price point. Serve their needs, things that they need and then down from the stuff that they did expect and say unexpected value.

Aram Rubinson – Nomura

It’s Aram Rubinson from Nomura. Two question, one operational and one financial. Operationally some of your kind of peers from Dollar General, have driven space productivity and utilization by going vertical, up to six feet or greater in the stores. I was wondering if you operationally see that as an opportunity to drive more volume. And then I have a follow up on the financials?

Gary Philbin

Yeah, think everybody fill their own mousetrap. I think our shopping experience really drives similarly how we do the décor and the lighting. So, sidelines for us, we’re very important going into a store what can customers see by category. Because we want them to see home store, we want to them to see the party section. And so, we want to touch product ones from an operational standpoint, once we like the merchandizing of it. And to go up and down ladders to go higher is not our bigger way of merchandizing a store in our world.

Now, New York City, sometimes runs thing what they are, that does give you some hoarding to possibly that you might do it that way. But for us, we can get the kind of sales generation we need on a linear footage basis. We’re not planogram mind you. So, we do lots of work behind the scenes, figuring out okay, where are the sales per square foot coming from some of the key departments. And how should we evaluate that on a year-over-year basis. But because we’re not planogram driven, because we feel like we want to develop our own shopping experience that’s unique to Dollar Tree, that’s why you see the things that we show up in our stores. 72 inch counters, store we’re in, it’s called a racetrack in-field there.

Aram Rubinson – Nomura

Okay. Thanks. And, just one for Kevin, just another year of flat depreciation even if the store space is growing. Can you give us a sense to when that will impact whether, you know, next year or the year after, when do you see that start growing more pace with the footage? And also fill up on the remodel schedule and how you think about that?

Kevin Wampler

I think as we think about depreciation, you know, we are heading into a timeframe where we’re going to be making some additional investments. You know, we’re starting to replace some of our older POS equipments this year in fact and that will continue next year. So, we have some of that going on. There will be a point in time where we’ll need another distribution center probably over the northeast. But I would say, you know, four, at least next I would expect to see, leverage on depreciation as we continue to perform reasonably well. I think we’ll continue to do that.

So, but we may start to see the actual dollars start to increase here in US, depreciation dollars were that percent down in certain respect. So, but I think over time, you know, that may come back a little bit as we continue to make conditions, that’s where we’re seeing the business for the long term.

Joe Feldman – Telsey Advisory Group

Hi, Joe Feldman from Telsey Advisory Group. Question on operating margin, I was curious given all the growth that you guys have ahead and with the different concepts. What’s going to keep the operating margin not looking like the 2002 to 2007 period? And the other part of my question is sort of related to operating margin. As in the fourth quarter, you tend to have a big spike in margin. And I’m curious is that more mix driven or is it more volume driven?

Kevin Wampler

Well, I think as you look at it, we have, you know, we’re well ahead of the curve now in building out the infrastructure. You know, obviously when we first had 8 or 9 DC, we really didn’t have the store base that we have today. And as we go forward, I think we’ll be able to continue to do the leverage on the infrastructure that we’ve right now created as we stay ahead of that curve. But I think from an overall operating margin, our expectation is to continue to find ways to dry that up. We do not believe that, you know, there is a feel, last year we did 11.1% operating margin, best we’ve had in a long time. This year, if you look at the guidance, it really reflects probably on 11.5% to 11.8% operating margin. Do we believe that that’s the feel? No, we feel that we have plenty of opportunities for us to leverage our business in better ways. And you know, it’s sourcing, its logistics, its SG&A, its every line I have made. We think we’re planning ways to improve that so the best time can continue.

And the second part of the question was? No, it’s really both in the sense, obviously they’re biggest volume quarters but it’s also the mix of shift to the point where we do a higher percentage of discretionary business [inaudible].

Unidentified Analyst

Hi, you said snap is 90%, do you accept snap in 90% of your stores. Where were you a year ago on that and a year before?

Gary Philbin

You know, we’ve grown that that snap acceptance along with the mix that we’ve added up in these spaces which add into our stores. In order to accept the true snaps the mix of products has to do requirements. So, as we’ve grown the size of our store, as we’ve grown the product assortments that we can qualify for food stamps pretty bad at the stores and which is like 90% now, our store accept food stamp. It would have been a few less than that last year because as we continue to grow, opening up more stores and more new stores typically, the larger stores.

Unidentified Analyst

So, was it 60% or?

Gary Philbin

It wasn’t 60, I don’t really know the number I can only characterize that that’s been more over the past five years especially from smaller number to about 90% now.

Unidentified Analyst

And will that be a drag on your growth that you fully penetrate snap?

Gary Philbin

No, I don’t believe so. I feel that we want to provide more customer access buying this product, it’s really a benefit in our customers, we able to serve them. So, we’re continuing to add the store that is required in order to have them in our store and use their snap cards as we go forward. It’s not going to be a drag, I see that as an increase tactic.

Vincent Sinisi – Bank of America

All right. Thanks a lot, Vincent Sinisi from Bank of America. It seems like you guys are talking a bit more about the deal stores this year. And I know you haven’t you know, put an actual number while not at this point but. You know, are we talking, you know, hundreds or are we talking thousands longer time, and when do you think you’re going to be at the stage where you’ll be able to make, you know, more of a commitment to that concept?

