What changed in this filing

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Item 1. Business

2023-03-10 compared with 2022-03-15 · 53 added, 56 removed, 106 unchanged (51% of the section changed)

9 unchanged sentences

Dollar Tree is the leading operator of discount variety stores offering merchandise predominantly at the fixed price point of $1.25.

Dollar Tree stores serve a broad range of income customers in suburban locations, striving continuously to “Wow” the customer with a compelling, fun and fresh merchandise assortment comprising a variety of the things the customer wants and needs, all at incredible values in bright, clean and friendly stores.

Dollar Tree stores serve customers with a broad range of income levels in suburban locations, striving continuously to “Wow” the customer with a compelling, fun and fresh merchandise assortment comprised of a variety of the things the customer wants and needs, all at incredible values in bright, clean and friendly stores.

Family Dollar operates general merchandise retail discount stores providing customers with a selection of competitively-priced merchandise in convenient neighborhood stores.

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We are executing our strategic initiatives including Dollar Tree Plus and the Family Dollar H2 and Combination Store (or Combo Store) format initiatives.

We are focused on revitalizing our assortment in every store by leveraging the complementary merchandise expertise of each segment, including Dollar Tree’s sourcing and product development expertise and Family Dollar’s consumer package goods and national brands sourcing expertise.

We are focused on refining our assortment in every store by leveraging the complementary merchandise expertise of each segment, including Dollar Tree’s sourcing and product development expertise and Family Dollar’s consumer package goods and national brands sourcing expertise.

These initiatives are discussed further in the overview of each segment below.

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We believe that running a business, and certainly a public company, carries with it a responsibility to be above reproach when making operational and financial decisions.

Our executive management team visits and shops at our stores like every customer, and ideas and individual creativity on the part of our associates are encouraged, particularly from our store managers who know their stores and their customers.

We have standards for store displays, merchandise presentation, and store operations.

We maintain an open-door policy for all associates.

Our distribution centers are operated based on objective measures of performance and virtually everyone in our store support center is available to assist associates in our stores and distribution centers.

Our distribution centers are operated based on objective measures of performance and our store support center associates are available to assist associates in our stores and distribution centers.

For more information, see Human Capital Resources below.

Our disclosure committee meets at least quarterly and monitors our internal controls over financial reporting to ensure that our public filings contain discussions about the potential risks our business faces.

We believe that we have appropriate controls in place to be able to certify our financial statements.

Additionally, we have complied with the listing requirements for the Nasdaq Global Select Market.

The Dollar Tree segment includes 8,134 stores operating under the Dollar Tree and Dollar Tree Canada brands, 15 distribution centers in the United States and two in Canada.

Our stores predominantly range from 8,000 - 10,000 selling square feet.

During the third quarter of 2021, we announced our new pricing initiative to increase the price point on a majority of our $1.00 merchandise to a new $1.25 price point across our Dollar Tree stores in the United States.

We believe that the new pricing strategy will enable us to introduce new products and expand our merchandise assortment in Dollar Tree stores while maintaining great value for our customers.

At January 29, 2022, the new price point was rolled out to more than 5,800 of our stores and we completed the rollout to the remaining stores in the first quarter of 2022.

We continue to implement our Dollar Tree Plus initiative which provides our customers with extraordinary value in discretionary categories priced at the $3 and $5 price points.

During 2021, we entered into a partnership with Instacart and as of January 29, 2022, our customers can shop online and receive same-day delivery from nearly 7,000 Dollar Tree stores without having to visit a store.

During the third quarter of 2021, we announced our new $1.25 price point initiative and we completed the rollout of this initiative to all Dollar Tree stores in the United States during the first quarter of fiscal 2022, increasing the price point on a majority of our $1.00 merchandise to $1.25.

During fiscal 2022, we began investing in new products and modifying existing products to provide greater value for our customers and increase customer traffic and store productivity.

We continue to expand our Dollar Tree Plus initiative which provides our customers with extraordinary value in discretionary and consumable categories priced at the $3, $4 and $5 price points.

During 2021, we entered into a partnership with Instacart and as of January 28, 2023, our customers can shop online and receive same-day delivery from more than 7,800 Dollar Tree stores without having to visit a store.

We are the owners of several trademarks including “Dollar Tree” and the “Dollar Tree” logo.

In our Dollar Tree Canada stores, we sell items principally for $1.50(CAD) or less.

Our revenue and assets in Canada are not material.

We are the owners of several trademarks including “Dollar Tree” and the “Dollar Tree” logo.

We strive to exceed our customers’ expectations of the variety and quality of products they can purchase by offering items we believe typically sell for higher prices elsewhere.

We buy approximately 57% to 59% of our merchandise domestically and import the remaining 41% to 43%.

