Dollar Tree (DLTR) 24 Aug 232023 Q2 Earnings call transcript

Hello, and welcome to the Dollar Tree Q2 2023 Earnings Conference Call and Webcast. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to your host, Bob LaFleur, Senior Vice President, Investor Relations. Please go ahead, sir.

you quarter us results. thank Dollar to and second Tree's morning, for today joining discuss Good

With and and CEO, today Rick me are Dreiling, CFO, Dollar Jeff Tree's Chairman Davis.

some would today make cause about the are and These the and remind begin, considered the results we plans are could like expectations, Safe prospects we remarks Litigation XXXX. that subject Securities I materially everyone Before that future of of company's forward-looking differ the will forward-looking under to those and actual of Private by statements Harbor uncertainties to from risks provision Act Reform are our which to contemplated statements. statements

release Discussion on please XX-K, Financial Form Condition and our risks the sections XX-Q that uncertainties and actual for we Results information the of see could statements, X-K forward-looking required obligation ended our our Form as filings Factors, results, Risk fiscal made and on quarter, XXXX, most on Operations annual report update any recent affect to recently XX, any except by our Management’s the and We Analysis For the in filed of today, reliance caution and and and statement March law. other on Business, any against Form disclaim with SEC. forward-looking press most

results GAAP not GAAP to Unless earnings most will measures. refer during our call, comparable today's financial IR on we directly available the these section GAAP website. measures discuss in we items certain will on basis. a non-GAAP be otherwise non-GAAP of our are the Also to this release a of for substitute non-GAAP financial financial intended These measures. stated, are Reconciliations to measures provided

are quarter for all otherwise unless fiscal period same year a XXXX the comparisons stated, Additionally, ago. the against today second discussed of

our supplemental slide operating IR on available the a metrics section that selected outlining is website. deck of note Please

prepared Jeff remarks, will and your questions. our Following Rick take

that participate we you question. one like today's of limit Given in would ask to the callers who session, to number yourself

now Rick. call turn over like to to I'd the

have Thanks, Bob. call I'd like morning. this to that welcome of joined our you all

many to you I key presented a hope by chance a the have that to and of better in $XX that the event to we our deliver am conference sure June. understanding EPS of with growth strategies investor had I information you we left was or more in you valuable XXXX. attend that place the

that our I team of has levers the unlock business. am the identified right to the true confident value

chain urgency to merchandising, and accelerate We our are with the infrastructure. act good store operations, making and progress supply to in continue IT of improvement pace

opportunity renewed merchandising efforts detailed We and standards real at represent Our and Dollar the enterprise. estate initiatives reviewed our plans Tree, journey Family major merchandising to a outlined store improve our at our across to unlock Dollar value. multi-price

simplifying productivity drive and and truck sales efforts unloading We have operating launched efficiency also in-stock improving process the to like increase levels.

are heading You retail times heard am about right that per all me retail right in us. to follows. square I for move units, When is everything else fundamentals three direction, sales pleased that and the in growing transactions these foot. say growing all report many the direction growing

both segments growth the past negative. posted the quarters, unit market has For consumables, two been in while positive

up consecutive sales X% at Family for nearly is per the Dollar Family Dollar traffic Tree; Dollar Family and Dollar growth at second Second over Dollar at X% quarter Tree. and square the fourth and at finally, X% at foot up was XX% of Tree. Dollar quarter And

to the merchandising comes efforts retail fundamentals, our labor for and our are momentum and dividends these the ongoing follow. When it in stage paying and else in investments stores key setting to everything

for little our results provide outlook of the the and review update on quarter highlights. our of Now, year. later, let you will A me our detailed Jeff a balance second some of review more

basis, EPS consolidated X.X% and $X.XX. income, to a increase led $XXX.X on of billion, in to growth X.X% we operating quarter, $X.X which enterprise of million the sales delivered comp with an For

our modest remains Tree top with coming In our from Dollar X.X% Dollar a by a offset year. of with segment, comp momentum strong, comp Tree's ticket. this average quarter's X.X% driven in last more traffic comp on X.X% was

Meanwhile, to Dollar operational continues segment turnaround. in progress make the Family good its