Bob Sasser

You know, we’re very committed to deals concept. And when we started it five years ago I think. I know, we started with an acquisition of one other dollar change, deals everything is a $1. And we converted those stores and since we’d learn about the customer and what they would buy and all the operating metrics of running a multi-price store. And over the years we’ve begun to add stores in new markets and different stores, new mix and new product lines into those stores. So, we’re in that evolutionary stage right now. We’re still in the stores we bought, some of them we’re in the same shopping centers, some of them, across dollar as the leap have come up for renewals, in some cases we’ve renewed and some cases we’ve turned them into a Dollar Tree and we’ve rationalized debate. So, the growth that you’re seeing over the past few years, particularly more growth than you see that tells we’ve been rationalizing the store base of our stores.

Going forward, we are excited about the deal’s opportunity and what we can customers that we can serve, especially in the urban markets, the highly populated markets. We are into the northeast, we’ve excited about Brooklyn and the Bronx and the Staten Island and Long Island and all of this highly more densely populated markets. Because we think that we can do more volume in the Deal stores than we can with the Dollar Tree stores. We think with more volume, we can leverage the higher fixed cost of the more urban environment. There are different operating metrics there it’s harder to operate when you have to deliver against lever on a 53 footer down the streets of Manhattan. So, we have to learn how to deliver the products different and we have to learn how to dispose the drag differently. We have to learn how to get rid of all the cards.

So, with a higher average ticket model, with a higher volume model, we think we can operate more efficiently in those markets. So, now to answer your question we’re going to continue to move, we’re excited about Deal, open up new Deal stores, it’s not that we’re going to do it instead of Dollar Tree, it’s going to be an addition to Dollar Tree. And we’re going to grow it overtime in conjunction with our Dollar Tree model. Because we believe that there are places where Deals model works better and there are places where Dollar Tree model works better. But there is x many projects that we’re planning to do year-over-year as future goes. And they’ll need to be a Deal or Dollar Tree based on, but it’s still x many projects that we’re planning to do.

If we have an opportunity now, if there was something popped up, we grab a chunk of real-estate at once, we might be interested in taking that. But otherwise it’s going to be a steady growth of both concepts.

Vincent Sinisi – Bank of America

Okay. Maybe just one follow up on that with the price levels. Is there you know, across the chain is x number of products, you know, between $1 and $2 between $1 and $5 like, or is it really on a store by store basis it varies?

Bob Sasser

You know, it does vary store by store, as it does at Dollar Tree, frankly is the mix of product does vary. But you know, we’re selling more and more products over a $1 especially in the new markets where we’re opening up the new stores. We’re pleased the average ticket is going up. It’s building over time. You know, you open up the first day plus Deal store. So, people try and as you heard in the video, you heard Alan talk about our customers like it, they’re coming back and we’re getting traction in the stores that we opened last year doing better year-over-year, we’re seeing really nice comp increases. But there are a different, you know, markets are different, the customers are different. And we try to make sure that we tailor in and address the needs of the consumer in those markets.

Unidentified Analyst

I’m interested how the operating margin on a full world basis may compare with in Deals versus Dollar Tree. And secondly, in a broader sense how do the ROI of the various opportunities you have compared and you know, what’s the benchmark between Dollar Tree deals and the Canadian entry?

Bob Sasser

Well, we don’t write that out separately. It’s one end of the Dollar Tree that is made of Dollar Tree and Deals and Dollar Stop and Canada. But I can tell you there is nothing better than an investment, new Dollar Tree store, not only within our own corporation but in our sector. We have the highest operating margins in the sector historically and we continue to really increase that GAAP. So, Dollar Tree, there is nothing better. There is nothing that beats the Dollar Tree model, we have room to grow more Dollar Trees and we’re committed to grow them effectively and efficiently over the next many years.

Alongside that we’re opening up more deal, the Dollar Tree Canada gives us 900 to 1,000 store opportunity. In Canada, we have the nucleus there of a tremendous amount of new growth. And then of course connecting the dots with Dollar Tree Direct, you know, you can access, you can shop online or you can be challenged online through the social media, through Dollar Tree direct to come into a new local Dollar Tree store or Deal store and shop there.

Anthony Chukumba – BB&T Capital Markets

Hi, it’s Anthony Chukumba with BB&T Capital Markets, thanks for taking the question. I just had a question on your free refrigerator coolers and freezers. I was just wondering if you can give us an update in terms of how many stores those are in, how much of a comp driver those have been and what your plans are for potentially putting those in the Dollar Giant stores bank?

Kevin Wampler

Bob, do you want to take that.

Bob Sasser

Tim’s got the number, on what was the last number we released on refrigerator store content. It’s little over 2,000 stores. We put them in stores, they meet certain criteria. It’s a volume size and lease restriction criteria. So, you know, as we grow, we grow as volume goes up. And if it’s a store that does not have a lease restriction as the right size crosses that volume level, it becomes a candidate. We now can reach most parts of United States with a supply channel. So, we’re really happy with that growth. Canada, we’ve obviously just now begun integrating our core stores into Canada. At some time the feature will start it’s pouring after it takes the supply channel in order to do frozen refrigerated. And as you saw, come through Canada and where we’re positioned, we’ll be looking at the same opportunities that relates to supply chain, space and volume levels and we’ll make the decisions accordingly based on the opportunity. Right now, we don’t have any immediate plans be putting into frozen, in those stores until we establish those criteria.

Gary Philbin

And the comp, he asked also about the comp. Kevin the comp, can we put?

Kevin Wampler

Is that, when we add it through a store, we see a 5% to 10% less than our comp store sales. It’s across the whole store, all the category, that’s not all just refrigerator and frozen goods in that point in time. But it does lift all other categories as well, that’s what we traditionally see. And it does continue to comp year-over-year.

