Dollar Tree 2011 Annual Report Download - page 20

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• Shrink costs decreased 15 basis points due to
improved shrink results in the current year and
a lower shrink accrual rate during fiscal 2010
compared to fiscal 2009.
• Merchandise costs, including freight, increased 15
basis points due primarily to higher import and
domestic freight costs during fiscal 2010 compared
to fiscal 2009.
Selling, General and Administrative Expenses. Selling,
general and administrative expenses, as a percentage
of net sales, decreased to 24.8% for 2010 compared to
25.7% for 2009. e decrease is primarily due to the
following:
• Payroll expenses decreased 45 basis points due to
leveraging associated with the increase in comparable
store net sales in the current year and lower store
hourly payroll.
• Depreciation decreased 30 basis points primarily
due to the leveraging associated with the increase in
comparable store net sales in the current year.
• Store operating costs decreased 20 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 2010.
Operating Income. Operating income margin was 10.7%
in 2010 compared to 9.8% in 2009. Excluding the $26.3
million non-cash adjustment to beginning inventory,
operating income margin was 11.1%. Due to the reasons
noted above, operating income margin, excluding this
charge, improved 130 basis points.
Income Taxes. Our effective tax rate was 36.9% in 2010
and 2009.
Fiscal year ended January 29, 2011 compared to
fiscal year ended January 30, 2010
Net Sales. Net sales increased 12.4%, or $651.2 million,
in 2010 compared to 2009, resulting from a 6.3%
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.
e following table summarizes the components
of the changes in our store count for fiscal years ended
January 29, 2011 and January 30, 2010.
January 29,
2011
January 30,
2010
New stores 235 240
Acquired stores 86 —
Expanded or
relocated stores 95 75
Closed stores (26) (25)
Of the 2.9 million selling square foot increase in
2010, approximately 0.4 million was added by expanding
existing stores and 0.7 million was the result of the
acquisition of the Dollar Giant stores.
Gross profit margin was 35.5% in 2010 and 2009.
Excluding the effect of the $26.3 million non-cash
beginning inventory adjustment, gross profit margin
increased to 35.9%. is increase was due to the net of
the following:
• Occupancy and distribution costs decreased 30
basis points in the current year resulting from the
leveraging of the comparable store sales increase.
18 Dollar Tree, Inc.