The improved and comp strong by second comp ticket price of efforts. X.X% balanced traffic position supported average with between more and quarter being our the was X.X% nicely trends merchandising X.X% growth,

both pressure new to in traffic, I gains While the share. with sales and our challenging pleased am segments, macro environment in continues mix customers the market

is pre-pandemic purchasing balance value. this across the and reflective behaviors more we of as of after to to the consumables in continuing Family consumables, macroeconomic shift come Tree rotation believe for consumer we discretionary current customers and We elevated see are years as categories. Regarding Dollar compelling the believe environment destinations winning in industry-wide a to Dollar spending

price Tree, strategy Dollar all multi-price Dollar, are with consumers. range initiatives clearly increasingly this consumers merchandising improved respond environment, changing our At customer image Family wide from and levels are value. to In seeking provides our to needs. of At income resonating flexibility

to strong and share customers lower-income concentrate when wallet value respond when their spending price positioned of consumables. consumers capture needs proposition well are We on higher-income incremental to based our

are unit This share. true food is consumables across retailers and where and other particularly taking value-oriented dollar

no sales landscape. Dollar are disproportionately food Dollar driving across the result, retail categories a Tree value exception. and As Family momentum are

center current Our high is categories. business and the across and well frozen seeing growth positioned volume especially in are store environment we food our extremely food

this going items, brands. evidence are on brand that private quarter. consumers vitamin forward. the we the when new family growth brand Dollar also we launched Expanding significant our will is private This assortment improving There private year, program seeking products wellness at will and To expansion remains for which be shelves a XXX store private our and accelerate in further through end, value growing over track. brand hit Family fourth vehicle us

sold XX%. points, by and seeing private comps over basis with We brands, private already across X%, by units are growing results expanding penetration brand quarter XX encouraging our second increasing

segments, part these lifeblood share. the market household million critical across new with X.X of having have are income of a New customers added and million and traffic X the driving $XXX,XXX. of customers both nearly In over year, we past customers retail are

research a come new Importantly, in the us our following initial customers that times of percentage visiting these year five trip. back average their very tells of an high

fact, now rank XX In by annual new we in the top activations. retailers customer measured

and These positive share market new leading traffic customer to strong are trends gains.

segments consumables share the Nielsen the quarter For gained unit while data, both of quarter. outperformance Dollar, in in a at grew, X,XXX unit to second volume market from second our their volume points quarter unit segments basis Dollar points with XXX and extending growth shrank. margin row, volume last According both outpaced over market's our basis by market consumable Tree at the Family as

a PLUS few X,XXX At to assortment Shifting nearly X,XXX the by was performance, the in we in frozen across from year-end, articulated second several Dollar available $X, of stores X,XXX target update locations our like that stores up $X, Dollar was over the to $X I'd recent our and key Tree on our stores. In merchandising, June. company. end X,XXX and PLUS available from in assortment to quarter, increased our minutes refrigerated initiatives Tree take you we sales have

those planogram with complete In by we Family track resets November, At sales to pleased store to roughly of to so XXX back lift half on in of year. our the openings and the are at this these XXX our on target remain pace resets are real hit Dollar, with we all year, from stores two-thirds estate, new far. the coming of we of

XX bringing by Dollar Family renovations, We the total format. we continue Formats HX.X Family year-end. Emerging completed Dollar XXX Family renovations of our to make Overall, HX.X or XXX. least under track at to at also converted We rural Dollar. are progress on locations stores to with complete opened our number X,XXX combo We

work chain, and supply temperature in operating It improved full environment Adding us year-end, upgrade expanded expenses our XXXX. additional distribution at increasing to rolled his investing DCs total. drives temperature we HBA recently and additional temperature We four cross-stocking to by which and our out improves in Mike Kindy By end OTC In range for products. the store the full eight balance associates with our the of efficiency flexibility to performance. reducing expect across control controls brings by drives center controls of DCs, also two DCs, are to network. team the

make currently end Carolina underway is in still we on progress for early on Matthews, and testing year. deliveries to its days, the to our North our continue good we track Rotacart-enabled in Rotacart While by this of Rotacart are rollout. on Beta DC be

our begin good on through are our progress year. transportation to upgrades and to their next rollouts particularly store to also needed systems. anticipated Meanwhile, Moving inventory our IT, progressing with management systems management early and new new infrastructure, warehouse stages making development on we're

as across benefits elevated improvements during double-digit store people, the in the continued are focus turnover levels in second intangible on and making begin With segments employee clear investments vacancy wages, store-level and we saw results. yield we to our the quarter standards both