Matt O’Connor – Deutsche Bank

Hi, Matt O’Connor from Deutsche Bank. I was just wondering if you guys could talk about your ability to, you know, within some of higher input prices you’ve seen today and some of the potential for 2012 if any of these input prices kind of declined?

Kevin Wampler

Input prices as in merchandize?

Matt O’Connor – Deutsche Bank

Yes.

Kevin Wampler

You know, I’ll just put a comment about and then Bob will speak to it. We’ve been able to do it 25 years Matt. It’s really the same way. Actually it’s getting, our values now are even better because of our buying power and our ability and efficiency and sourcing worldwide and bringing this product to market. You saw, possibly you saw the distribution center that we have here. You know, we sourced this product around the world and we can bring it efficiently from Asia, from South America, wherever it starts out into the courts in the US and into our stores more efficiently than we’ve ever done it in the past. That along with our buying power that has increased over the years is enabling us to offer more value really or the same type of margin and offset a lot of when you hear about cost increase and inflationary pressures.

And all of that, it depends on who you are and what kind of retailer you are on whether or not you’re feeling or seeing. If you were an apparel retailer over the last couple of years, with cotton, I would imagine now that’s not our business. But I would imagine that they faced a lot of issues with the raw material on their product and pricing. At Dollar Tree, though we don’t planogram anything, we change the product not the price, we negotiate with a bigger pencil than ever. And we deliver it as efficiently as it’s possible from around the world.

I can only point to troop, we saw the product in the store and it was here you know, 10 years ago, 1998, I loved this back story and I’ve said it before in public. It was in about 1998, the last time we had a non fourth quarter at over 10% operating margin was in 1998, until this past year, first quarter this year and second quarter this year. In 1998 diesel fuel was $0.98 a gallon. And somehow we’re able to deliver a higher operating margin in 2011 at $4 and change per gallon. Well, the answer is this, the answer the efficiency the power of the pencil and all that we do. The investments that we’ve done and bring product to the market efficiently, to run our stores more efficiently, to get, we’re really focused on our stores on sales for OEMs.

And year-over-year we’re able to make advancements in that using technology in our business to understand where the inefficiencies are so that we can attack that as a transaction. So, the short answer to that is you know, if we have the same product mix that we had 10 years ago and if we had the same stores and the same infrastructure, we would also be part and parcel to what we hear about inflation. But we’re really not seeing as because of all of the other things that we’ve done. The world has changed and we’re changed. Our model is much different than it was. Bob, goes to Asia all the time, albeit how many times a year but with the buyers, and if you just give some color maybe on shine about.

Bob Sasser

Yeah, I’ll talk about import. We just got back from our trip. We just completed buying all the important things for spring 2012, pretty much through July with exception of Back-to-School. And we have bigger and better values than ever before. We delivered at the end of trip, our margins I mentioned earlier that nobody gets to go home until they meet their goals. And everybody came home so that’s good news. Hate to leave somebody behind. Actually the key is I don’t get to go home until I meet our goals. I’ve got kids. But, we change the product, we buy more of the things, we have a larger pencil, we move closer to the factories. There are 10 or 15 different things that everyone does in order to source product, we do all of them. You know, we have a team of dedicated passionate world-class folks dedicated to delivering value at a $1.

You know, a lot of retailers have to go and say, this is the thing I want, what am I going to sell it for. What’s my ad price is going to be, what’s okay. So, we start, that’s off the table. And we focus on value and price. And we go places that other people don’t go, doesn’t mean they should or shouldn’t go, it’s our DNA, it’s what we do. Even domestically, I know everything, where you see all these conversation about price increases it never seemed to have amazed me. Something that we brought from our assortment three or four years ago, if somebody raised the price, or wanted to raise the value, we’re really big on, do we offer value based on what’s on the market today.

Commodity prices may go up and maybe last month, that could be 12 eggs per $1 but you know, right now, 8 eggs for $1 is a great value, some of value in the marketplace. But we’ve had exact items that we had dropped three or four years ago, when the vendor food whatever reason and their model changed. They’ve come back to us with the exact same item in size wise that we had before at the exact same price we used to pay. And they’ve come back to us. So, sometimes it’s their model of changes, they’ve become more efficient.

So, our assortment is very fluid and we say it’s very flexible. And as you visit our stores, if you look at the values we offer compared to where you’re shopping for your groceries or your variety or your Hallmark cards, whatever it is you choose to go to shop. And it’s more of a value today because we’re creating our own products and we’re developing more and are buying powers bigger. And we’ve added more expertise in trend and product development that we’ve ever had before. So, when you shop at the stores, we’re in control of our margin. It doesn’t say that constant for all these years unless that’s a deliverable strategy. You know, it’s there. And I think the proof is the history and the proof is what you see in the store. So, that’s a long range.

Matt O’Connor – Deutsche Bank

Thank you, Bob.

Guy Kelvin Raj – Goldman Sachs

Thanks. This is Guy Kelvin Raj [ph] from Goldman Sachs. Bob, we’ve seen so much M&A activity in your space. You know, another one of your competitors probably about to a private. I’m wondering if you can give us a sense of why you think you have been spared from all this M&A activity. You know, obviously on one hand, you guys have been great operators which I’m sure the turnaround part of it not there. But if there is something else structurally you think that is kept activists away and if someone were to come knocking, you know, would you be receptive to a deal?

Bob Sasser

Look, we haven’t, we don’t have a defensive plan to keep them people away. We stay focused on running our business. We are proud of our performance and we want to keep at world class level. So, to a degree not through plan or design because of that but you know, our destiny is pretty much in our hands because we stay focused on our business, we run a great organization we keep our focus on our top line, on our bottom line, on every line of the P&L. And I think that’s what we know how to do and that’s what we should do, that’s the best way of creating value for our shareholders.

