Dollar Tree 2010 Annual Report Download - page 5

changing the source while maintaining our focus on achieving margin targets and providing great value to
our customers for their dollar.
Retail Technology
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, fl exing our inventory to meet increasing customer demand, improving our in-stock of basics, and
optimizing the fl ow of seasonal product to our stores, consistent with sales trends. This translates into a better customer
experience, improved sell-through and increased inventory turns – which rose for the sixth consecutive year in 2010 to
4.17, from 4.06 turns in 2009.
Logistics
We have built a solid and scalable logistics infrastructure to support our nationwide retail footprint, which we
continually upgrade as we provide for sustained, profi table growth. In April 2010, we opened a new Distribution Center
in San Bernardino, CA to provide more effi cient service and to provide for expanded growth in Southern California and
the Southwestern U.S. The total facility cost of approximately $37 million was fi nanced using available cash.
In 2011, we are expanding our Distribution Center in Savannah Georgia to support growth in the Southeast. The
expansion will bring the Savannah facility from its current size of 600,000 square feet to one million square feet. This
project involves $19 million of capital investment, using existing cash, and should be completed in the third quarter. With
the completion of this expansion, our network of nine Company-owned DCs will have the capacity to support $8 billion
in annual sales in the U.S. with no meaningful additional investment. Our logistics infrastructure provides effi cient service to
our stores today, room for expansion and continuing asset leverage. Every new store that we open makes our network more
effi cient, and we continue to build more stores.
The Future: More Stores, Better Stores, New Formats
More Stores
Dollar Tree has expanded its store count every year and we will continue to build more stores for the foreseeable
future. During 2010, we opened 235 new stores and relocated and expanded 95 stores for a total of 330 projects. We
ended the year with 4,101 stores. The new store class of 2010 averaged approximately 10,000 square feet, similar to the
class of 2009. Our plan for 2011 includes 300 new stores and 75 relocations for a total of 375 projects.
Better Stores
Along with expanding the number of stores, we are focused on operating better, more productive stores. Efforts
have concentrated on improved site selection, on opening new stores earlier in the year and on right-sizing our
stores at about 10,000 – 12,000 square feet. We believe this to be our optimum size 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. Average new store productivity increased once again in 2010,
continuing a fi ve-year trend.
Our expansion of frozen and refrigerated product continues. We installed freezers and coolers in 421 stores in
2010, including 124 new stores. Frozen and refrigerated product is now available in 1,844 stores. This product serves
the current needs of our customers, drives traffi c into our stores and provides incremental sales across all categories
– including our higher margin discretionary products. The plan is to
continue to expand this category. In 2011, we intend to expand frozen
and refrigerated capability to an additional 225 stores.
New Formats, New Markets, New Channels
While we are growing our business through more stores, the
development of new categories and more productive stores, we are also
developing New Formats, entering New Markets and adding New
Channels of distribution to customers.
New Formats – Deal$, our multi-price format, continues to gain
traction – extending our ability to serve more customers and our
increasing growth potential. By the end of 2010 we were operating
164 Deal$ stores in 19 states. At Deal$, not everything’s $1, but
everything is a value. In 2010, we continued to improve the operating
DOLLAR TREE, INC. ♦ 2010 Annual Report 3