Dollar Tree 2014 Annual Report Download - page 22

6
PART I
Item 1. BUSINESS
Overview
We are the leading operator of discount variety stores offering merchandise at the fixed price of $1.00. We believe the
variety and value of products we sell for $1.00 sets us apart from our competitors. At January 31, 2015, we operated 5,367
discount variety retail stores. Our stores operate under the names of Dollar Tree, Deals, Dollar Tree Deals, Dollar Tree Canada,
Dollar Giant and Dollar Bills. In 5,148 of these stores, we sell substantially all items for $1.00 or less in the United States and
$1.25(CAD) or less in Canada. In substantially all of the remaining stores, operating as Deals or Dollar Tree Deals, we sell
items for $1.00 or less but also sell items for more than $1.00.
We believe our optimal store size is between 8,000 and 10,000 selling square feet. This store size provides the appropriate
amount of space for our broad merchandise offerings while allowing us to provide ease of shopping to our customers. As we
have been expanding our merchandise offerings, we have added freezers and coolers to approximately 3,620 stores to increase
sales and shopping frequency. At January 29, 2011, we operated 4,101 stores in the United States and Canada. At January 31,
2015, we operated 5,157 stores in 48 states and the District of Columbia, as well as 210 stores in Canada. Our revenue and
assets in Canada are not material. Our selling square footage increased from approximately 35.1 million square feet in January
2011 to 46.5 million square feet in January 2015. Our store growth has resulted primarily from opening new stores.
Business Strategy
Value Merchandise Offering. We strive to exceed our customers' expectations of the variety and quality of products that
they can purchase for $1.00 by offering items that we believe typically sell for higher prices elsewhere. We buy approximately
59% to 61% of our merchandise domestically and import the remaining 39% to 41%. Our domestic purchases include basic,
seasonal, closeouts and promotional merchandise. We believe our mix of imported and domestic merchandise affords our
buyers flexibility that allows them to consistently exceed the customer's expectations. In addition, direct relationships with
manufacturers permit us to select from a broad range of products and customize packaging, product sizes and package
quantities that meet our customers' needs.
Mix of Basic Variety and Seasonal Merchandise. We maintain a balanced selection of products within traditional variety
store categories. We offer a wide selection of everyday basic products and we supplement these basic, everyday items with
seasonal, closeout and promotional merchandise. We attempt to keep certain basic consumable merchandise in our stores
continuously to establish our stores as a destination and increase the traffic in our stores. Closeout and promotional
merchandise is purchased opportunistically and represents less than 10% of our purchases.
Our merchandise mix consists of:
• consumable merchandise, which includes candy and food, health and beauty care, and everyday consumables such as
paper and chemicals, and in select stores, frozen and refrigerated food;
• variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other
items; and
• seasonal goods, which include, among others, Valentine's Day, Easter, Halloween and Christmas merchandise.
We added freezers and coolers to certain stores and increased the amount of consumable merchandise carried by those
stores. We believe this initiative helps drive additional transactions and allows us to appeal to a broader demographic mix. We
added freezers and coolers to 460 additional stores in 2014. Therefore, as of January 31, 2015, we have freezers and coolers in
3,620 of our stores. We plan to install them in 320 additional stores by the end of fiscal 2015.
The following table shows the percentage of net sales of each major product group for the years ended January 31, 2015
and February 1, 2014:
January 31, February 1,
Merchandise Type 2015 2014
Consumable 49.3% 49.4%
Variety categories 46.4% 46.3%
Seasonal 4.3% 4.3%