If someone showed up at the door, we’re willing to loosen and talk, you know, if it was good for the shareholders, then we would be interested in listening, the one is so far. But we’re doing nothing that we’re keeping from knocking other than running our business, it’s not a turnaround. It’s a high performing company and we’re going to keep it that way. As far as the active is the other part of that, you know, we do we’re good corporate citizens, we try to do the best thing for our shareholders, that’s our job we know that, we accept that. That’s why we are here. So, we follow best practices, we’ve made some changes in our governance over the years to respond to whatever the newest thinking and best practices are. And we’re just good guys and gals really. I mean, we try to play as right. We think we can win, we think we can do the right thing and still win. So, that’s nice.

Guy Kelvin Raj – Goldman Sachs

And then, one quick follow up. You know, last year you introduced to a whole bunch of whole context the dollar stop as was prior mentioned. I know you’ve mentioned the Dollar Tree market and then you also last year talked about the Fifth Corner store. Is there anything else new this year to talk about and then also maybe touch on any update on some of those other plans if any are ready to be rolled out or any are being scrapped?

Bob Sasser

Nothing is really scrapped. You know, some things are gaining more traction faster, there is always something new. But at a point, you got a kind of touch on a lot of basis, so past year we spent a lot of time on those concepts. You know, we shared with you the Dollar Tree market. We’re learning a lot about it, some things we like a lot, some things we’re not so happy about. So, I’m not ready to declare a victory and say that’s going to be a new growth vehicle for us. But it’s exciting. I would tell you we’re very much excited but it’s only been a year. So, that’s still being worked, we’re working real hard on the market. The Dollar Stop is something I think is absolutely there to be done whether it’s now or later, there is no rush to judgment on it. It’s a sub set of the assortments that we already sourced and that we already delivered across the North America. And something that we know how to do, it’s really kind of where our roots are and those boxes.

So, it’s there to be done, it’s a matter of focus, it’s a matter of refinement. And again, we’re doing all these things as we are really continuing to roll out our Dollar Tree stores. Again, the best investment for a $1 and proven the performance of them and also our Deal store and our Dollar Tree Direct, these three have the most traction now. But we’re always looking and we’re always at this corner, we’re going to shortly pull up and stop rolling out more of those for the year because we’re going into fourth. And so, we don’t want to tearing up our stores in both quarter. But we’re very excited about what that’s bringing to us with the home store and the opportunity to really showcase our party business, more party, more upfront and we’re seeing some really good returns from that. But you can get too many ideas too. And I’m very thoughtful about that.

You don’t want to get more good ideas out there, it’s easy to get the next good idea and leave the last good idea laying fallow and we’re not going to do that. So, we’re not going to extend past what we think again provides value to our customers.

Wayne Hood – BMO Capital Markets

Hi Bob, it’s Wayne Hood with BMO Capital. I have my three questions related to Canada. One is that Dollarama operates with a better 60% and 69% EBITDA margin up there and doesn’t have the infrastructure or anything that you have. And so, when you sit back and say, what would be the impairments to you operating at that or higher EBITDA margins, which is higher than you have in the US. Can you comment on that? And then, the second question relating to Canada, at what point either in store size or volume you think you can move to self distribution and if Kevin can speak to the capital that’s going to be required behind that. And then the third question is, just give us the sense of the maximum number of stores that they might be able to open up there in any given year, given the infrastructure you have in place over the next two years? Thank you.

Bob Sasser

I’ll try to take the first one last one first. The Dollarama operating margin, I guess, I’m excited about that. You know, if they can do it, why can’t we do it, you know, I mean, that’s the challenge that we have. I don’t know all the details of what is all in their margin and how they’re getting there and yes we do have infrastructure and we’re going to continue to provide infrastructure as a growth in Canada. So, that’s in place. Clearly we think in the long run that’s a good thing for the returns of the business. So, you know, they have a higher operating margin, higher EBITDA then certainly that gives us cost to reach for at least that. We’re competitors and gosh, I think we’re efficient in operators and the merchants as anyone. So, that’s exciting.

The growth rate in Canada is going to be, you know, this year we spend a lot of time on integration and building teams and putting in our systems and getting our logistics in place, our sourcing in place, the buying teams and making all the trips and putting together the assortment plans. And we’re going to grow 15% this year, 20% something like that. Next year, we’re looking at maybe 25% growth and going forward. Now having said that, you know, things change, opportunities come up, you take advantage of opportunities just as we’ve done in Dollar Tree over the years. But that 25% growth rate is something that keeps sticking in my mind as an opportunity to start something to plan with self distribution. We have our own logistics that we don’t own it, but certainly we’ve put in, we’ve integrated with our systems and then we have control of the product.

We know what we are and we know where it is. We’re shipping it, we’re billing it, we’re doing all sorts of things that we do at Dollar Tree. We don’t know that we’ve put a time and place yet to say when we might build something in Canada, but it’s out there to be done. If you look at the way we’ve built across the US, I see no reason why we shouldn’t continue the same type of thinking as we go into North of the border. And the little question was to Kevin, ask me that one again, if you don’t mind.

Wayne Hood – BMO Capital Markets

[Inaudible].

