Dollar Tree 2004 Annual Report Download - page 9

DOLLAR TREE STORES, IN C. • 20 0 4 AN N UAL REPORT 5
THE CFO
From
As I pen my first CFO letter, it is appropriate to
reflect on the strengths that initially attracted me
to the company.
• Dollar Tree has a successful and experienced
management team
• A great store economic model
• A proven financial track record
• A strong financial position with a cash rich
balance sheet
• Plenty of room for future growth
These attributes remain firmly in place today
just as they were back in July 2004 when I started
here, and now I am even more convinced that we
have the opportunity to grow at a premium rate
when compared to other retailers. Here is why . . . .
Over the past three years, Dollar Tree has made
substantial investments in infrastructure to build for
the future. While these investments have challenged
our operating margins over the past 18 months, we
are well positioned to improve store productivity and
improve upon processes. Major investments in POS
technology and logistics have been completed. With
the completion of our POS initiative last year, we
now have visibility to product sales by store enabling
us to get the right product, in the right quantity to
the stores that can sell it. This will help drive store
productivity and increase inventory turns. We com-
pleted the last phase of our logistics network last year,
opening two new distribution centers. Our logistics
network is now in place to efficiently deliver product
anywhere in the country. With these major invest-
ments behind us, we expect to see operating profits
improve, especially into the second half of 2005.
Our most important goal is to grow sales and
earnings. A key part of our strategy to accomplish
this is to open new stores, better and more efficiently.
We continue to refine our real estate processes and
we believe we have opportunities and the tools to
open new stores more productively. You may also
be assured that we will keep a watchful eye on our
expenses and we expect to lower our store construc-
tion costs through competitive bidding and value
engineering. The results will be improved profitability
and a significant increase in cash. We will continue
to self-fund our future store growth and infrastructure
needs from internally generated cash.
We successfully completed our first year’s compli-
ance efforts under the requirements of Sarbanes-
Oxley legislation. It has come at a tremendous expense
to us and other public companies. However, as a share-
holder of Dollar Tree, you should feel encouraged that
our efforts toward SOX compliance were no less than
100%. The fruits of our labor resulted in a “clean
bill of health”with no material weaknesses and no
significant deficiencies noted in our accounting and
reporting processes that remained un-remediated. But
the real benefit to Dollar Tree was the enhancement
and, in some cases, the introduction of new financial
controls and disciplines, which are often overlooked
or assigned a lower priority in high-growth environ-
ments. Let me assure you that we will not rest on our
2004 efforts. It starts with the tone at the top, and
we will continue to focus our efforts to ensure that
processes and policies are in place and under continual
scrutiny to ensure the Company’s adherence to all
statutory and GAAP requirements and the continued
integrity of our financial reporting.
I look forward to serving you in the future.
Kent Kleeberger
Chief Financial Officer
Kent Kleeberger
Chief Financial O fficer