Dollar Tree 2012 Annual Report Download - page 16

Management’s Discussion & Analysis of
Financial Condition and Results of Operations
•OnNovember2,2009,wepurchasedanewdistribu-
tion center in San Bernardino, California. is new
distribution center replaced our Salt Lake City, Utah
leasedfacilitywhoseleaseendedinApril2010.
Overview
Our net sales are derived from the sale of merchandise.
Twomajorfactorstendtoaectournetsalestrends.
First is our success at opening new stores or adding new
stores through acquisitions. Second, sales vary at our
existingstoresfromoneyeartothenext.Werefertothis
change as a change in comparable store net sales, because
we compare only those stores that are open throughout
bothoftheperiodsbeingcompared.Weincludesales
from stores expanded during the year in the calculation
ofcomparablestorenetsales,whichhastheeectof
increasing our comparable store net sales. e term
‘expanded’alsoincludesstoresthatarerelocated.
AtFebruary2,2013,weoperated4,671storesin
48statesandtheDistrictofColumbia,aswellasthe
Canadian provinces of British Columbia, Ontario,
Alberta,SaskatchewanandManitoba,with40.5million
sellingsquarefeetcomparedto4,351storeswith37.6
millionsellingsquarefeetatJanuary28,2012.During
scal2012,weopened345stores,expanded87storesand
closed25stores,comparedto278newstoresopened,91
storesexpandedand28storesclosedduringscal2011.
In the current year we increased our selling square footage
by7.7%.Ofthe345storesopenedinscal2012,25were
openedinJanuaryandvewereexpandedinJanuary
2013.Excludingthesestores,oursellingsquarefootage
increasedby7.1%.Ofthe2.9millionsellingsquarefoot
increasein2012,0.3millionwasaddedbyexpanding
existingstores.eaveragesizeofourstoresopenedin
2012wasapproximately8,060sellingsquarefeet(or
about9,900grosssquarefeet).For2013,wecontinueto
plantoopenstoresthatareapproximately8,000-10,000
sellingsquarefeet(orabout10,000-12,000grosssquare
feet).Webelievethatthisstoresizeisouroptimalsize
operationallyandthatthissizealsogivesourcustomers
an ideal shopping environment that invites them to shop
longer and buy more.
Fiscal2012endedonFebruary2,2013andincluded
53weeks,commensuratewiththeretailcalendar.e
53rdweekin2012addedapproximately$125million
insales.Fiscal2011andFiscal2010whichendedon
January28,2012,andJanuary29,2011,respectively,each
included52weeks.
Inscal2012,comparablestorenetsalesincreased
by3.4%.isincreasewasbasedonthecomparable
53weeksforbothyears.ecomparablestorenetsales
increasewastheresultofa2.8%increaseinthenumber
Key Events and Recent Developments
Several key events have had or are expected to have a
signicanteectonouroperations.Youshouldkeepin
mind that:
•InJuly2012,webeganconstructiononanew1.0
millionsquarefootdistributioncenterinWindsor,
Connecticut.Weexpecttobeginshippingproduct
fromthisbuildingin2013.
•OnJune6,2012,weenteredintoave-year
$750.0millionunsecuredCreditAgreement
(theAgreement).eAgreementprovidesfora
$750.0millionrevolvinglineofcredit,includingup
to$150.0millioninavailablelettersofcredit.e
interest rate on the facility is based, at our option,
on a LIBOR rate, plus a margin, or an alternate base
rate,plusamargin.OurFebruary2008,$550.0
million Credit Agreement was terminated concur-
rent with entering into this Agreement.
•OnOctober7,2011,ourBoardofDirectors
authorizedtherepurchaseofanadditional$1.5
billionofourcommonstock.AtFebruary2,2013,
wehad$859.8millionremainingunderBoard
authorizations.
•OnOctober7,2011,wecompleteda410,000
square foot expansion of our distribution center
in Savannah, Georgia. e Savannah distribution
centerisnowa1,014,000squarefoot,fullyauto-
mated facility.
•OnNovember15,2010,wecompletedour
acquisitionof86DollarGiantstores,locatedinthe
Canadian provinces of British Columbia, Ontario,
Alberta and Saskatchewan and we have since opened
storesinManitoba.esestoresoerawideassort-
ment of quality general merchandise, contemporary
seasonal goods and everyday consumables, all priced
at$1.25(CAD)orless.isisourrstexpansionof
retail operations outside of the United States.
•Weassigncosttostoreinventoriesusingtheretail
inventory method, determined on a weighted average
costbasis.Fromourinceptionandthroughscal
2009,weusedoneinventorypoolforthiscalcula-
tion. Because of our investments over the years in our
retailtechnologysystems,wewereabletoreneour
estimate of inventory cost under the retail method
andonJanuary31,2010,therstdayofscal2010,
webeganusingapproximately30inventorypools
in our retail inventory calculation. As a result of
this change, we recorded a non-recurring, non-cash
chargetogrossprotandacorrespondingreduction
ininventory,atcost,of$26.3millionintherst
quarterof2010.iswasaprospectivechangeand
didnothaveanyeectonpriorperiods.
14 Dollar Tree, Inc.