Kevin Wampler

I would tell you that in the short term, I think we’re going to stick with the third party logistics partners that we’ve signed up with. And as Bob said, you know, at some point there maybe the store density that maybe we would look at. But I think the other thing is we want to see it so much low, you know, we got to remember it’s not the 50% state, it is its own separate country. And that’s how we’ve got Joe and his team helping us and learning that as we go forward. And so, you know, I think overtime will be the opportunity but I don’t see that being in the near term so it’s kind of hard to speak to what kind of capital that might take at that point in time. So, why don’t we cross that bridge when we get there.

Wayne Hood – BMO Capital Markets

Very good.

Brent Rystrom – Feltl and Company

Thanks Bob, Brent Rystrom. Couple of quick questions for you, closeout on the percent of sales, how those varied the last year and did the vary at Deals?

Bob Sasser

It’s about the same Brent, it’s always been. You know, we pushed towards trying to get about 10% sometimes, it’s 6% to 8% in that range I think probably right now in the 6% to 8%, was that opportunity. We like more, so we keep growing with numbers, the dollars go up with the percents somehow in that range, that is about the same. In Deals, it’s lift the restrictions at price points, we’re getting access to some things that we wouldn’t have seen at Dollar Tree, but the percentage is about the same.

Brent Rystrom – Feltl and Company

When visiting the lot of the Deal stores, one of the things I noticed from a visual merchandizing perspective, you don’t have the same feel and consistency out in the store. There is a lot about the stocks, there is a lot of open shelves. What do you need to do to lift these standards of that chain to fit kind of where the Dollar Tree concept is?

Bob Sasser

Yeah, it’s all about we’re changing the mix spread. As I said, we’re trying new things, we’re trying new categories. And as it starts trying new things and you’re getting out of old things, you’ll see some of that. It’s really more about the merchandize sourcing and the merchandize plan that you’re seeing that in consistency of I believe right now. Actually Alan Goldman, Alan if you’d like to take the mic and say a few words about your Deal stores, it’s I know Brent has visited several of them along the way on his way down here right?

Brent Rystrom – Feltl and Company

Actually it was a month ago, yeah.

Alan Goldman

Yeah, to your question. We are always evolving in our category mix and we’re not on the full planet guys type of system we’re having some basic consistencies with some products and somewhere rest of it is in on some merchandizing flexibility. So, as Bob and Bob have mentioned before, we’re able to give the customer a new look for a new merge [ph] every time she comes in, to let her start her shopping experience with her basic core, core basic. So, I think you can see us getting better at shop level, with that as we perfect our mix, perfect our operations.

Brent Rystrom – Feltl and Company

When you go into your store, and you look at you had the slide where you have the slight electrics, household electrics. And a lot of the stores, those are single price point, I think it’s $10 is where I intend to see a lot of them priced in the stores. And then you have something like a toaster oven on the floor for $20 in a larger box, is the electrics on the wall, are they continuity type items by category but not specific by item? And then, is the toaster oven for example is that a special buy in the floor.

Alan Goldman

Yeah, what you’ll see a lot of times in that case, an OPP opening price point will have to the basic needs that maybe the $10 item. The $20 black and deck are piece that you’ve seen and there was an opportunity buy, it’s a buy that we’re able to get. And that would be part of the flow in. And that will expand the contract as we get towards fourth quarter or maybe a gift giving season, a time frame. And we do that for the most part without our whole mix. We’ll try to have some great values in the brands, because we have to carry the brands because we’re on the price restriction, we’ll have a comparison of a private label fee as an OPP as a $1 which no one else can do and we just kind of fill in around that assortment from there.

Brent Rystrom – Feltl and Company

Okay. Final quick question actually if I could follow up on that. From the perspective then of the physical capabilities with store, it seems the store is a lot more merchandize on the floor in the isles, is that on plan or is that just working through the kinks of trying to figure out ways to get the merchandize on the shelves, did the store harder to navigate than the Dollar Tree store has been traditionally?

Bob Sasser

Well, I think and I’m not sure what you’re market is. If it’s New York City, we may have that opportunity go little less that force back, so I think it’s a great value. But we give the same clean experience we’re striving to the same clean experience as you see in our Tree, obviously in the 80 or 400 or 7,500 square foot store that maybe some other challenges and depending on the timing of the year that you’re in there some items that just don’t fit on the shelves that we merchandize that way. Christmas trees were never going to get on the shelf, they’ll be there. But we’ve accommodated that in our floor displays and in our floor guides for the stores at seasonal times. So, we take other things potentially out the store to make room for that.

Brent Rystrom – Feltl and Company

Thank you.

Dan Binder – Jefferies

Good morning, Dan Binder, Jefferies. Maybe just a follow on to the Deals store questions. As you look at the ROI gap between Dollar Tree and Deals, which I know you didn’t explicatively say there was one but it seems that there is a gap that you’re trying to close. Do you think it’s more of a volume issue, a cost issue, a mix issue that you have to address to close that, that was my first question? My second question was.

Bob Sasser

Let me answer that one first.

Dan Binder – Jefferies

Okay.

Bob Sasser

So not forget the second, then you get into like question number four and I’m really lost. So, look the part of it is just side we got 180ish Dollar Deal stores at one point in time. So, you know, the power of buys have a lot to do with the returns. But look, you know, we’re talking about deals for the couple of hundred stores, we have 4,200 Dollar Tree stores. Obviously, we know how to do run Dollar Tree better than maybe a new concept. We started up Deals five years ago. And it’s gaining traction every year, it’s better than it was it. I’m excited about it. If you ask, is it a better return, then Dollar Tree is not today. Will it be in the future? Well, it’s big part of the future that’s the essence of it. It’s the idea that we can with all that we’ve build in infrastructure and people, and merchandizing and sourcing, we can run Dollar Trees across North America.

