Dollar Tree Stores Earnings Call Nuggets: Discretionary & Consumables Comps, Back Half Outlook
Dollar Tree Stores, Inc. (NASDAQ:DLTR) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Discretionary & Consumables Comps
Stephen Grambling – Goldman Sachs: Given the aggressive cooler rollout, I thought it was interesting that the discretionary continues to outperform consumables. Can you maybe talk about the cadence of the comps in discretionary and consumables as the quarter progressed? Then maybe as a follow-up, any initial thoughts on the back-to-school season so far?
Bob Sasser – President and CEO: We don’t break any of that out separately, and I can’t really comment on the back-to-school season, but I’m going to try to give you some color of the comps were consistent throughout the quarter. June was the highest comp in quarter. I believe our variety business comp consistently higher than the consumer business throughout the quarter, that’s the result of plans. Stephen, we’re a variety store and we’ve always been a variety store. We service slightly higher demographic than others in our sector, $40,000 and up versus $40,000 and down. So we’ve always had a discretionary portion to our mix that we aspire to that – one of the reasons we’re amongst the highest in margins in our sector because of our variety mix. It’s a balanced mix, it’s about 50-50, sometimes it’s 51-49, sometimes it varies a little bit, but it’s typically a balanced mix. Our consumable business has grown a lot faster over the past several years for a couple of reasons. One is, the rollout of the cooler (indiscernible) we went from basically zero to a lot of coolers the whole brand new business during that time frame. We added and expanded a lot of the consumer product categories over the past – almost all of them over the past 10 years and certainly a lot of them over the past five years. So, that was our newer businesses to us. But again, we are always striving to strike that balance, not only because it’s what we are, it’s what we do, it adds excitement in our stores with the seasonal product and the variety of mix and it also contributes a lot of margins. So, we are very happy with the balance as it is. I would expect going forward you’ll see some bouncing back and forth as we continue to drive sales and serve our customers in these difficult times and you’ll see a little bounce back and forth. But all-in-all, when you look at the big picture it’s somewhere in that 51-49 or 50-50 range.
Stephen Grambling – Goldman Sachs: And I guess one quick follow-up would just be on the gross margin line and on the distribution cost, in particular. Are there still cost that you’ll have to incur in the second or into the back half of the year, maybe any color you can give in terms of how gross margin is playing in the guidance?