Dollar Tree Inc DLTR
Q1 2013 Earnings Call Transcript

Transcript Call Date 05/23/2013

Operator: Good day and welcome to the Dollar Tree, Inc.'s First Quarter Earnings Conference Call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Mr. Tim Reid, Vice President, Investor Relations. Please go ahead sir.

Timothy J. Reid - VP, IR: Thank you. Good morning and welcome to the Dollar Tree conference call for the first quarter of fiscal 2013. Our call today will be led by Bob Sasser, our President and Chief Executive Officer, who will provide insights on our performance in the quarter and recent developments in our business. Kevin Wampler, our Chief Financial Officer, will provide a more detailed review of our first quarter financial performance and provide our guidance for the remainder of 2013.

Before we begin, I would like to remind everyone that various remarks that we will make about future expectations, plans and prospects for the Company constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors included in our most recent press release, most recent current report on Form 8-K, quarterly report on Form 10-Q, and Annual Report on Form 10-K, all of which are on file with the SEC.

We have no obligation to update our forward-looking statements and you should not expect us to do so. At the end of our planned remarks, we will open the call to questions which we asked that you limit to one question and one follow-up question if necessary.

Now, I'd like to turn the call over to Bob Sasser, our President and CEO. Bob?

Bob Sasser - President and CEO: Thank you, Tim. Good morning everyone. This morning we announced the following results for the first quarter 2013. I'm pleased to report that our comp store sales increased 2.1% in the quarter, this was on top of a 5.6% comp in the first quarter last year and a 7.1% comp the year before.

Traffic grew 1% and average ticket increased 1.1%. Total sales grew 8.3% to $1.87 billion. Operating income increased by $28.6 million or 15.2%. Operating margin was 11.6%, an increase of 70 basis points over first quarter last year. Net income increased 15% to $133.5 million, and earnings per share increased 18% to $0.59 compared with first quarter 2012 earnings of $0.50 per share.

I am very pleased with these results. Gross margin increased 20 basis points, driven by an increase in merchandise margins and leverage of occupancy cost with a 2.1% sales comp. SG&A expense decreased 50 basis points, and as a result, operating margin increased 70 basis points to 11.6%; that's the highest first quarter operating margin we have ever produced, breaking the record set in first quarter last year.

This did not happen by accident, and I am particularly proud of our Dollar Tree associates who work every day to deliver on our promise of great value merchandise and a clean, bright, and fun place for our customers to shop. The merchant teams continue to source and develop product that exceeds the customers' expectations of what $1 can buy. The product selection and assortment day-in and day-out is of the highest value and more relevant to our customers than ever. New customers are finding Dollar Tree and Deal$ to be shopping destinations and our store teams are working very hard to keep these customers coming back by delivering on our promise of a store that is clean, bright, friendly and full of merchandise energy.

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