In addition to that, we can leverage all that we’ve built. And then with the restrictions of the price point and serve even more customers, we can sell that toaster oven in Dollar Tree, we cannot. It’s a great buy by the way, terrific opportunity for the customer but you’re never going to sell it for a $1. So, by lifting the restriction of the price point, it gives us the ability to serve even more customers, gain more market share and it’s an addition to Dollar Tree, it’s accretive to Dollar Tree, it’s not instead of Dollar Tree, we’re going to grow both these concepts, they’re both profitable and the deal model is really a big part of our future as we continue to grow, especially in these more dense markets where it’s tougher to operate anyway. The Deals model give us the chance to, $3 dollar item instead of a $1 item and leverage them as fixed costs in those markets.

Dan Binder – Jefferies

My second question was related to your presentation today, it didn’t really have a long term financial plan or goals with respect to top line growth or comps, operating margins. I was wondering if you can frame out roughly, you know, how do you see that shaping up over the course in the next three to five years?

Kevin Wampler

Well, look, we haven’t laid out our five year financial plan. But we do have one. And it’s aggressive. We’re going to continue to open up Dollar Tree stores. We’re going to continue to open up more Deal stores. We’re growing into Canada, we’re growing our Dollar Tree Direct business. And all the while, we’ll continue to enhance inside the store is getting better at operating our frozen refrigerator department getting more productivity in our home store businesses, getting more productivity from our store operations as we continue to run the stores better and really get down to the line item on where we can really provide more value to the customer and at the same time more efficiency for us for our business.

So, comp store sales are continue to be planned and they continue to grow, we continue to, we planned them to over the next three or four years to continue a growth rate. It’s similar to what we’re doing right now over the near time. We continue to plan to support that growth with infrastructure, I will tell you that the biggest things before us is sometime in the next three years, two to three years, there will another distribution center in our future.

But that will be injunction with our growth as we’ve always done as we open up more stores and more markets provide that efficient suggestions and we’re able to leveraged that, we have that, we’ll leveraged that. So, the future is bright for Dollar Tree, there’s a plenty of room to grow, we have different concepts used to growth, different ways of reaching more customers, we still have opportunity to improve our operating margins within Dollar Tree as we have over the past two or three years if you’ve seen those numbers. We expect the improvements to continue there, exciting place to be right now.

Right now we are squarely and across air of where consumers looking that value. We have 50% of our business. I think you got ahead and at a mode frequently shopping, you seen true up in the traffic, that’s going to continue. I don’t think that even with the recovery which I’m hopeful for in our economy, even with a recovery, I think that people like to save money and they like value and they’re going to continue to look to Dollar Tree and others to define that value.

So, we have a future, at Dollar Tree though it is not only about things you need, it’s about the things if you want, you know, our party business is strong, our toy business, our seasonal business. All those fun things, and it’s only a dollar, and people like to feel good about themselves, then they feel they’ve found a values, they like the shopping experience that’s going to continue if we patch away.

Unidentified Analyst

The Regions Bank. Two separate questions. One real estate values really created some opportunities for reduce lease rates. And I was curious how you saw those going before the next several years, if you saw that those opportunities continue?

Bob Sasser

Well, you see the same things I do probably. It’s been situation of the good and the bad, and the ugly really over the last few years since 2008. We had opportunity that reducing some of our occupancy cost on existing real estate we always trust to take advantage of that, no matter what.

We’ve seen new real estate as we may not even a seen before because it may be right side of our range, that’s been able to take advantage and then continue to take advantage. On the bad sides, there has been a lot of whole lot of new development out there, the people that were building the shopping centers, you know, they’re not as robust and they don’t really have the access to the capital, let’s say as pretty 2008 and that’s still sort of obeying which hanging out there.

We do have capital that we can invest. So, we are able to take like a new space that we are able with our nickel. Basically we could get the rent right to build it out on our capital, our cost of capital. And so we are creating opportunities for ourselves with our balance sheet and that matter.

Going forward, I don’t know, it’s uncertain as to is it going to change dramatically, you know, I hope it doesn’t get, I don’t see any that getting worse out there for us. So, I’m speaking from my point of view and not from the developer point of view. But, I’m not sure it’s going to get better either on the development side for a few years and maybe another low dry patch there for new development coming out. I’m encouraged to see some of the big box guys talking about maybe they open a few more stores that they drive some of that.

Peter Keith – Piper Jaffray

Hi Bob, Peter Keith from Piper Jaffray. I wanted to talk about some of the comp drivers in your business, you know, obviously you guys continue to bring in good merchandize and dry productivity. There was a question earlier on a freezer rollout, to the other one, I just want to address what’s your remodel and expansion strategy and then the expansion of tender type.

And one thing, but the sustainability of those two comp drivers, if we look at the retail expansions, you’ve done 90 a year for several years. How much longer, how many more years can you continue at that same rate. And then on the other one, the tender types. Could you refresh us where you are right now with debit and credit as a percent of sales and where you think those two could trend maybe over the next four to five years?

Bob Sasser

Okay. I’ll let Kevin speak to the tender types. The remodel expansion program is pretty consistent over the past, you know, 10 years frankly as a strategy. We’re always looking or we rarely close the store, I can almost not remember closing the store before the lease turn was up. But we’re always out there looking at when that is. So, that we can make decisions on that market and that opportunity in that market. So, that when the least is expiring, we want to stay there and if it’s a small store, do we need that store, we’ve already got large store, maybe just we just renew and we stay there.

If it’s a small store, do we want to stay there and expand or do we want to move and expand. We typically do five year lease term with 35 year option. So, that gives us the ability to overtime, flexibility to move, or close if we need to at the same time, we are in consistency, we can continue to operate in a good location.

