Dollar Tree to Offer More Higher-Priced Goods as It Expands
admin / November 2020
Deep Discounter’s Sales Are Growing
Dollar Tree said it will expand its Dollar Tree Plus concept, a riff on its deep-discount business model but at prices a little higher than a buck as it seeks to take more real estate.
Selling products at $3 and $5 in 100 select pilot stores resonated well with consumers, prompting the parent of Dollar Tree and Family Dollar stores to stock the higher-priced items in 500 more stores by early next year, the company said.
At the same time, the Chesapeake, Virginia-based retailer said it is on track to open 480 new Dollar Tree stores and renovate 750 Family Dollar stores with an updated layout. Capital expenditures are expected to reach as high as $1 billion.
“It’s an exciting time at Dollar Tree,” CEO Mike Witynski said in a statement.
“We are just over three weeks into our important fourth quarter and we are off to a very good start, with same-store sales at both banners currently tracking above reported third-quarter levels,” he added.
The retailer, which operates more than 15,600 stores in the United States and Canada under the Dollar Tree and Family Dollar brands, said it earned $330 million, or $1.39 a share, as revenues grew by 7.5% year over year to $6.18 billion, outpacing Wall Street’s expectations.
Same-store sales, a key industry metric, jumped 5.1% on a year-over-year basis with 4% generated from its flagship Dollar Tree stores and 6.4% from its Family Dollar unit. Witynski said it was the strongest same-store sales performance in 10 straight quarters.
So far this year, the company has opened 143 new stores, expanded or relocated 34 and closed 16. It completed 371 Family Dollar makeovers to what it calls its H2 format. Total retail space reached some 124.3 million square feet at the end of the third quarter, the company said.
Dollar Tree also jumped on the success of its Crafter’s Square arts-and-crafts section, expanding it from three stores to more than 2,400 this year with plans to add them to the rest of the fleet in 2021.
The company conceded to consumer demand exacerbated by the COVID-19 pandemic for delivery and in-store pickup for online orders, a first for the discounter. Witynski said testing Instacart and Shipt deliveries in recent months was still in the “really early” stages.
“Our focus will continue to be on opening new stores, refining our store formats and upgrading our assortments to drive improved store productivity,” Witynski said.
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