10-KPeriod: FY2013

DOLLAR TREE, INC. Annual Report, Year Ended Feb 2, 2013

Filed March 15, 2013For Securities:DLTR

Summary

Dollar Tree, Inc.'s 2013 10-K filing reveals a company in a strong growth phase, primarily driven by new store openings and strategic expansions. With 4,671 stores across the US and Canada as of February 2, 2013, the company emphasizes its value proposition of offering a wide variety of merchandise at a $1.00 price point or less, setting it apart from competitors. The business strategy focuses on maintaining a balanced mix of consumable and variety merchandise, with an increasing emphasis on consumables supported by the addition of freezers and coolers in a significant portion of its stores. This initiative aims to drive customer traffic and appeal to a broader demographic. Financially, Dollar Tree demonstrated consistent net sales growth, increasing by 11.5% in fiscal year 2012 to $7.39 billion. Operating income and net income also saw substantial increases, with diluted EPS rising to $2.68. The company's ability to self-fund capital expenditures and new store openings through strong cash flow from operations is a key strength. Management highlights significant investments in distribution center capacity and ongoing store expansion plans to support future growth. While facing competitive pressures and potential cost increases, Dollar Tree's disciplined approach to cost control and store site selection, coupled with its strong brand offering, positions it for continued success.

Financial Highlights

47 data points
Beta

Revenue

$7.39B

35.9% Gross Margin

Net Income

$619.30M

8.4% Net Margin

EPS (Diluted)

$2.68

Total Assets

$2.75B

Cash & Equivalents

$399.90M

Free Cash Flow

$366.10M

Financial Statements
Beta
Revenue$7.39B
Cost of Revenue$4.74B
Gross Profit$2.65B
SG&A Expenses$1.73B
Operating Income$920.10M
Net Income$619.30M
EPS (Basic)$2.70
EPS (Diluted)$2.68
Shares Outstanding (Basic)229.30M
Shares Outstanding (Diluted)230.70M

Key Highlights

  • 1Consistent revenue growth driven by store expansion: Net sales increased 11.5% to $7.39 billion in FY2013, with store count growing to 4,671.
  • 2Profitability improvement: Operating income increased to $920.1 million, and net income rose to $619.3 million, with diluted EPS at $2.68.
  • 3Strategic expansion of consumables and refrigeration: Over 2,550 stores equipped with freezers/coolers to boost sales of consumables, which now represent 51.4% of sales.
  • 4Strong operational efficiency: Selling, general, and administrative expenses as a percentage of net sales decreased to 23.5%.
  • 5Significant investment in infrastructure: Expansion of distribution centers to support future sales growth up to $10.2 billion.
  • 6Shareholder returns: The company repurchased $340.2 million worth of shares in FY2013, with $859.8 million remaining under authorization.
  • 7International expansion: Successful integration of 86 Dollar Giant stores in Canada, marking the first international retail presence.

Frequently Asked Questions

Dollar Tree's primary strategy revolves around offering a wide variety of quality merchandise at a fixed price point of $1.00 or less. They focus on maintaining an optimal store size, balancing basic and seasonal merchandise, and increasing the proportion of consumable goods, supported by the installation of freezers and coolers in many stores. This strategy aims to drive customer traffic, increase shopping frequency, and appeal to a broad demographic.

The company primarily self-funds its growth through internally generated cash flows from operations. The filing indicates that cash flows from operating activities have consistently exceeded capital expenditures over the past five years. Additionally, Dollar Tree maintains a $750 million unsecured credit agreement for liquidity and potential future needs.

Key risks include vulnerability to cost increases (merchandise, wages, shipping) without the ability to raise prices, potential impacts of economic downturns on consumer spending, intense competition in the discount retail sector, and risks associated with its supply chain, particularly reliance on imports from China. The company also faces litigation risks, primarily related to employment matters.

The acquisition of 86 Dollar Giant stores in Canada, completed in November 2010, represented Dollar Tree's first international retail expansion. These stores offer merchandise at $1.25 (CAD) or less. The filing suggests it provided a proven management team and distribution network, with potential for further growth in the Canadian market, though its overall impact on financial results was not significant in the immediate years post-acquisition.