second both As add shortages. and saw all it staffing to that I a Dollar. I'm this late at eliminated If early in that happy our time improvement measurable due openings to of we closings, comp. open conference, Tree a mentioned quarter stores area had X.X during overall to don't could significant our at number close points the we Dollar Family or investor and early report we on

can high execute factors level. control, when to In we summary, a it that comes to we at continue

to responding Creedon merchandising conditions recent urgency As At upgrade our across Mike time, store his our the performance improve are to initiatives. are clearly store operational consistency and our consumers sales fleet. same team acting with our shows, and

top-line for we the cultural key built an than profitability. making associates. organization results XXX,XXX investments We as operating focused including all delivering performance, on are a efficiencies are need greater to improve our and to our make better foundation constituents, generate accelerate we and more strong our We've

leaders, amazing. our in a of represent than two the XXX,XXX spent and speaking we've the than here associates, energy our with just last leadership of of more at was weeks more headquarters team And our associates, coming those out who X,XXX field sessions meeting Virginia,

key have customer the over short period to such time. so grateful I efforts Our for a made our in we experience great and a of turnaround am people are the progress

I and now turn the the review results outlook over of balance our will to financial Jeff year. the call for to

everyone. Thank and Rick, morning, good you,

share. generate an In quarter, segments, the unit market by to both top-line results strong continued growth and accelerating customer volume in traffic, we driven second across

operating continue of current a to the have favorable We environment. view

Our top-line increase driven material was in performance any promotional not intensity. by

did generated gross profit mix in second consumables, While our shift continues to more we towards the quarter sales we than last year. dollars

strategy We resolute and our investments people. necessary also in the chain, supply in our remain stores, IT, to make

contracted XXX XX.X% from in decrease primarily point from point was gross SG&A This a sales unfavorable and from consolidated mix, conditions. and margin leverage from primarily compensation, by increase we the elevated On margin operating comp rollout claims, basis cost from the lapped sales to SG&A was benefit level, margin liability operating and quarter. offset and XXX merchandise product stock-compensation driven Notably, from expenses margin income $XXX.X shrink. wage margin the XXX store basis and $X.XX of as repairs general last general lower partially a million expenses. incentive points. increased basis impact for $X.XX and declined investments, maintenance compressed in and by Gross a expense. liability improving were inflation, lower by These costs expanded claims year's

rate Our work partially were higher non-deductible XX% credits year, by effective offset last as tax higher XX.X% was tax expenses. versus opportunity

$X.XX was was $X.XX and share per versus million $XXX.X income diluted a earnings year ago. Net

against rollout mix, partially offset inflation, expenses and partially sales offset claims, cost, minimum lower were million, operating SG&A wage expanded from increases, income as expenses. These was and and for Dollar we Gross These in from increase in points. a leverage SG&A improving declined a comp occupancy benefit XX.X% leverage. and store point margin product sales shrink. $X.XX point wage sales At basis conditions. level, operating margin from XXX unfavorable liability costs decline utility $XXX.X investments, basis and margin elevated merchandise by basis contracted to This a compressed margin gross Tree's XXX principally driven repair comp cost and business general margin by from by cost. XXX the lapped year's primarily were segment maintenance last

costs, a Dollar's in expenses. XX and operating store sales Family XX.X% from margin basis contracted occupancy $XX.X improving shrink XXX gross expenses increased costs point point wage with income primarily margin basis and operating points. decrease offset XXX compressed increases, increase declined in from conditions. leveraging were This a utility by Gross led by SG&A also minimum partial from to and costs. These basis margin million elevated maintenance was comp principally investments, leverage. repairs SG&A partially wage and offset from

sheet and balance the cash flow. Moving onto

As and XXXX sheet a comparisons reminder, my comments reflect between XXXX. balance QX QX

X.X%. by decreased Inventory

of recovery third While is imports. across inventory early supply With due seasonal well rapid Asia chain, ahead to receipt from was our quarter arrived year's imports a of receipts. scheduled elevated level, below our last

will we inventory improve accounts forward, and Moving our free continue cash to payable flow trade to related generation. manage

were $XXX.X elevated store reflecting million chain million year, openings information in expenditures in $XXX.X the second new last Capital and supply investment quarter and renovations, versus systems. levels

we XXXX, initiatives. billion, maintenance with allocated and approximately $X capital XX% towards will the fiscal towards total growth For CapEx expect expenditures balance approximately

cash Free the $XX.X long-term growth of we generation, business. consecutive in third last This as flow of improved improvement support versus make year. to the even investments the quarter significant million the flow second free quarterly cash represents

lower lower from merchandise improved net the $XXX adjusted six timing with For million CapEx, period versus and for year, partial by items, led non-cash last income a accounts the first the months cash offset of payable. largely inventories increased same free XXXX, of flow

quarter, excise billion we XXX,XXX under share for shares applicable we quarter-end, authorization. tax. repurchased including second repurchase our $XX.X the remaining had At approximately million, In $X.X

