Dollar Tree 2014 Annual Report Download - page 26

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Dollar Tree has achieved consistent growth in net sales over each of the last 10 years and has successfully delivered positive
same stores sales for 28 consecutive quarters through varying economic environments. Following the 2008 recession, Dollar
Tree and Family Dollar stores have become a more frequent shopping channel for consumers who are increasingly price and
value conscious. We believe that this industry backdrop coupled with our diversified geographic footprint and merchandise
offering positions us well to generate stable, consistent demand going forward through various economic cycles.
Strong free cash flow generation to support planned debt repayment. We have always been prudent with our use of capital
and following consummation of the Acquisition we intend to maintain our disciplined approach to capital deployment to invest
in new store growth while supporting our existing infrastructure and store efficiency initiatives. Our business model offers a
highly profitable and capital efficient platform with new stores requiring relatively minimal investment, while delivering robust
operating income margins and initial investment payback within only a few years. We believe we will be able to share our best
practices in capital deployment and store development across our combined platform to generate significant excess cash flow
going forward and enable rapid debt repayment with the goal of returning to an investment grade rating profile within
approximately five years.
Best in class management team with proven track record. Our management team includes experienced, long-standing
members of the Dollar Tree family with a consistent track record of delivering industry leading profitability and returns on
capital over the last 10 years. Led by Chief Executive Officer, Bob Sasser, our management team is responsible for our
financial outperformance over the past decade. Together with the Family Dollar team, we intend to leverage our management
expertise across a larger retail network in an effort to achieve higher levels of sales and profitability.
Competition
Our segment of the retail industry is highly competitive and we expect competition to increase in the future. We operate in
the discount retail business, which is currently and is expected to continue to be highly competitive with respect to price, store
location, merchandise quality, assortment and presentation, and customer service. Our competitors include single-price dollar
stores, multi-price dollar stores, mass merchandisers, discount retailers, drug stores, convenience stores, independently operated
discount stores, and a wide variety of other retailers. In addition, several competitors have sections within their stores devoted
to "one dollar" price point merchandise, which further increases competition. We believe we differentiate ourselves from other
retailers by providing high value, high quality, low cost merchandise in attractively designed stores that are conveniently
located. Our sales and profits could be reduced by increases in competition. There are no significant economic barriers for
others to enter our retail sector.
Trademarks
We are the owners of several federal service mark registrations including "Dollar Tree," the "Dollar Tree" logo, the Dollar
Tree logo with a “1”, and "One Price...One Dollar." In addition, we own a concurrent use registration for "Dollar Bill$" and the
related logo. We also acquired the rights to use trade names previously owned by Everything's A Dollar, a former competitor in
the $1.00 price point industry. Several trade names were included in the purchase, including the marks "Everything's $1.00 We
Mean Everything!," and "Everything's $1.00." With the acquisition of Deals, we became the owners of the trademark
"Deal$”. With the acquisition of Dollar Giant, we became the owners of the trademark “Dollar Giant” and others in
Canada. We have federal trademark registrations for a variety of private labels that we use to market some of our product
lines. Our trademark registrations have various expiration dates; however, assuming that the trademark registrations are
properly renewed, they have a perpetual duration.
Employees
We employed approximately 18,100 full-time and 71,900 part-time associates on January 31, 2015. Part-time associates
work an average of less than 30 hours per week. The number of part-time associates fluctuates depending on seasonal
needs. We consider our relationship with our associates to be good, and we have not experienced significant interruptions of
operations due to labor disagreements.
Item 1A. RISK FACTORS
An investment in our common stock involves a high degree of risk. Any failure to meet market expectations, including our
comparable store sales growth rate, earnings and earnings per share or new store openings, could cause the market price of our
stock to decline. You should carefully consider the specific risk factors listed below together with all other information
included or incorporated in this report. Any of the following risks may materialize, and additional risks not known to us, or that
we now deem immaterial, may arise. In such event, our business, financial condition, results of operations or prospects could
be materially adversely affected.