So, it’s strategic, it’s really driven by the market and if I have a 6,000 square foot store and it’s doing really well and there’s an opportunity maybe we’re undeserving the market and an opportunity to do the 10,000 to 12,000 square foot store, we’re looking a couple of years out, both the time at least that’s far trying to determine where [inaudible] market optimization that. So, where do we want a larger store, how do we want move the surrounding, make way for the changing in the population? It’s also the movement of the you know, re-locations of Wall-Mart or Targets or the grocery store in the center or whoever is the big box guy is there, we have now decisions to make on that, if we want to move when they move, we want to move with them or do we want to stay there or maybe if it’s there.

So, it’s strategic, it’s opportunistic, we will do, we plan to do 90 next year. If we could do or saw the reason to do more, we could do it, we have the capital availability to do that. And if there was an opportunity to do to relocate and we thought we could get return or better serve that market then we would do more than that, it’s same where you open a new store or relocate store there. So, it’s really the total number of project that we build that’s the important part a new better return and relocate store, thus strategic reason to move in there and relocate in a small store or large store usually or moving to a better part of the market as market change.

Peter Keith – Piper Jaffray

Two, debit and credit your penetration continues to grow there as we’ve, you know, asked you, we’ve added American Express. And when we look at something like America Express, we really added for a Dollar Tree direct as a way to serve our small business owners out there, they really use their card a quite bit. And but we’re also, rolled some stores and it’s been falling with surprise with what was seen from the usage standpoint of store. So, overall penetration from the standard it’s little over 35% of our business and it’s [inaudible] credit, but we’re continue to see a throw.

Bob Sasser

We take visa credit, master card credit, visa debit.

Gary Philbin

We are getting close to the end here, but there’s a couple of people in queue, Patrick and then Teresa and maybe there will be time for one more after that. But it’s almost 12:30. So, we know you need to catch the bus, going to your next stop. Go ahead please.

Bob Sasser

Just wondering if you could talk about, the move from a dollar to a dollar 25 in Canada. And what prompt you that and what kind of a, how did you carried out in Canada and what kind of an impact that have on the business both from sales team point and profitability standpoint as well?

Gary Philbin

They had already done that before we bought the company.

Peter Keith – Piper Jaffray

Right.

Bob Sasser

So, it was a good move apparently. From what I saw when we are looking at the financial, but the, you know, and Joe if you like to address the, that this was pre acquisition.

Joe Lampassi

Thank you. Yeah, I think the $1.25 and the Canadian market has so left us as the only single price retailer the overall the lowest price in the markets, where Dollarama being our main competitor. I would say most of their goods are over a dollar today and they have a very small selection of goods, they’re still at a dollar, a lot of their goods are a $25, $15, $2.

Plus by living our consumable net dollar, we really try to capture both sides of the market still having the needs factor at a dollar, which again the only retailer in Canada and its all the needs product at a dollar. And we have our, we call it our fashion goods, or wants goods at a $21. So, overall was a great decision for instance, we’ve kept our customer traffic, we haven’t lost any customer traffic over last two years if anything we’ve grown. And we see a lot of potential been at the $25 in the Canadian markets.

But we just felt that the Canadian market to give value because I think on a concept just like Dollar Tree in the US its value is very important sort to downsize our product and keep the $1 price point. Secondly real estate pricing taxes all those other things that are in the Canadian market are lot greater than the dollar.

If you look at Canadian pricing in general, for instance, the US pricing, we usually run 25% to 30% greater. And if you look at the back at the greeting card were magazines are approximately 25% to 30% greater not on whole concept. Canadian consumer through the taxes, real estate wages, really you have to be at that level if you want to get value and that’s our goal.

Bob Sasser

I think it was the right move, I frankly I like –

Kevin Wampler

There was a good move.

Bob Sasser

I like the way that Joe and his team responded, it’s $25 Canadian it gives flexibility to be a dollar, but it’s a single price point, it’s the power of that single price point when you walk into a dollar, a giant just like when you walk into a Dollar Tree, everything in the store is one price and there is a power to that, that Joe maintain. Although, I’ve given him the flexibility to go up, it could be a dollar and a quarter; it could be a dollar or less. But its flexibility, it’s actually with the fluctuations in the currency.

Unidentified Analyst

And then how about oops? What’s up with oops, is that still oops, oops initiative?

Bob Sasser

Oh oops, oops it’s there, you know. Oops was, it was our news it was something that we will bound to try and I’m happy to say that we are open to good ideas. And several years ago, we had the thought that, well let’s try in 10 or 15 or stores I don’t know, if we might have gotten up to 20 stores, you know, everything the dollar except for Deals. And so we put in some things that were more than a dollar, great values are, and we said and the signing was oops, we know it’s a dollar, but in such a great value, we couldn’t pass it up, so we’re passing the savings along to you because we’re then responsive, we tried it for a year or so, we really gave it to, okay, let’s try, we changed the product, we did a lot value.

And at the end of a year or so, the conclusion is that, you know, we’re better with a pure strategy, everything is a dollar, it’s Dollar Tree everything is dollar, deal everything is not a dollar, everything is a value. And we’re keeping a pure and we’re having much better result as a result of that.

So, oops was a trail didn’t work, didn’t give us the return we’re looking for, we stopped that, our focus on multi price points is on deals. And from the customer view point is very clear deal, everything is a value, Dollar Tree, everything is a dollar.