Cash and cash million equivalents year to compared totaled $XXX.X ago. million $XXX.X a

established time of up XXX to a days, paper with commercial billion. outstanding we with any unsecured issue July, face aggregate $X.X notes program amount new at maturities to an In

corporate use rank unsecured purposes. with net expect and indebtedness. We passu general to the notes other for proceeds all The unsubordinated pari will

and outstanding serve a our provides rates our backstop it program. capital outstanding as credit manage at end no flexibility facility. Our facility additional to rates, short-term lower current than of This repayment are provides new quarter. revolving and as for issued the There notes borrowing working notes credit will this under liquidity of program of the at needs, the

last into reiterating point the additional the XXXX. balance let me better and opportunities gave the expectations year bringing to current and center Now we and quarter environment. low are third risks reflect the outlook of high the for balance we operating the provide some visibility full and a our high we in the in end of and sales At EPS of level, quarter see

PLUS into higher mix and sales the outlook Our related national diesel shrink in the to and current side, multi-year June. outlook a see expect shift following year; sales shared the balance and utility in for savings. environment that we incremental head improved consideration would have our systemic we continued on and That the in negative ocean fuel structural repairs all lasting over freight maintenance dome; we the unfavorable takes of costs the factors: nothing implications trends the performance said, or prices; that

in consolidated So of based store We in against will range to sales in the quarter net the share comp each of in range segments. the earnings per $X.XX. the billion, for that for be diluted a be backdrop, increase quarter enterprise $X.XX the $X.X $X.X to we sales third mid-single-digit will expect of billion estimate third on

new by our better and I includes billion, comp store Based a are mid-single-digit driven store narrowing for outlook a to full per a detailed, reserve sales the are across $X.XX this X% margin earnings segments visibility raising took $X.XX selling $XX.X of We the $XX.X $X.XX, expect diluted fiscal the XXXX in and the back-end we we billion growth of both full enterprise. For we share range to sales full our which in between year, year, on including XXrd into expectations footage be headwinds X.X% year square the GAAP still just a range the year, quarter. to week increase weighted. and to first grow to legal to

and shares year; $XXX and net following: million expense million of the for in expect should to $XX approximately full our repurchases; diluted third XXXX for assuming XX% the rate range third million the for outlook we tax the share quarter year. XXX million full approximately XX% be have we and $XXX the of be quarter XXX.X quarter assumptions any for for million are an we interest effective for and included $XXX the should full approximately third and depreciation the diluted considerations not Other the million; year; amortization for shares approximately incremental include

to that Dollar, continued both higher levels are generate through rebates in Tree the gains pressures expect year. to we on a good position promotional share outlook half back of Dollar persist at continued the Family and our allowances. Our of margin market Based we reflects and

in structure, We also growth cost continue of even investments $XX to meet be our as to necessary long-term XXXX. stated managing EPS disciplined we make by more objective of our or

over call the back remarks. I'll for closing Now, turn Rick to

Jeff. you, Thank

with the roadmap June. of our transformation in in and pleased these remain confident We three-year in very early progress stages outlined the remain

operating is of of are those turnaround that focus retail the perspective, any with you succeeding. growing From immediate we For familiar my philosophy, sales.

a both purchase seeing strong to the providing our experience from repeat segments activity these across are new shoppers. customers next-generation We of new and

variety to experience. convenience, a value, goal great the provide Our with consumer shopping is and

of XX% lives within a radius Our stores located; one conveniently are already the States population stores. five of of the our of mile Continental United

we customers. closer more greater convenient to our As and number footprint, of even an we'll grow be

remain realized earnings within confident long-term we the that can communicated. I our potential be have timeframe

top-line improving a put position initiatives people relative And estate, in of the combined the and of an our position in merchandising, impact us even supply competition. performance to Our stronger us chain, should IT places strength. real

are questions. take ready Operator, to now and Jeff I

Mike question-and-answer We'll Our you. a [Operator question coming first UBS. conducting now Thank Lasser session. from Instructions] be from is

