Dollar Tree 2009 Annual Report Download - page 26

Management’s Discussion And Analysis Of Financial Condition
And Results Of Operations
Our unaudited results of operations for the eight
most recent quarters are shown in a table in Note 11 of
the Consolidated Financial Statements.
Inflation and Other Economic Factors
Our ability to provide quality merchandise at a
xed฀price฀and฀on฀a฀protable฀basis฀may฀be฀subject฀
to economic factors and influences that we cannot
control. Consumer spending could decline because
of economic pressures, including unemployment and
rising฀fuel฀prices.฀Reductions฀in฀consumer฀condence฀
and spending could have an adverse effect on our
sales. National or international events, including war
or terrorism, could lead to disruptions in economies
in the United States or in foreign countries where we
purchase some of our merchandise. These and other
factors could increase our merchandise costs and other
costs that are critical to our operations, such as shipping
and wage rates.
Shipping Costs.฀Currently,฀trans-Pacic฀shipping฀
rates are negotiated with individual freight lines and
are฀subject฀to฀uctuation฀based฀on฀supply฀and฀demand฀
for฀containers฀and฀current฀fuel฀costs.฀We฀can฀give฀no฀
assurances฀as฀to฀the฀nal฀actual฀rates฀for฀2010,฀as฀we฀are฀
in the early stages of our negotiations.
Minimum Wage.฀On฀May฀25,฀2007,฀legislation฀was฀
enacted฀that฀increased฀the฀Federal฀Minimum฀Wage฀
from฀$5.15฀an฀hour฀to฀$7.25฀an฀hour฀in฀July฀2009.฀As฀a฀
result,฀our฀wages฀increased฀in฀2009฀and฀will฀continue฀
to฀increase฀through฀the฀rst฀half฀of฀2010;฀however,฀
we believe that we can partially offset the increase
in payroll costs through increased productivity and
continued฀efciencies฀in฀product฀ow฀to฀our฀stores.
the฀amounts฀recorded.฀We฀believe฀that฀our฀liability฀for฀
uncertain tax positions is adequate. For further discus-
sion฀of฀our฀changes฀in฀reserves฀during฀2009,฀see฀Note฀3฀
of the Consolidated Financial Statements.
Seasonality and Quarterly Fluctuations
We฀experience฀seasonal฀uctuations฀in฀our฀net฀sales,฀
comparable store net sales, operating income and net
income and expect this trend to continue. Our results
of฀operations฀may฀also฀uctuate฀signicantly฀as฀a฀result฀
of a variety of factors, including:
•฀฀shifts฀in฀the฀timing฀of฀certain฀holidays,฀especially฀
Easter;
•฀฀the฀timing฀of฀new฀store฀openings;
•฀฀the฀net฀sales฀contributed฀by฀new฀stores;
•฀฀changes฀in฀our฀merchandise฀mix;฀and
•฀competition.
Our highest sales periods are the Christmas and
Easter฀seasons.฀Easter฀was฀observed฀on฀March฀23,฀2008,฀
April฀12,฀2009,฀and฀will฀be฀observed฀on฀April฀4,฀2010.฀
We฀believe฀that฀the฀earlier฀Easter฀in฀2010฀could฀result฀
in฀a฀$10.0฀million฀decrease฀in฀sales฀in฀the฀rst฀quarter฀
of฀2010฀as฀compared฀to฀the฀rst฀quarter฀of฀2009.฀We฀
generally฀realize฀a฀disproportionate฀amount฀of฀our฀
net sales and of our operating and net income during
the฀fourth฀quarter.฀In฀anticipation฀of฀increased฀sales฀
activity during these months, we purchase substantial
amounts฀of฀inventory฀and฀hire฀a฀signicant฀number฀of฀
temporary employees to supplement our continuing
store staff. Our operating results, particularly operating
and net income, could suffer if our net sales were below
seasonal norms during the fourth quarter or during the
Easter season for any reason, including merchandise
delivery delays due to receiving or distribution prob-
lems, consumer sentiment or inclement weather.
24฀฀฀DOLLAR฀TREE,฀INC.฀•฀2009฀Annual฀Report