Dollar Tree, Inc. (NASDAQ:DLTR) Q3 2022 Earnings Call Transcript

So what I’m really excited about is for the second quarter in a row, consumables have outpaced our discretionary business and it was 9.3%, 9.4% comp sales, but discretionary still doing well over 8%. So we like the business and the reaction we’re seeing from the customers based on us being able to have a better assortment at greater values and products they need. And I think as we continue to provide that, that will help stabilize our traffic in the long-term going forward. On the $3 and $5 we’re seeing a great response from our customer, especially on the seasonal side of the product, and that’s where we think we can continue to refine and grow that business. And then as well, you’ve also heard us on the frozen food part at $1.25 with the cost pressures, it’s even hard for us to get a great value assortment at $1.25, so we’ve moved to multi price products in our frozen food set.

It’s easy to communicate to our customers and our associates because it’s door-by-door. And that assortment as I’ve shared, the customers are responding greatly. And again, this is our frozen business for the last 18-months was in a decline, because of the same pressures we were seeing on the consumables and now we’ve completely reversed that. Where we have introduced the multi price $3 and $5 items, customers are responding well and we see strong growth in our sales there. So I think between the two of those things, the consumable side and then the frozen side, over time, we will continue to drive traffic doing that. And then on the discretionary side, proven by our continued growth on a 8% comp, the customers still see the value in our seasonal party, toys, crafting and that continues to be strong.

So I like the trends we’re seeing overall.

Matthew Boss: Great color. Best of luck.

Operator: Thank you. We will take the next question from line Scot Ciccarelli from Truist. The line is open now. Please go ahead.

Scot Ciccarelli: Thank you. Good morning, everyone. So can you talk about the consumable versus discretionary mix of both banners? It seems like there’s a concerted effort to focus more on consumables. Obviously, that helps traffic, but is margin dilutive. So I guess the question is, how do you guys expect to manage that balance, number one? And then number two, when would you expect the mix pressures to start to ease? Is there like I guess a certain target you’re kind of shooting for?

Mike Witynski: Yes and you’re right. Right now, we’re meeting the needs where the customer is taking us and we are improving that assortment. And I’ll speak to Family Dollar. Larry Gatta and the merchants have done a wonderful job at really improving that assortment and that the pricing for that customer where they need us and it’s all in that consumable and DSD related product. And we’ve done that not only in our base pricing, but our promotion pricing and then also in the linear footage dedicated to it, our resets and our (ph). So you’re right, I think our biggest goal to drive improvement on the Family Dollar side is to get more sales per square foot in our boxes. And the first thing is driving it with consumables and being right on that.