Your now live. line is

Good lot question. morning. Thanks my a for taking

does profitability more not are lot knock that the Tree expected your flowing what sales a but than than through. lifting, the lot the is was it a investment And sign, originally to more the heavy seem was that fact going is on been it's better Rick, what Dollar transformation good trending just at has So, a like take anticipated.

that use Or Thank source that flow the the as the a with the you handle the reinvest all months, business to for to Is look to now as b, costs. years on then you my right there's chain several you different will you of profitability? and drive next savings XX of of further very outs a do through? out? considerations the a, benefit earnings lower And, $XX to So, ins taking that question. from be supply back going going a of in good much have towards

questions. Mike, Yes, really three good

we we we would we knew got has First what off, because fast, be facing. than when a were than done, be? it heavier more And all we faster trying it are moving what little push. lift this, little in more to the to expense, of much you a we're I it was little When what I it going do, move takes takes on to more effort, thought is do takes would. I say no. think a thought we

And so, No, we're possibly same. is what But to is trying move the it's the as as lift fast do heavier? can. we

a regards lot of think lot Family side are In I vendor retail the of by the terrific the on the learning flexing that's you to Jeff drop-through, execution. to we about And that. job muscles do and all have not for And used Dollar all driven the community. Dollar allowances, things, out to that we in The rebates make potential a is commitment doing people are increased really called the a Family past.

Dollar store, on buying the in our the happened have Tree side, people has change in What more patterns consumables. that is Tree exhibiting to consumer the Dollar responded the

incredibly up. to I always subscribed I that not margin trouble remain have fact any on and we're think starts levels. more the and realistic bullish our where top-line I everything to and see margin targets going, else getting when moving, do I to catches So,

will chain, In the a the combination improvements in supply both. regards to that of be

side. got changes the place chain we've know, you on taking As massive supply

it, invest. you know Some bottom-line of of we'll the will I anything to have make and, And if add? want to some Jeff, you that don't it

couple a Michael. just of Yeah, items, additional

to As retail out, as more not an moving it tried mix we're into the relates that people really to immune where the that, across landscape, you sales flow-through, call area that. our a to are it's -- and we consumables, and this see situation is

gross are impacting Those area margin ongoing items about through. we talked two us the progression that and the there. restricting and other flow flow-through really addressing shrink more the the are The significant that basis or from was a

that The back this kind in care we something we muted Once that and other of that take to restricted for comments, over we thing that $X.XX driving of, accrual quarter, make but during needed course the year. liability about flow-through of it really but that period. past of XXXX dated the needed had adjustment pandemic the progression related claims certain the the an and our to XXXX also sales we again, the to -- general were to it's tremendous

that adjustment shrink, think we was I out right and reason we we've guidance that in we're past around was and make. adjustment last just unfortunately, So, sales seeing our quarter, need further overall for accrual this it called now, the exacerbated, with to the and then in gave which

Thank you.

Edward Wells Fargo. Next question today from from is Kelly coming

Your is line now live.

Hi. Good morning.

Good morning, Mr. Kelly.

How you? are

Good.

where to we wanted this step QX. about you versus the in the a I core obviously about then If the more in back incremental we pressures, dig gross Dollar that how the quarter. could back hoping it's margin were I half. think was you bit little and think talk XX.X%, Tree on a about

talked that's previously the XX%, for had gross coming XX% down. year. about a Obviously, margin You

So thoughts there.

the relates all this XX.X%? range. that the this but shrink does below backdrop it it coming got longer-term [indiscernible], to get inform bottomed. It to end does to just you maybe you in, year, as take to I'm even What that sure looks of low of end normalize middle that, how need of Do then, And is of obviously range? the like to XX.X% you demand target the freight not

of Just be Thank thoughts around would think, all helpful. really you. I that,

Tree Dollar of consumer. we're in happening what's responding to Hey, needs the is the again. question Great Yes.

