Dollar Tree Sticks With Basic Groceries

CHESAPEAKE, Va. — Dollar Tree here intends to continue to use consumables primarily to drive sales of variety merchandise rather than move deeper into category expansion, Bob Sasser, president and chief executive officer, told analysts in a conference call discussing second-quarter results.

“Consumable products are really important to our traffic, but there is always a balance,” he said. “If you look at the past several quarters, there has been an increase in consumable products as a percent of our total, driven by the down economy, and we still see continued penetration from consumable products driven by customers’ need.”

Any decision to increase its consumables offerings will depend on customers, Sasser added. “Our intent is to continue to serve our customers and follow their lead.”

For the second quarter, which ended July 28, net income increased 25.6% to $119.2 million, with sales up 10.5% to $1.7 billion and comparable-store sales rising 4.5%. For the half, net income rose 20.1% to $235.3 million, with sales increasing 11% to $3.4 billion and comps up 5.1%.

Read more: Dollar Tree Adds to Frozen, Refrigerated Assortment

Sasser said basic consumables increased 45 basis points as a percentage of sales during the quarter.

Dollar Tree is continuing to install freezers and coolers at its stores, Sasser said, with 60 additional installations during the second quarter — bringing the total number of stores with frozen and refrigerated foods to 2,403 out of the company’s 4,523 units.

“This category serves the current needs of our customers, and it drives traffic into our stores more frequently, which promotes incremental sales across all categories,” he explained. “Our overall comp sales increase has been the result of growth in both needs-based consumer products and higher-margin discretionary variety merchandise.”

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