DLTR
#All right, thank you.
I would thank you for the question, because it gives me a chance to brag a little bit on our folks who have worked very hard on really just the basics, but the hard work that goes into running our stores.
Where are we.
While we know we're not to the finish line, but I would color it this way.
Our in-stocks, what our customer sees on the shelf, is certainly better than where we started 18 months ago.
In our efforts to catch up on some of the deferred maintenance and cleaning, and the basics that we need to run a full, clean, recovered store are in place.
Our operational teams are heavily focused on our consistency of providing that day in and day out.
I commented on it, but for our customers, it really revolves around, are we first-of-the-month ready at Family Dollar.
That's a very important focus for us to gain consistency with our customer.
It tends to show up with our first-of-the-month business and our share of SNAP that we take.
Those are the things that I would say we've improved on.
We have more work to do across all of those.
I am pleased with the efforts our folks are putting towards it.
It's going to be one of just the basic table stake foundational initiatives that we stay with for several years, because we will always be able to find a way to improve.
As we start to be able to renovate some of our older stores, our customers store by store will see something that's different.
That's just as important when we're talking about the stores that serve their neighborhood.
I'm encouraged with where we are at.
More to be done, but it's a consistent message and focus around the organization right now.
Hi, <UNK>, this is <UNK>.
I will take the first part.
In order to answer your question about Duncan, let me take you back to about 18 months ago when we made the acquisition of Family Dollar.
At that time, if you remember there was no President at Family Dollar.
The President had already left.
I thought that when we made the acquisition that it was extremely important first day to have a President in place.
<UNK> <UNK>, who had been President at Family Dollar, my partner here for a long time, stepped up and went down, moved down to <UNK>s, and on day one we had a president of Family Dollar in place to lead the team.
He's done a terrific job energizing the team, communicating, building the initiatives, getting some traction on the business, cleaning up old inventory, doing all the things to revitalize the marketing campaign and the customer communication.
I couldn't be more proud of what <UNK> has done.
But I was still one President short with that combination.
As <UNK> went down to <UNK>s, we launched into a national search with a national search Company, looking for a President, a future President of Family Dollar, and we found Duncan.
I will tell you that Duncan, when we met, I knew that he was exactly the right person for this job.
His background, he had consumer products background, he had supermarket background, he had big-time discount store background, and he had demonstrated throughout his career a real ability to build store teams, to build merchant teams, to build an organization, and to drive success.
I was real pleased to bring Duncan on board.
Duncan has been down there just a short period of time, but I will tell you he is stepping in, and he's started running.
If you talk to the folks down at Family Dollar, I think you would hear from them that they really have engaged with Duncan and he has engaged with them in a positive way.
We're very excited about adding Duncan to the Management team.
In addition at this point in time, we brought <UNK> ---+ we elevated <UNK> to Enterprise President.
As Enterprise President, <UNK> now has responsibilities for all the customer-facing initiatives, all of merchandising, all the store operations, and real estate across both banners.
<UNK> reports to me, as does the shared services organizations report to me.
That was the trail of how all this began, and we're really pleased to have Duncan on board.
We're also pleased to have <UNK> in a new role.
I'll let <UNK> speak to the second part of the question.
Good morning, <UNK>.
From a big-picture perspective, in regards to comps, obviously from a Dollar Tree side of the equation we expect the cannibalization we've seen from the re-banner process to dissipate as we go through Q1 and Q2, and really be pretty much done by the end of Q2.
The back half really shouldn't have any head winds, per se, from the re-banners for the most part, so that's a positive on that perspective.
I think on the Family Dollar side, we think it's been a little harder for us to forecast, just in general I would say, just from a rhythm standpoint at this point in time, so we take that into consideration.
There's been a little bit more variability to the business.
It doesn't mean we believe they're not going to comp positive and be able to be a meaningful contributor at the end of the day.
I think the way we're going to look at it as we go forward is we're going to give you enterprise guidance, and then when we report the quarter we will break it out and give you the two segments, as well.
That's how we're thinking about it going forward.
From maybe a little bit bigger picture for the year, from a ---+ speaking to the moving pieces within our P&L, so to speak, on a consolidated basis, we do expect to see improvement in our gross profit this next year ---+ for this year we just started, I should say.
Really, expect mark-on to continue to improve in both banners.
We're going to work to lower our mark-downs as a percent of sales in our Family Dollar banner.
We're going to continuing to see a little bit of geography change from the standpoint on the Family Dollar banner.
We talked about this last quarter in the sense of our process where we're getting our co-op dollars net in our first costs, as opposed to offsetting advertising.
You have the benefit in gross profit; you actually see advertising expense in SG&A go up, but that's a geography difference.
We know some of those improvements are going to be somewhat offset by the higher freight costs that we've already talked about, but in general we're expecting gross profits to improve.
On the SG&A side, I think there's expecting flattish to maybe a slight improvement.
I think the head winds are, in SG&A, are going to be the pressure on store wages in both banners.
Again, we've got minimum wage increases and just general average hourly rates that are increasing more than what we've seen over the last probably four or five years, realistically.
As well in SG&A, we do have the advertising that I spoke to that will be an increase year over year.
Somewhat offsetting that then is we will expect lower depreciation, based upon the range I gave this year.
The mid-point of that range would be $620 million, which compares to last year's actual of $637 million, so depreciation is actually going lower.
Those things, as we look at that then, if you look at our operating income, at that mid-point of our guidance you would be looking at operating income of approximately 8.8% to 8.9%, which is a compared to the 8.23% that we reported on the press release today.
At the mid-point, still a nice increase in the overall operating income as we go forward.
Those are some of the moving pieces, big picture, as we move into 2017.
Hi <UNK>, <UNK>.
I think one of the things that you point out with the question is the synergy does give us some flexibility in our sector.