have Tree particularly in -- all back a margin I But the that's about in on the year us the the not for what going number we Dollar when three, And stronger that, going Saying think we up. to have in change of discretionary store. we much and now happen. be due quarter is and to SKUs our quarter mix the that our that. nearly because because go four Halloween ago, did the a think all position very of was quarter is You side Christmas consumable business a quarter of four, seasonal on we're with slightly

that So, the and are Tree takes the just remain Ed, eventually, it. to on outstanding. responding believe, customer we of sales two-year I bullish Dollar care I is in do everything and stack

So, I bullish very remain margin. going very, we're the where on with

chance, a you And margins like basis. we our the take Ed, -- presentation the margins I is that, to basis right shrink to get hope hopefully, we're broken see you'll sound you at now. look have opportunity, supplemental headwinds an XX I a restrict to on a add don't by be other our thing continuing having points year-over-year would are the record XX that unfortunately, a muting here, but, shrink When that about have, in

We that. actions, are organization taking the the we start to address appropriate to in believe,

shrinking actually as a the the are muting mix And new because of the the shrink between shrink, things is one actions time sort it, But takes those over indication adding been stores trailing a hold. it to have the once things again, and this As margin. course reduce you're take you is know, of for year. that the of sales to

of McNeely and a maybe of thing and his they through significant, work in through team figuring product The less magnitude are frequency out cost those number that as ways are different are And merchandising the seeing other not increases those Rick the are marketplace. to actions. of while we still

of So, start on cost consumer we -- to over as should we headwind a abate forward, that move will we still pressures, bit product start have demands, on which to believe depending time. little there those

guys. Thanks,

you. Thank

is question John from from Securities. coming Next Guggenheim Heinbockel

now is line Your live.

revolve multipart $X, the Hey, $X, cooler. right, $X, around Rick. is and question My frozen really

experience lifting talk the maybe clearly comps. you So, to because consumable about that be you're seeing, has

should all then three and thought the Though on to rollout, not right, today. that's impact but rollout the the doors, doors to more then Your think on -- expanding And hurt the should getting stores, discretionary, that just than that, you but ultimately, do it expense traffic, time. right, ticket, on control gross,, having impact that should benefiting then positively increased over right?

P&L? your it the maybe impacts that thought So, on Dollar as Tree

Yes.

of the really $X.XX, looking We'll Another or working XX that In have $X, doors, we're a I doors at number we're actually from we go plan. to three, really, expand effort couple even the will XX door more. look of to $X, as point multi-price cooler that hard the going and believe, is $X, regards to that on. we're be is

The is when food the actually gets interesting thing frozen the into a goes larger. item basket basket,

about So, is your transactions point driving spot traffic, on. driving

thing, $X.XX, family serving interesting us it's we a allowed $X a and versus offer $X other The to that went to $X, serve. where at when just single

So, again, much to more -- appealing to consumer. the the actual

on allowed out The we we're had to it business. pounds, stores. that went in John, and larger fact ice the we put back to a went in and X points take is the to other $X, bag, it thing, to ice we multiple in always And locked seller. to $X, ice price back us the a big took again, When were we

sales as we'll that happen I roll what also be to And is out, that I about you also think growing will to the those stores. Dollar agree then down to Tree the Rotacarts we fact leverage SG&A our and keep we the allow stores us in want delivering the also. in will

that takes out putting items a to be So, shelves. the multi-price truck in point that more all on unload of invested will time it

Okay. Thank you.

Thanks, John.

Thank you.

from is Next Citi. Paul Lejuez coming question from

is line now Your live.

morning, Good Paul.

that urban suburban competitive curious out and hear Thanks. rural that you landscape trend you changing in each there Good performance your say you monthly locations. see perspective? versus talk morning. from the would to Curious of Also for pricing if about anything about segment. the a And could in terms

question. Great Yes.

quarter, remained of across flow the through. at the the look consistent I As quarter. all it banners way We through strong both strong and started it off the was through pretty the balance

think It a in it's customer in observation. that appears the the environment. will even, trade performance, higher rural the more but of environment this down pretty from make than I In urban terms I income it's coming

way but an -- it's that's all the spin, even it's So pretty across. interesting

regards would the of right been. basically is in to it's I right pricing, think collateral I see is In going same Nothing regards out on kind I to the the competitive now. Everybody's is significant -- rational ad everybody on. there it, it's always say environment field playing now. same very way the the

Thank you.

is from Matthew Boss question Next from JPMorgan. coming

is now Your live. line

Good Matt. morning,

Good morning, Thanks. Rick. Great.