Unidentified Analyst

The question of financial, I had two questions, the question of financial return overtime. I’m curious, how you think about sustaining a growth rate versus sustaining a certain level of ROI or ROA. And then secondly I had a question on the treasure hunt capability?

Bob Sasser

Well, look, we’re very focused on sustaining on both, there’s a room to grow, there’s opportunity to grow, we know how to grow, we have the infrastructure that every time we open a new store, we get device more leverage to what we are, the capital we’ve already invested. So, an investment in a Dollar Tree or a deal store or any of these stores, these concepts provides leverage on the corporation and return for a shareholder. How do we think about the quality of growth, we are focused on providing the highest quality of growth in our sector and even in retail, we have high standard and we’re really proud.

If you look back in our history and take any of those lines you want and I will tell you over 24, you can’t go 25 years because they’re only public since 1995. But you can see there was not by chance, not by accident that we deliver these returns. And we are very proud, Kevin stand up here and show that slideshow and the operating margin going down in the mid early 2000 and then reflecting back upward because that was the plan, we made an investment in DOS technology starting in 1999 or 2000, millions of dollars we invested in technology.

We built with a 70 season, 5 year seed [ph]. And that period of time and we were investing in market share and opportunity to grow this company across the country efficiently and effectively. During those investment years, we had operating margin decline; we’re now passed that and is going in the right directions what you’re looking, that’s going that way.

But we like that way and that’s the way, we don’t have any huge, many of those huge investments to do in front of us now. When I talk about in the next couple of years when we’re in new DC, that’s peanuts as to when I saying when I was saying we need seven of them over five years time.

So, the big investments are behind us, the big investments in technology are behind us, we’re going to be going back as all good companies do and republishing and upgrading and updating and we’re going to be upgrading and updating our point of self systems over the next few years, we’re going to always do that. So, that’s an investment in our business to stay relevant, to stay where we need to be the leader in our market.

But, always with an eye on return, we don’t just throw it out there; it’s been very calculated planned effort as we’ve gone from small stores in the mall to larger stores across America and now in the Canada.

Unidentified Analyst

You know being wired for the treasure hunt if you will and where you think you can take that competitive advantage long term, I mean, does it leave beyond retail, does it leave to more with the business customer. I mean how do you think about leveraging those talents over the long term?

Kevin Wampler

I got you. It works really well on the stores because you have someone that getting in the car and they made a shopping trip and they have come into your store and they maybe come to, bought some dishwashing liquid and maybe some paper towels. And as you’re walking back towards where that is in the store, they all of a sudden hear the Christmas village assortment that looks like the one they have may seen in the department store and it’s only a dollar.

And it’s disarming, it’s stops people in the track and its part of the reason that people like the shop Dollar Tree. The Shop Dollar Tree because you need to and also because you like to and we pay a lot of attention to the light too. And I think that is something that sets us apart possibly in our sector.

How it relates in other parts of businesses it’s going to be proven, you know, we have a pretty good florist customer, it’s kind of about small businesses florist like us because they come to know and we come know by the way that they like buying those basis, so we may find, we may find these close out bond on basis and we can sell them for a dollar and florist aren’t buying it for a dollar and we’re able to small floor to find from.

So, now they look to us for that type of products, by the way, they sign up and we know who they are, we know where they live and we communicate with them back whenever we have this type of product. So, the treasure hunt in that way, I supposed, you know, ever I thought if that is the treasure hunt much it was just for a customers need, you know, or you know, or the chain and how to lead and find a way to sell our product to them. But, I guess, that is a way of looking at it to extending the treasure hunt.

One more question, is all right Tim?

Tim Reid

Yes.

Bob Sasser

Okay.

Denise Tri – Bank of America

Okay. Thank you. Denise Tri [ph] from Bank of America.

Bob Sasser

Hi, Denise.

Denise Tri – Bank of America

So, a couple of your competitors are moving into California pretty soon. So, can you talk a little bit about how you see that shaping up in terms of the competitive dynamics or real estate in consumer? Because obviously we have the first mover advantage that make a good sense?

Bob Sasser

We’ve been there since 1998. And we got there in 1998, but 98 Sinclair Center was the name of the company, they were maybe 75 stores in that range as I remember, it was in that range. And so, we’ve been there long time. We now have more than 200 stores, I mean, we haven’t got 350 stores in California and more than add on the West Coast. We’re not just in California, we’re also in Oregon and Washington, Arizona and all the other states that bump up. We have three distribution centers in the West Coast, 2 in California, and one in Washington, we have store teams. We have all the things that you need to continue to grow, run business.

The entry of another competitor is always something that we watch. We compete with them not anyway, everyway, both of the guys are bigger than we are. So, we see them in all 48, not necessarily some of us but we see them across country. And we watch what everyone else does. At the same time, we stay focused on what we did. And we deliver the most value for a $1. And we have a real estate model we know that 10,000 to 12,000 square foot stores, that’s the sweet spot. We take a little larger sometimes, take a little smaller.

And we understand the California market and the California customers. We also understand the California laws and regulations. And I know there are a few differences in that statute that goes across the country especially in California. But our California customers love Dollar Tree. And we found them over 10 years ago. So, I think we’re well positioned for the competition. Is that it?

Tim Reid

Okay. Do you want to say?

Bob Sasser

Well, I want to say thank you to everyone. Again, thanks for coming and thanks for your interest in Dollar Tree. And I hope we’ve made this sufficient for you. And I hope you gained insights and things that you need to know and had chance to ask your question.

Tim, next is lunch and home or?

Tim Reid

We have box lunches.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Dollar Tree Stores Capital Markets Conference - Transcript
This Transcript
All Transcripts