Our domestic purchases include basic, home, closeouts and promotional merchandise.

We believe our mix of imported and domestic merchandise affords our buyers flexibility that allows them to consistently exceed our customers’ expectations.

In addition, direct relationships with manufacturers permit us to select from a broad range of products and customize packaging, product sizes and package quantities that meet our customers’ needs.

We carry approximately 7,000 items in our Dollar Tree stores and as of the end of fiscal 2021 approximately 30% of our items are automatically replenished.

Merchandise imported directly typically accounts for approximately 41%-43% of our total retail value purchases, with the remaining merchandise purchased domestically.

Our domestic purchases include basic, home,

closeouts and promotional merchandise.

We believe our mix of imported and domestic merchandise affords our buyers flexibility that enables them to consistently exceed our customers’ expectations.

In addition, direct relationships with manufacturers permit us to select from a broad range of products and customize packaging, product sizes and package quantities that best meet our customers’ needs.

We carry approximately 8,000 items in our Dollar Tree stores and as of the end of fiscal 2022 approximately 25% of our items were automatically replenished.

The remaining items are pushed to the stores and a portion can be reordered by our store managers on a weekly basis.

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The merchandise mix in our Dollar Tree stores consists of:

• consumable merchandise, which includes everyday consumables such as household paper and chemicals, food, candy, health and personal care products, and in many stores, frozen and refrigerated food;

• consumable merchandise, which includes everyday consumables such as household paper and chemicals, food, candy, health and personal care products, and in most stores, frozen and refrigerated food;

• variety merchandise, which includes toys, durable housewares, gifts, stationery, party goods, greeting cards, softlines, arts and crafts supplies and other items;

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Our stores predominantly range from 6,000 - 8,000 selling square feet.

The Family Dollar segment consists of our store operations under the Family Dollar brand and 11 distribution centers.

The Family Dollar segment consists of our store operations under the Family Dollar brand and ten distribution centers.

We have two primary initiatives for our Family Dollar stores, the H2 format and our Combo Store format, both of which incorporate elements of our Dollar Tree stores into Family Dollar stores.

The H2 model stores include approximately 20 Dollar Tree $1.25 merchandise sections and establish a minimum number of freezer and cooler doors, throughout the store.

The H2 model stores include Dollar Tree $1.25 merchandise items and establish a minimum number of freezer and cooler doors throughout the store.

As of January 28, 2023, we operated approximately 4,360 H2 stores.

The Combo Store format, which was designed specifically for small towns and rural communities with populations of 3,000 to 4,000 residents, blends Family Dollar’s great value and assortment with select Dollar Tree merchandise categories under one roof.

As of January 29, 2022, we operated more than 240 Combo Stores.

As of January 28, 2023, we operated approximately 810 Combo Stores.

Our new and renovated H2 and Combo Stores have higher sales and operating income margins compared with legacy Family Dollar stores.

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We offer competitively-priced national brands from leading manufacturers alongside name brand equivalent-value, lower-priced private labels.

We purchase merchandise from a wide variety of suppliers and generally have not experienced difficulty in obtaining adequate quantities of merchandise.

We purchase merchandise from a wide base of suppliers and generally have not experienced difficulty in obtaining adequate quantities of merchandise.

In fiscal 2022, we purchased approximately 15% of our merchandise through our relationship with McLane Company, Inc., which distributes consumable merchandise from multiple manufacturers.

In addition, approximately 16% of our merchandise is imported directly.

In addition, merchandise imported directly typically accounts for approximately 15%-17% of our total retail value purchases.

While the number of items in a given store can vary based on the store’s size, geographic location, merchandising initiatives and other factors, our typical Family Dollar store generally carries approximately 7,600 basic items alongside items that are ever-changing and seasonally-relevant throughout the year.

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We leverage our merchandising team to source products that can be sold in both Dollar Tree and Family Dollar stores.

We also believe our ability to negotiate with our vendor partners allows us to minimize the margin impact of economic pressures such as tariffs.

We also believe our ability to negotiate with our vendor partners enables us to manage the margin impact of economic pressures.

We buy products on an order-by-order basis and have no material long-term purchase contracts or other assurances of continued product supply or guaranteed product cost.

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A strong and efficient distribution network is critical to our ability to grow and to maintain a low-cost operating structure.

We currently operate 26 distribution centers in the United States, 15 of which are primarily dedicated to serving our Dollar Tree stores and 11 distribution centers primarily serve our Family Dollar stores.

George, Utah distribution center, which is a legacy Family Dollar facility, services both Dollar Tree and Family Dollar stores and we expect future distribution centers to be built with the capability to service both Dollar Tree and Family Dollar stores.

