Dollar Tree 2015 Annual Report Download - page 22

6
PART I
Item 1. BUSINESS
Overview
We are a leading operator of discount variety stores. We believe the convenience and value we offer are key factors in
growing our base of loyal customers. At January 30, 2016, we operated 13,851 discount variety retail stores. Our stores
operate under the names of Dollar Tree, Family Dollar, Dollar Tree Canada, Deals and Dollar Tree Deals.
On July 6, 2015, we completed our purchase of Family Dollar Stores, Inc. and its more than 8,200 stores. This
transformational transaction created the largest discount retailer (by stores) in North America. The Dollar Tree and Family
Dollar banners have complementary business models. Everything is $1.00 at Dollar Tree while Family Dollar is a
neighborhood variety store offering merchandise largely for $10 or less. Also, on October 13, 2015, we announced our plans to
convert all Deals and Dollar Tree Deals stores to one of our two primary banners, Dollar Tree or Family Dollar. On November
1, 2015, we completed the transaction pursuant to which we divested 330 Family Dollar stores, 325 of which were open at the
time of the divestiture, to Dollar Express LLC, a portfolio company of Sycamore Partners, in order to satisfy a condition as
required by the Federal Trade Commission in connection with our purchase of Family Dollar.
We operate in two reporting business segments: Dollar Tree and Family Dollar.
Dollar Tree
Our Dollar Tree segment is the leading operator of discount variety stores offering merchandise at the fixed price point of
$1.00. The Dollar Tree segment includes 5,954 stores operating under the Dollar Tree, Dollar Tree Canada, Deals and Dollar
Tree Deals brands, ten distribution centers in the United States and two in Canada and a Store Support Center in Chesapeake,
Virginia. Our stores range from predominantly 8,000 - 10,000 selling square feet. In the Dollar Tree stores in the United
States, we sell all items for $1.00 or less and in the Dollar Tree Canada stores, we sell all items for $1.25(CAD) or less. In our
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. Our revenue and assets in Canada are not material.
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 57% to 59% of our
merchandise domestically and import the remaining 41% to 43%. Our domestic purchases include basic, seasonal, home,
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.
All of our Dollar Tree stores in the United States accept cash, checks, debit cards and credit cards. 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 665 additional stores in 2015. As of January 30, 2016, we have freezers and coolers in 4,285 of our Dollar Tree
stores. We plan to install them in 400 additional stores by the end of fiscal 2016. Along with the rollout of freezers and
coolers, we have increased the number of stores accepting Electronic Benefits Transfer (EBT) cards and food stamps (under the
Supplemental Nutrition Assistance Program (“SNAP”)) to approximately 5,600 stores as of January 30, 2016.
At any point in time, we carry approximately 7,100 items in our stores and as of the end of 2015 approximately 35% of our
items are automatically replenished. The remaining items are pushed to the stores and a portion can be reordered by our store
managers on a weekly basis. Through automatic replenishment and our store managers’ ability to order product, each store
manager is able to satisfy the demands of his or her particular customer base.
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.