Dollar Tree 2009 Annual Report Download - page 19

Management’s Discussion And Analysis Of Financial Condition
And Results Of Operations
Fiscal year ended January 30, 2010 compared
to fiscal year ended January 31, 2009
Net Sales.฀Net฀sales฀increased฀12.6%,฀or฀$586.3฀
million,฀in฀2009฀compared฀to฀2008,฀resulting฀from฀a฀
7.2%฀increase฀in฀comparable฀store฀net฀sales฀and฀sales฀in฀
our new stores. Comparable store net sales are positively
affected by our expanded and relocated stores, which
we include in the calculation, and, to a lesser extent, are
negatively affected when we open new stores or expand
stores near existing ones.
The฀following฀table฀summarizes฀the฀components฀
of฀the฀changes฀in฀our฀store฀count฀for฀scal฀years฀ended฀
January฀30,฀2010฀and฀January฀31,฀2009.
January 30,
2010
January฀31,฀
2009
New stores 240 227
Acquired leases —4
Expanded or
relocated stores 75 86
Closed stores (25) (51)
Of฀the฀2.0฀million฀selling฀square฀foot฀increase฀
in฀2009฀approximately฀0.3฀million฀was฀added฀by฀
expanding existing stores.
Gross฀prot฀margin฀increased฀to฀35.5%฀in฀2009฀
compared฀to฀34.3%฀in฀2008.฀The฀increase฀was฀due฀to฀
the following:
•฀฀Merchandise฀costs,฀including฀inbound฀freight,฀
decreased฀80฀basis฀points฀due฀primarily฀to฀lower฀
fuel costs and lower ocean freight rates compared
to฀the฀prior฀year.฀Improved฀initial฀mark-up฀in฀many฀
categories during the year was partially offset by
an increase in the mix of higher cost consumer
product฀merchandise฀during฀scal฀2009฀compared฀
to฀scal฀2008.
•฀฀Outbound฀freight฀costs฀decreased฀20฀basis฀points฀
in the current year due primarily to decreased fuel
costs.
•฀฀Occupancy฀and฀distribution฀costs฀decreased฀30฀
basis points in the current year resulting from the
leveraging of the comparable store sales increase.
Selling, General and Administrative Expenses.
Selling, general and administrative expenses, as a
percentage฀of฀net฀sales,฀decreased฀to฀25.7%฀for฀2009฀
compared฀to฀26.4%฀for฀2008.฀The฀decrease฀is฀primarily฀
due to the following:
•฀฀Depreciation฀decreased฀40฀basis฀points฀primarily฀
due to the leveraging associated with the increase
in comparable store net sales in the current year.
•฀฀Store฀operating฀costs฀decreased฀30฀basis฀points฀
primarily as a result of lower utility costs as a
percentage of sales, due to lower rates in the current
year and the leveraging from the comparable store
net฀sales฀increase฀in฀2009.฀
Operating Income.฀Due฀to฀the฀reasons฀discussed฀
above,฀operating฀income฀margin฀was฀9.8%฀in฀2009฀
compared฀to฀7.9%฀in฀2008.฀
Income Taxes.฀Our฀effective฀tax฀rate฀was฀36.9%฀in฀
2009฀compared฀to฀36.1%฀in฀2008.฀The฀higher฀rate฀in฀
the current year was the result of the favorable settle-
ment฀of฀several฀state฀tax฀audits฀in฀2008฀and฀a฀higher฀
blended฀state฀tax฀rate฀in฀2009.
Fiscal year ended January 31, 2009 compared
to fiscal year ended February 2, 2008
Net Sales.฀Net฀sales฀increased฀9.5%,฀or฀$402.3฀million,฀
in฀2008฀compared฀to฀2007,฀resulting฀from฀sales฀in฀
our฀new฀and฀expanded฀stores฀and฀a฀4.1%฀increase฀in฀
comparable store net sales. Comparable store net sales
are positively affected by our expanded and relocated
stores, which we include in the calculation, and, to a
lesser extent, are negatively affected when we open new
stores or expand stores near existing ones.
The฀following฀table฀summarizes฀the฀components฀
of฀the฀changes฀in฀our฀store฀count฀for฀scal฀years฀ended฀
January฀31,฀2009฀and฀February฀2,฀2008.
January 31,
2009
February฀2,฀
2008
New stores 227 208
Acquired leases 432
Expanded or
relocated stores 86 102
Closed stores (51) (48)
Of the 1.9 million selling square foot increase
in฀2008฀approximately฀0.3฀million฀was฀added฀by฀
expanding existing stores.
฀฀฀DOLLAR฀TREE,฀INC.฀•฀2009฀Annual฀Report฀฀฀17