Dollar Tree 2012 Annual Report Download - page 17

stores to more consumer product merchandise which we
believe increases the traffic in our stores and has helped
to increase our sales even during the current economic
downturn.Whilethisshiftinmixhasimpactedour
merchandisecostswewereabletoosetthatimpactin
the current year with decreased costs for merchandise in
many of our categories.
Our point-of-sale technology provides us with valu-
able sales and inventory information to assist our buyers
and improve our merchandise allocation to our stores.
Webelievethatthishasenabledustobettermanageour
inventory flow resulting in more efficient distribution and
store operations and increased inventory turnover for
eachofthelastveyears.
Wemustcontinuetocontrolourmerchandisecosts,
inventory levels and our general and administrative
expenses as increases in these line items could negatively
impact our operating results.
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
oftransactionsanda0.6%increaseinaverageticket.
Webelievecomparablestorenetsalescontinuedtobe
positivelyaectedbyanumberofourinitiatives,asdebit
and credit card penetration continued to increase in
2012,andwecontinuedtheroll-outoffrozenandrefrig-
erated merchandise to more of our stores. At February
2,2013wehadfrozenandrefrigeratedmerchandisein
approximately2,550storescomparedtoapproximately
2,220storesatJanuary28,2012.Webelievethatthe
additionoffrozenandrefrigeratedproductenablesusto
increase sales and earnings by increasing the number of
shopping trips made by our customers. In addition, we
acceptfoodstamps(undertheSupplementalNutrition
AssistanceProgram(“SNAP”))inapproximately4,200
qualiedstorescomparedto3,860attheendof2011.
Withthepressuresofthecurrenteconomic
environment, we have seen continued demand for basic,
consumableproductsin2012.Asaresult,wehave
continued to shift the mix of inventory carried in our
Results of Operations
e following table expresses items from our consolidated statements of operations, as a percentage of net sales.
OnJanuary31,2010,therstdayofscal2010,webeganusingapproximately30inventorypoolsinourretail
inventory calculation, rather than one inventory pool as we had used since our inception. 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.
YearEnded
February 2, 2013 January28,2012 January29,2011
Netsales 100.0%   100.0%   100.0%
Cost of sales, excluding non-cash beginning
inventoryadjustment 64.1%   64.1%   64.1%
Non-cashbeginninginventoryadjustment — —   0.4%
 Grossprot 35.9%   35.9%   35.5%
Selling, general and administrative expenses 23.5%   24.1%   24.8%
Operating income 12.4%   11.8%   10.7%
Interest expense, net — —   (0.1%)
Other income, net (0.8%) — —
Income before income taxes 13.2%   11.8%   10.7%
Provision for income taxes (4.8%)   (4.4%)   (3.9%)
 Netincome 8.4%   7.4%   6.8%
2012AnnualReport15