New distribution sites are strategically located to reduce stem miles, maintain flexibility and improve efficiency in our store service areas.

We expect to complete a significant expansion of our Ocala, Florida distribution center in 2024 which will include more modern automation.

We currently operate 25 distribution centers in the United States, 15 of which are primarily dedicated to serving our Dollar Tree stores and ten distribution centers primarily serve our Family Dollar stores.

We expect future distribution centers to be built with the capability to service both Dollar Tree and Family Dollar stores.

New distribution sites are strategically located to reduce the distance between the distribution centers and stores, maintain flexibility and improve efficiency in our store service areas.

We expect to complete a significant expansion of our Ocala, Florida distribution center in 2024 which will include enhanced automation.

Our Dollar Tree stores receive approximately 92% of their inventory from our distribution centers via contract carriers and our Family Dollar stores receive approximately 70% of their inventory from our distribution centers.

The remaining store inventory, primarily perishable consumable items and other vendor-maintained display items, are delivered directly to our stores from vendors.

The remaining store inventory, primarily perishable consumable items and other vendor-maintained display items, are delivered directly to our stores from vendors or third party distributors.

Our Family Dollar stores receive approximately 15% of their merchandise from McLane Company, Inc.

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We operate in the discount retail sector, which is currently and is expected to continue to be highly competitive with respect to price, store location, merchandise quality, assortment and presentation, and customer service, including merchandise delivery and checkout options.

Our competitors include single-price dollar stores, multi-price dollar stores, mass merchandisers, on-line retailers, discount retailers, drug stores, convenience stores, independently-operated discount stores, grocery stores and a wide variety of other retailers.

Our competitors include single-price dollar stores, multi-price dollar stores, mass merchandisers, online retailers, discount retailers, drug stores, convenience stores, independently-operated discount stores, grocery stores and a wide variety of other retailers.

In addition, several competitors have sections within their stores devoted to “one dollar” price point merchandise, which further increases competition.

5 unchanged sentences

Compliance with these laws and regulations often requires the dedication of our associates’ time and attention, as well as financial resources.

In fiscal 2021, compliance with these laws and regulations did not have a material effect on our capital expenditures, earnings or competitive position.

Historically, compliance with these laws and regulations did not have a material effect on our capital expenditures, earnings or competitive position;

however, in fiscal 2022, we closed our West Memphis, Arkansas distribution center (“DC 202”) following observations of rodent infestation at the facility as well as other items that required remediation.

During the first quarter of fiscal 2022, approximately 400 stores serviced by DC 202 were temporarily closed in connection with a retail-level product recall.

We incurred costs related to the product recall, remediation efforts and asset impairment during fiscal 2022.

Remediation-related costs included merchandise disposal costs, payroll and legal costs as well as incremental freight costs resulting from stores being serviced by distribution centers which are farther away.

Human Capital Resources

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We greatly value our people and invest in their personal well-being and professional growth through various human capital programs and initiatives, including the following:

• Compensation and benefits.

We are committed to providing market-competitive pay for all positions and we are a pay-for-performance organization, offering performance-based compensation opportunities at nearly all levels of the organization, including hourly-paid positions.

• Compensation, benefits and well-being.

We strive to ensure gender and racial pay equity for employees performing equal or substantially similar work.

Full-time associates can participate in our Retirement Savings Plan, which provides a dollar for dollar match on the first 5% of employee contributions and all associates can participate in our Employee Stock Purchase Plan.

All full-time and part-time associates are eligible for competitive health and welfare benefits, including medical, dental, vision, disability, life insurance and other benefits.

Eligible associates can participate in our Retirement Savings Plan, which provides a dollar for dollar match on the first 5% of employee contributions and all associates can participate in our Employee Stock Purchase Plan.

All full-time and part-time associates are eligible for competitive health and welfare benefits, including medical, dental and vision.

Associates may be eligible for other benefits including disability and life insurance as well as primary caregiver and parental leave.

We have a program that provides financial support to associates recovering from natural disasters and personal hardships as well as a scholarship program for associates with children pursuing higher education.

We also offer a voluntary benefit called “pay any day,” which allows associates to advance their payday earnings for flexibility in meeting their bills and expenses.

• Health, wellness and family resources.

In addition to making health and welfare benefits available to our associates, we also support our associates and members of their household through our Employee Assistance Program, which includes financial and legal services, as well as expert counsel in areas such as parenting, family issues and resilience skills.

We offer primary caregiver and parental leave to support our associates while they are starting or growing their families and we have a program that provides financial support to associates recovering from natural disasters and personal hardships.

To support our associates with high school-aged children, we launched a scholarship program in 2021 to provide access to financial support in their pursuit of higher education.

• Talent development and retention.

