Dollar Tree 2010 Annual Report Download - page 20

Management’s Discussion And Analysis
Of Financial Condition And Results Of Operations
• 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 compa-
rable 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 30, 2010 compared
to fi scal 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 fi 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 profi 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 fi scal 2009 compared
to fi scal 2008.
18 DOLLAR TREE, INC. ♦ 2010 Annual Report