two-part the Tree? just maybe in you've Dollar on a share category the the Any Dollar trends? Tree seen It in speak maybe progression August? market momentum that elaborate at seeing that's question. And by banner, at to here. seems change could positive traffic Rick, like you're real So trends you that

And standards then, I like you've on been we this think investments think a the beyond of store wages the the in Jeff, to place do next Or maybe what see you as model? that that is comp front, progression year? more stickier of putting It in guess, fixed to maybe just ask there year as differently, the the seems the initiatives. maybe we foundational and need costs expense way leverage about to two maybe

Dollar So, Matt, traffic steadily I'll first in increasing is Jeff. take the the part, Tree.

pleased quarter X% was traffic two. Really, up with that. in really Our

-- opportunities powerful to price that continue for unlock that were XX%, point, It unlocking is, really to The bring items. is Your up discretionary X.X%. we remember, by up have, was which other up question traffic. price as going more our point up And it's still to over we was open the drive way us Dollar Tree. in consumables in consumables and though value

with So, pleased customer traffic.

up on X.X% Dollar in, this the Family traffic throw I'll customer side. fact, was In

customer we with movement the are base. seeing So, now

we're it they're the to twofold. making, really that relates investments as And

as you CapEx. had So, investments well expense as

There's and about As with few also as we expense -- I with need out store play to that elements. a would to increase think year the We're right we standards we chain think our into spot our respect into the on the elements how going year. transcend supply improve respect you're wage as of and they in to investments, thought this on then think DCs. the track next over about course we standard

what with as actual then CapEx parts work perspective to adding as do layer to be rollout trailers a kind perspective, going you the of to with [indiscernible] doing with we're and lift on and need From that doing we capabilities additional top systems. what IT be of gates and going in well Rotacart an that, our the from we're

be of the right think more account deliver, especially out. inflation labor, be to take you is to now quite working look in to of that need the going through are it our have going there's we honestly, you level in One what's and, going we is significant one marketplace, As areas. of as be going that that comp into number as we're relates to cost what's to rate about a factors our which to to of

is going sales Dollar think going The and you course, basis, talked a sales which in level that both when consumables The shift about kind other be on of out a comp year-over-year see bit in Family Tree time. we're period discretionary. Investor had We weighted significant over this little mix. Day, over now. a Once that's you're term. time, little right of as average versus not Dollar be over comp, we your and to of is the We the higher to a mix again, where believe, out need seeing will of long the this towards piece, more balance mix

So, that little and to to thought give I'm order expenses not quite going a a this meet more a what need economy comp leverage to because in does. to point in we time, number there's of on depending honestly, at need we the number that give you to factors

is Stanley. Thank coming you. from Gutman Our from [Operator Simeon Instructions] next Morgan question

is Your line now live.

Good morning, guys.

Good morning.

all clarify the then little are just parsing a and you you to expenses or between wanted pressures follow-up, being in inflationary thought? higher, than than I out more spending quarter, this higher bit planned morning. or ask The it Good one.

gives spend picture, long happened business. then way said the you've a with to not $XX afraid think XXXX, linear. flexibility. into the you're I don't it's you get It there, in any back be that may bigger show in What not expenses And ratable way. to

look, in may So, sure 'XX, run that land I terms of curious where expenses? I'm where plan. have know of you're an early you tracking. And rate your it's own

question. And question finally. glad I'm got that Great I this

if to we into leveraging had that are at spend taking look of original forecast, adjustment of outlook that take And this respect we performance. account This we and pace strong given right on, One the that also against things our to again, is anticipated make. needed on the this just unfortunately, you quarter are level with we that a our in transformation. the actually we're sales once this accrual the

the continue sooner. disciplined of which that much a opportunity forward to to going the are items we forward, move original able an be -- get at our we we as Rick we has outlook were if is We we're as few according year. that to believe at we that So, look, rate in our spend. in be investing pull situations, we said, beginning to returns this the said But to some

a it inflationary of components, predominantly can in heat that and imagine, some are as dome as modest a on result national There is seeing basis. we're you the utilities,

in this of seeing particularly here reflected little The other would be back are diesel seen and these fuel. reflected -- items that recently area we're fuel, for guidance is of half we've year. a inflation our more both And most in in the in

Thank you.

today question next BMO coming Our is Capital Kelly from Markets. Bania from

Your line now live. is

Good morning, Kelly.

