Dollar Tree 2009 Annual Report Download - page 5

for a number of reasons. It is small enough to be convenient, but large enough
to accommodate a broad assortment of merchandise, including the growing
selection of needs-based product we’ve added in recent years. Our stores today
offer฀a฀compelling฀mix฀of฀things฀customers฀need฀and฀want—all฀for฀just฀a฀dollar.
The larger-store format has also allowed for the expansion into frozen and
refrigerated฀product.฀In฀2009,฀we฀rolled฀freezers฀and฀coolers฀to฀an฀additional฀214฀
stores฀and฀now฀have฀frozen฀and฀refrigerated฀product฀available฀in฀1,291฀Dollar฀Tree฀
stores฀and฀132฀Deal$฀stores.฀Our฀measured฀expansion฀of฀frozen฀and฀refrigerated฀
product is continuing. This year we intend to roll out this product to another
225฀stores฀or฀more.
All of this is driving footsteps into our stores and driving sales, including sales
of our high-value, high-margin discretionary product. Evidence shows that this
variety truly appeals to our customers—traffic is up, and the average transaction
is on the rise.
We have developed and implemented retail technology tailored to
our unique business model and are now leveraging those investments.
Using point of sale data by item by store, we are making “smarter”
allocations, flexing our inventory to meet increasing customer
demand, improving our in-stock of basics and optimizing the flow
of seasonal product to our stores, consistent with sales trends. All of
this translates into a better customer experience, improved sell-through
and฀increased฀inventory฀turns,฀which฀rose฀by฀25฀basis฀points฀to฀4.06฀
turns฀in฀2009.฀
Investments in technology have enabled us to broaden the types of payment
accepted at our stores, thereby offering increased flexibility and convenience to
our customers. We accept Debit cards, Visa credit, Discover credit and Electronic
Benefits Transfer in all of our stores. We also accept “SNAP” – food stamps – in
75% of our stores. We intend to continue expanding food stamp acceptance to
more฀stores฀in฀2010.
We have built a solid and scalable logistics infrastructure to support our nationwide retail
footprint.฀Logistics฀ efciency,฀already฀outstanding,฀ continued฀to฀improve฀in฀2009.฀
Our logistics team found ways to save costs through greater cube utilization of
our trailers and increased less-than-trailer-load consolidation. Backhauls increased
more than 10%, which further reduced cost per delivery and inventory turns con-
tinued฀to฀increase฀in฀2009฀for฀the฀fth฀consecutive฀year.฀Our฀distribution฀center฀
efciency฀also฀increased฀in฀2009฀by฀more฀than฀14%.฀We฀expect฀continued฀gains฀
in efficiency as our volume increases; in fact, every new store that we open makes
our network more efficient.
In฀ the฀ fourth฀ quarter฀ 2009,฀ we฀ purchased฀ a฀ new฀ distribution฀ center฀ in฀ San฀
Bernardino, CA, to replace a leased facility in Salt Lake City. The new DC be-
came฀ fully฀ operational฀ in฀ April฀ 2010.฀ It฀ is฀ slightly฀ larger฀ than฀ the฀ distribution฀
center it replaced, fully automated and will provide further increases in distribu-
tion center productivity. It is strategically located to decrease stem miles and better
serve our base of existing stores while supporting new store growth in Southern
California and the Southwest. The total facility cost of approximately $37 million
was financed using available cash. We currently have the network capacity to support
$7.5 billion in annual sales with no meaningful additional investment in infrastructure.
We continue to open new stores and increase market share. For฀the฀full฀year฀2009,฀
we฀opened฀240฀new฀stores฀and฀relocated฀and฀expanded฀75฀stores฀for฀a฀total฀of฀
315฀projects.฀We฀ ended฀the฀ year฀ with฀ 3,806฀ stores,฀and฀ the฀new฀store฀class฀of฀
2009฀averaged฀approximately฀10,000฀square฀feet,฀similar฀to฀the฀class฀of฀2008.
‘05 ‘06 ‘07 ‘08 ‘09
7.8%7.8% 7.9%
9.8%
8.4%
Operating Margin
฀฀฀DOLLAR฀TREE,฀INC.฀•฀2009฀Annual฀Report฀฀฀3
We have developed and implemented
retail technology tailored to our unique
business model, and are now leveraging
those investments.