Dollar Tree, Inc. (NASDAQ:DLTR) Q4 2022 Earnings Call Transcript

Kelly Bania: Hi. Good morning. Thanks for taking our questions. Wondering if we can just talk a little bit more about the operating expense investment in particular, the wages, how much of the $430 million is wages and you called out the $2 increase in your labor rates? Just curious if you can help us understand where this brings your average, your starting wage how would that compare to peers once this is implemented? And does this bring you in line with peers or get ahead of the rest of the industry?

Jeff Davis: I appreciate your question because I realized I didn’t answer the $430 question earlier, so I apologize. Of the $430 million, about two-thirds of that is related to wage and wage-related items. The delta, if you will, is around such things store standards, what we are doing in sort of standards that we are doing for IT, what we are doing in our supply chain. As it relates to our wage rates of $2, it definitely brings us more competitive in the marketplace as it closes the gap. We believe that, once again, it’s not only closing the gap on hourly wages, but then it’s also for us collectively bringing us more competitive as it relates to the field leadership teams. We haven’t provided any sort of average hourly rate, but it is about a 20% increase over the course of the 2 years that $2 would represent.

Kelly Bania: Okay. That’s very helpful. And just another one on freight, the comments you provided are very helpful, but you have outlined sort of $2 in freight really over the next couple of years. I guess the question is, would that be a €“ would that reflect a full recovery of the significant increase in freight costs that you have had over the last few years, or is that assuming only a partial recovery?

Rick Dreiling: It would only be a partial recovery. There is a number of factors to this. One, freight rates have not gone back to 2019 levels in its entirety. Also, as you think about freight, there are really three components of freight and everyone seems to want to focus only on the Transatlantic portion, but there is import and €“ I am sorry, inbound and outbound freight also, which is ultimately included in all of this. And those particular rates you have not seen a significant reduction or return back to 2019 as driver costs, chassis costs, fuel. All those components continue to be at more elevated rates versus 2019. So, as we look at these freight cost reductions and its entirety, we do not €“ we are not forecasting this is going to recover that which we would have seen in comparison to 2019.

Operator: Thank you. We will now move to €“ apologize please go ahead. We will now move to our next question from Joe Feldman, Telsey Advisory Group. Please go ahead.

Joe Feldman: Yes, hey, guys. Thanks for taking the question. I had a question about the investments that you guys are making. You have outlined both the Dollar Tree side, the Family Dollar side. As you think of store improvement, presumably, it’s more on the Family Dollar side, but I am just curious how you balance the investments between the two and how you decide where to allocate to each brand and where you feel there is more need for store improvement. Is it €“ because it sounded like Dollar Tree actually could use some store improvement, too, which I think I was a little surprised by, but maybe you could address that issue?