the for necessary headwind? are the what just Thanks I you versus clear plan? in also back your expectations, to our morning. and in is do And different shrink factors those second for at just to that combat to shrink, or two the And maybe margin just wanted the shrink long-term the is coming that about your also be same to Good of questions. go and and investment half? mix taking related how see magnitude all planned the kind

things a few you, Thank There's Great. here. Kelly.

are in to that our further an said last additional what shrink definitely anticipated are as our One, mix, given had there against and favorable more that. believe that offset a about has Having seeing we advanced relates Two, perspective. guidance ocean quarter. little we in it it we other helping items we are that, we from than As that freight think opportunity momentum. had sales

about earnings, going and between an our adjustment first had $X.XX quarter. to But that mix, earlier the $X.XX, that had be of Of about we spread mix. was as that and incurred shrink actually as mentioned in evenly we that pretty our to to and shrink it relates $X.XX comp in -- was total to expected

$X.XX In forecast, that So us. QX, mix -- remains and against the on advanced $X.XX back that shrink QX. for for another our you through original gives -- QX

is from All is we about in margin of about options to that freight half, once extent think offsetting the thinking opportunities there acceleration, we're the that back this as and/or other other any included our favorability further forecast we're have and additional again P&L. the as thinking through how through we that about

And I'd if like can, to thing, add Jeff. I one

SKUs to keep cases with to we the We but taking being to behind now on of us it's a year. up. we'll And are introduce moving from have it new where can't we that in half formats back shrink that a to the locked taken shelf do quarter, stores just some SKU the certain have a the And check approach certain some And stand. goes even has everything the It very point several item. defensive discontinuing shrink. the

going a to lot of the things have roll So, works we in that's forward.

Is question had You a mix. that the correct? about

back the assumption? in half What's

which I She's assumption, not back specifically what's half provided. have asking in the

Yes.

enough. Okay. Fair

I pretty what So, was widespread answer. a let me -- gave

what XX% headwind -- half inventories. the you said to taken and of us. the of think we've shrink balance about of be continues approximately year, mix We've XX% If in sales back year, for and and QX, to in QX, the stores the our really a

the be of balance we'll stores quarter. through the -- by the of end most third So, those

dome, sales -- could little again, and headwind a utilities of be little So, a that from continues this said for a headwind for of a to continues diesel as Freight headwind and as of bit a us. bit fuel for us. then And shrink bit far a to be be us. little mix I once this heat

is we that the are we to to are from And got many sales tailwinds. we freight We've started lap certain projecting. we ocean that going opportunities SG&A that an have we also, We year. perspective. know investments Offsetting be last believe that that additional momentum starting of in freight

lapping quarter further of is the that SG&A and our less further tailwinds half perspective, stronger inventory. those continued on Fourth back quarter, the sales in adjustment we go then, or you shrink, half because again, a investments mix in we a the for of again, the once back we've sales we once we'll of year. have much again, last make ocean XXrd an momentum it's of impact into taken and all in And discretionary. back then which year, week, in the As us we freight, projection, fourth the the half focus for have seasonal quarter our can started once from along and

as believe, quarters, headwinds opportunity. of So, sales momentum because we as will strongest our the fourth we the the from quarter, one we and freight as shrink progress through quarters, and have less be mix continued well oceanic

Thank you.

from Next is Gordon from question Chuck coming Haskett. Grom

now is line Your live.

Hey, good morning, Chuck.

speak was the Jeff? Good heights rolling chain? is morning, the Rick. wondering higher you I could it if on the Dollar. to My going, Family How's progress across on out question shelf

that line? corporate the On just $X.XX, which one for Jeff. then Or banner And was in that that was in?

the done. maybe XX-inch I In of complete would profile, XX% have to we say that to towards the year. Yes. end hope XX% probably we're regards the or

the also Tree the While Dollar doing do Dollar Family to side, we're going we're side.

allows HX.X those shelf And the on making cooler new it. by in. doors we're So, the to And profile have progress all the add the remodels, us more and way, raise shelf of profile refrigerated.

best claims, was Yes. banners, both on the split. liability it think the to was And general pretty about across evenly it and way

We the to comments. any over closing to you. end of the question-and-answer Thank further our session. turn floor or reached I'd back management for like

and talking to you for look you to time, thank your soon. all forward No,

and teleconference That Thank webcast. today's you. does conclude

and We your line today. at have participation disconnect time, day. a thank this may you your for wonderful You