Dollar Tree 2008 Annual Report Download - page 4

What a great time to be Dollar Tree! In a year of unprecedented challenges,
Dollar Tree set new records for sales and earnings, increased operating
margin, expanded selling square footage by 6.7%, and grew cash net of debt
by more than $284 million. These are outstanding results by any measure
but especially impressive given the economic backdrop of record-high prices for gasoline, diesel
fuel and utilities, a meltdown in financial markets, declining consumer confidence and rising
unemployment. Our model is resilient and last year was validation of its strength. At Dollar Tree,
we have a long history of industry leading financial performance through good times and bad and
the reasons are really very basic. We have a concept that consumers love, we are vigilant about
understanding what our customers need and we do our best to give it to them. Results in 2008
demonstrate our continued relevance to our customers and our ability to provide great value in
the products they want and need in a clean, bright, convenient shopping environment.
2008 Financial Results
Our total sales were $4.64 billion, an increase of 9.5% over last year’s sales of $4.24 billion.
Comparable store sales increased 4.1%, including a 3.7% increase in traffic for the year. I am
proud to report that our sales performance earned the Company a place in the Fortune 500
largest corporations in America for the first time. I am even more proud to state that we are
the only Fortune 500 Company to have achieved this milestone “a dollar at a time.” Today, as
in each of the 23 years since our founding in 1986, everything at Dollar Tree stores is priced at
$1 – or less – every day.
Our diluted earnings per share were $2.53, an increase of 21% over last year’s $2.09, which
was another record. Operating income increased by $35 million (10.7%), and operating margin
increased to 7.9%, compared to 7.8% in fiscal 2007. Our operating margin remains among the
highest in the value retail sector. Net income rose 14%, and we grew our cash net of debt by $284
million. Long term debt remained $250 million, unchanged from the previous year.
All of these successes speak to the underlying strength and flexibility of our business model,
especially in light of the year’s economic headwinds. Dollar Tree can adapt quickly to a changing
environment to offer value in all seasons – throughout changing cycles and circumstances – to our
customers, our shareholders, our associates, and our communities.
Review of 2008 Goals and Accomplishments
Our primary goal for 2008 was to drive profitability by growing the top line, and by all
measures cited above we accomplished that goal. Even the negative impact of severe winter
storms that started in the Pacific Northwest and tracked across the northern section of the country
during the last 10 shopping days before Christmas was largely offset by the business in our
warmer-weather stores, and as the storms passed, sales in the affected areas rebounded.
I view our performance as further evidence of Dollar Tree’s growing relevance to the
consumer. Dollar Tree’s exceptional value and convenient, friendly shopping experience are
more important now than ever before. Customers know they can save money and stretch
their household budgets at Dollar Tree, and they continue to respond in record numbers. In
fact, for millions of consumers, Dollar Tree is becoming a destination as they look to find
ways to manage their family budgets under tremendous pressure.
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DOLLAR TREE, INC. • 2008 ANNUAL REPORT
To Our Shareholders
BOB SASSER
President and Chief Executive Officer