Interview Synopsis

Dollar Tree – Q4 2022 update and Family Dollar transformation

  • Public Equity
  • Consumer
  • North America

Ahead of Dollar Tree’s expected earnings report this month, Third Bridge Forum spoke to a former executive at the company who told us it is well positioned as the global economy enters a recession.

How will a recession impact Dollar Tree?

In the Interview, the specialist said they expect Dollar Tree to grow by mid-single-digits in Q4. They told us this is due to the arrival of the holiday season and product price increases to USD 1.25 for most goods and USD 3-5 for some Dollar Tree Plus items. 

The specialist said for the past 6-7 years Dollar Tree has opened 500-600 stores a year and previously opened more stores than Family Dollar, which it purchased in 2015. However, that has now changed, according to the specialist, with Family Dollar opening stores at a faster rate. The specialist said Family Dollar could have a total of 15,000 stores vs 11,000 for Dollar Tree over the coming years. 

We heard that one of the biggest opportunities for Dollar Tree lies in its Dollar Tree Plus offering. Over the past six months Dollar Tree has fitted more fridges and freezers to sell food or consumable products, according to the specialist. However, they said variety items priced at USD 3-5 have higher margins vs food or consumable items. 

Dollar Tree has faced challenges combining Dollar Tree and Family Dollar stores, according to the specialist. They said that acquiring and retaining good store managers is “critical” to Dollar Tree’s business – something that they said is also a challenge for the retail industry in general. The specialist said Dollar Tree has implemented improved training and management initiatives at its stores to increase store manager retention.

Over the next 12-18 months, the specialist said Dollar Tree should continue to execute on “multi-price points”, as well as proceed with combining and refurbishing Dollar Tree and Family Dollar stores. While the specialist expects Dollar Tree to perform well during a recession, they anticipate greater challenges for Family Dollar. 

Click here to access all the human insights in the Third Bridge Forum Interview, “Dollar Tree – Q4 2022 update and Family Dollar transformation”.

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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