Dollar Tree 2007 Annual Report Download - page 4

2 DOLLAR TREE, INC. • 2007 ANNUAL REPORT
Dollar Tree continued to grow and improve in 2007. Our total sales were
a record $4.24 billion. Comparable store sales increased by 2.7%, and
earnings per share were $2.09, another record. We improved our gross
margin, increased inventory turns and our operating margin remains among
the highest of retailers in the value sector. We invested in our future by
increasing our total store square footage, adding frozen and refrigerated
capability to more stores and expanding our Distribution Center in Briar
Creek, PA. We generated significant cash flow, and returned value to our
long-term shareholders by investing more than $473 million on share
repurchases without increasing our long-term debt.
REVIEW OF 2007 GOALS AND ACCOMPLISHMENTS
As always, we entered 2007 with a specific list of goals for the year.
Our primary goal for 2007 was to grow our top line and continue to
produce sector-leading profitability. We do this by managing every aspect
of our business to deliver great merchandise and a fun, friendly, convenient shopping environment for our cus-
tomers. This is the key to the Dollar Tree extreme-value proposition. Each Dollar Tree store offers a wide assort-
ment of variety merchandise at incredible values. Our merchandise strategy provides an ever changing mix of
exciting seasonal merchandise, branded product — including well-known national brands, popular regional brands
and exclusive Dollar Tree brands — and high value closeouts. Our goal is to create merchandise excitement for
our customers, every time they visit our store.
In recent years we have increased our selection of basic products; items that people need everyday and are
more frequently purchased. Because of the value we offer, we have become more of a destination for categories
such as basic cleaning supplies, health and beauty care products and paper goods. Our expanded product selection
has been embraced by our customers who are making more frequent shopping trips to our stores. While there,
customers continue to be surprised by the extreme-value seasonal product and variety merchandise, which
continue to account for the majority of our sales. This is a factor that differentiates Dollar Tree, setting us apart
from our competitors in the extreme-value sector. In addition, improved replenishment methods are providing a
better in-stock position on these products and we believe this has been a real driver of increases in both customer
traffic and our average ticket.
As we have increased our offering of basic everyday products, we continue to expand frozen and refrigerated
product to more stores. In 2007, we added freezers and coolers to a total of 340 stores. At the end of the year, we
had freezers and coolers in 972 Dollar Tree stores compared to 632 stores the same time last year.
The expansion of our payment type acceptance continues to contribute positively to our results. We currently
accept Food Stamps in about 1,000 qualified stores, and the penetration of Debit Card usage continued to grow
throughout the year. We rolled Visa credit card acceptance to all of our stores nationwide on October 31, just in time
for the Holiday season. We began to see a lift from Visa credit almost immediately in the fourth quarter, particularly
TO OUR SHAREHOLDERS
Bob Sasser
President and
Chief Executive Officer