We believe in the growth and development of our associates and are committed to building a culture of learning in which associates are given the opportunity to enhance their skills at every stage of their career.

To support this objective, we provide a multitude of professional and leadership development experiences, including online and instructor-led trainings that enable associates to consume relevant learning content for their current role and future career growth.

To remove barriers to education, we launched an education assistance program in 2021 that provides tuition reimbursement, as well as discounted tuition at over 200 colleges and universities for our associates and their families.

Our associates also receive personalized coaching and advisement on degree programs that meet their needs.

To support this objective, we provide a multitude of professional and leadership development experiences, including online and instructor-led trainings, tuition reimbursement for graduate, undergraduate, GED and English as a Second Language classes, and discounted tuition at over 200 colleges and universities for our associates and their families.

Retention of our associates is a focus for all leaders and we continue to strive to improve our turnover rate.

We monitor associate turnover as we know our success depends on retaining and engaging talent in all areas of the business.

To identify high-potential talent, leadership assesses talent at the store manager level and above on a regular basis through structured talent reviews and succession planning paired with customized development plans.

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We believe our associates should mirror our diverse customer base and the communities we serve.

Our goal is to create and support a culture of inclusion among a diverse and inclusive workforce where the individual differences of our associates are understood, respected and appreciated.

To further this goal, we launched a Diversity, Equity and Inclusion (DEI) Executive Council in 2020 comprised of senior leaders from every department within the company.

The DEI Executive Council is charged with creating and implementing DEI-focused strategies consistent with our business goals, catalyzing cultural change throughout the organization and driving accountability at the senior management level for progress on key DEI objectives.

In addition, we have provided associate training on DEI topics and committed to forming a number of employee resource groups that are intended to serve as platforms for discussion and support among communities of associates within targeted demographics.

Our plan is for each employee resource group to have an executive sponsor who is a member of the DEI Executive Council.

Our goal is to create and support a culture of inclusion within a diverse workforce where the unique skills and perspectives of our associates and customers are understood, respected and appreciated.

To further this goal, we established a Diversity, Equity and Inclusion (DEI) Executive Council comprised of senior leaders from every department.

The DEI Executive Council provides strategic and tactical leadership support to our Chief Diversity Officer (CDO) on all matters related to DEI.

The CDO is charged with creating and implementing DEI-focused strategies consistent with our business goals, catalyzing cultural change throughout the organization and driving accountability at the senior management level for progress on key DEI objectives.

In addition, we provide associate training on DEI topics and have formed a number of associate resource groups.

Our objective is to build a platform to encourage professional development, support community outreach, cultivate mentoring, attract diverse talent and promote cross-functional teamwork for all employees.

Each associate resource group will be supported by an executive sponsor who is a member of the DEI Executive Council or senior leadership team.

• Workplace safety.

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Among other things, our environmental health and safety department establishes standard safety protocols and operating procedures across the company, and our field managers are responsible for overseeing associate safety training and conducting store safety audits.

In response to the COVID-19 pandemic, we implemented several changes to protect our associates and our customers and to ensure adherence to Centers for Disease Control and Prevention (CDC) recommendations.

During 2020, we provided personal protective equipment including masks, gloves and sanitizers for our store and distribution center associates, installed plexiglass sneeze guards at all store registers and

enabled the majority of our store support center teams to work remotely.

We provided wage premiums for store and distribution center hourly associates, provided minimum guaranteed sales bonuses for store managers and pay continuation for associates who tested positive for COVID-19.

In response to the COVID-19 pandemic, we implemented several changes to protect our associates and our customers and to ensure adherence to Centers for Disease Control and Prevention recommendations.

• Communication and Engagement.

We believe that our associates are critical to our business and the right culture is essential to creating an environment of high engagement and inclusivity in which Associates thrive.

It is important to listen to Associate feedback and perspectives on various matters affecting their relationship with the company.

As a result, we have launched a culture assessment that enables us to define the culture we aspire to be, measure the culture we are today and close the gaps so we realize our goals, execute on our business strategies and create a compelling associate experience within the organization.

We believe that our associates are the most critical part of our business, and supporting an engaging culture where people can do their best work is a top priority for our leaders.

Over the last year we have added new channels to foster two-way dialogue and ensure we are listening to our associates and taking action on their feedback.

A recent culture assessment helped identify areas of focus and prepare the organization for a robust employee engagement survey process to close the gap between our current culture and the culture we aspire to have.

As of January 28, 2023, we employed more than 207,500 associates, as follows:

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We consider our relationship with our associates to be good, and have not experienced significant interruptions of operations due to labor disagreements.

Available Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on our website at www.dollartree.com as soon as reasonably practicable after electronic filing of such reports with the Securities and Exchange Commission (“SEC”).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business