We certainly monitor all of the price checks, like everyone else, and what's happening across not just our sector but also the other channels as well.
Over the last 18 months, we have had a very mindful eye exactly where we are compared to each of the targets we have by market.
Our answer to that has been Smart Ways to Save, which gives us flexibility, and maybe even more than that, points to the way we show our offers to a Family Dollar customer.
We do see a customer that shops differently ---+ I mentioned first of the month before.
Clearly that's a big driver for us.
What's on shelf and end caps and either it's on sale or a priced drop is how we're approaching it.
Looking forward, we are going to watch everyone this year, as we go into price checks and see what they're doing across the shelves, and we'll react accordingly.
But to some degree, you know it's not new news.
Everyone has been waving their flag on saying they're going to bring value.
We're in a sector that delivers that with a convenience factor attached to it for our customers.
That's how we're thinking about it starting off the year.
<UNK>, again as I said in my prepared remarks, it hasn't been passed yet.
If it is passed, we really need to see what it covers and how it's done and what the rules are and all that.
I'm sure we'll be able to respond accordingly to that.
We have a lot of levers across both banners that we can do.
I believe that the pressure on the consumer is going to be potentially if passed the way everybody is contemplating could be a real issue for the consumer, but as far as retailer ---+ we're a retailer just like everyone else, we will respond accordingly.
I will tell you this.
At Dollar Tree, we are ---+ for 30 years we've been $1.
You talk about the price point.
I've been asked that question for a long time on other issues as cost changes, as expenses changed, as the markets changed, as inflation, deflation, and the like.
We are able to manage that, because we are able to manage our assortment at Dollar Tree.
As long as a dollar is a unit of currency I believe, and we can offer the best value, then we've got a business.
Let's wait until we get there.
Let's let us see if it's passed, and if passed, then what the rules are, and they we'll respond accordingly.
But I believe we have as much a right as anyone to respond and run a great business going forward.
It will be different, but let's see what the rules are first.
Good morning.
Hi <UNK>, this is <UNK>.
Let me take a swing at it first.
We're excited to have 300 stores and the renovations.
What you're going to see ---+ listen, the headline is, how do we drive a more productive store for our customers at Family Dollar that really enhances the shopping environment.
You're going to see some things that both drive traffic and enhance the customer's shopping experience, especially on the discretionary side as well.
I am not going to give the blueprint of everything that you'll see out there, but the model will be small box, still.
We certainly know how to run our box, both in urban and rural.
What we're going to drive is really the categories and adjacencies that make sense in a Family Dollar world.
I think our opportunity is to find the categories that consistently drive in traffic week in and week out, which has not always been the case as the box has been developed over time.
We certainly have the pieces to make that a better shopping environment for our customer.
Some of that can be our consumables and the frozen food and on the margins pieces, so the elements we do on seasonal.
We aren't the same party department that Dollar Tree is by a long shot, but certainly our customers still have birthdays and celebrate seasons, and those are things that we can enhance and shine up in a Family Dollar world.
The difference that we really have is we still have apparel.
Apparel is a category that for us we can win in.
It's always been a matter of space, and the dedication that you give it within the store.
Those are some of the items that when you combine with the basic elements, are smart ways to save that will come to life in these stores in a way that show our customer categories adjacencies and the items they need and want, we think, in an exciting shopping environment, is what these will look like.
You'll see a split with both urban and rural locations.
We know we can be successful in both, and you will see that split ---+ maybe not evenly between the two locations, but it will be fairly close on both.
Well, I'm counting on it.
Listen, I'm thrilled to have Duncan as a partner, number one.
Duncan is going to help us tremendously.
I would tell you that.
I would echo what <UNK> said, his experience doesn't need me to polish it up.
He's going to be President of Family Dollar.
He's going have as strong a voice as anyone at the table.
Here's what I'd like to think about.
Listen, the price checks ---+ I get more than everybody out in the field, I am sure.
The way I take a look at the price checks, and whether it's 10% ---+ and I don't know where you're checking, but we react accordingly.
It comes across both on-shelf everyday pricing.
We're rooted on EDLP.
We need to show a weekly promotion when we put our ad out there.
We want to show our customers savings on Price Drop, which are some of the things they buy most often.
It's a combination of all those things that we go to market with that react to a Family Dollar customer.
We're going to be mindful where Wal-Mart is, and certainly anybody in our sector.
But we have more than one tool to go to show our customer value in our store.
That's how we think about it.
Well, I would say, <UNK>, that as strong as they have been, in my opinion, the mix at Dollar Tree ---+ we have two different banners here.
We're a lot more discretionary in the Dollar Tree banner than in the Family Dollar banner.
My expectation is that we'll continue to grow both discretionary and consumable, but mix is going to be pretty much I think the same.
At Family Dollar, I think there's an opportunity to sell a little more discretionary.
We're going to still go after the consumable business.
We want to be the place where our customers shop for the things they need every day.
We want to be convenient.
We want to have great values for our customers and all the things that they need.
We're not backing down on the consumable business.
At the same time, we want to offer them more of the things that are discretionary at great values.
<UNK> mentioned some of the things.
Everybody has birthdays, our apparel business, our home business.
We have, I believe, terrific opportunities at Family Dollar in driving more discretionary business in our home departments, for example.
It's a big question.
It's a good question, but at a high level, that would be my answer.
As we get down into walking the stores four by four, that's how we likely look at it.
Where should we expand, where do we have the opportunity to expand, what's our customer telling us that they want more of, how are they responding to our tests when we expand a category.
That's really where we're going to get our answers.
Thank you for joining us on today's call, and for your continued interest in Dollar Tree.
Our next quarterly earnings conference call is tentatively scheduled for Thursday May 25, 2017.
Thank you, and have a good day.
