Dollar Tree, Inc. (NASDAQ:DLTR) Q3 2017 Earnings Conference Call - Final Transcript
Nov 21, 2017 • 09:00 am ET
(Operator Instructions) Matthew Boss, JPMorgan.
So can you speak to gross margin drivers at the Family Dollar banner? Obviously, a great quarter. But specifically, can you talk to customer reception to the recent rollout of some of your private brands there? And just how do you rank forward gross margin drivers at FDO?
Well, I'd say it's a lot of the elements that we've been talking about, Matt, from the beginning. Of course, some of it's the initial steps on synergy between the banners, both on direct and similar items. The Smart Ways to Save program that we've implemented from the beginning has given us the ability to drive business across each of those metrics. So with our Dollar well, which gives us some ability to drive higher-margin items, and we know how to do that from another banner. We've -- the Compare and Save on the private brands has really been, I would say, just at the beginning stages of that. Now you're starting to see some of those brands out there in each of the categories. I mentioned some of them. But I would say at this point, the primary impact has been across consumables, both in food and some of our household products. And where we're introducing those and getting critical mass, we're seeing additional penetration growth on the consumables side of the label change. I think it just gives our customers greater confidence in the packaging. The marketing of the brands itself is more geared towards the -- each of the categories that we operate in, whether it's center-of-the-store food, or beverage or household products. And it gives our customers, I think, the confidence to buy what are great values on the shelf compared to national brand. And this isn't either/or. We want to do both. And so our opportunity to enhance the packaging has been a big piece of that. I would tell you there's also been just the nuts and bolts of us getting our pricing in line. We're more competitive than two years ago. Our customers have greater confidence on the retails on shelf. It still means that we have promotion on the items they buy most often. And I would say our Smart Ways to Save element of our Family Dollar business also now has been well received, and we -- during the quarter, we did start a new app, Family Dollar, that gives our customers easy access to some of the great savings. And while we're at the beginning stages of getting a customer base there, what it allowed us to do is really touch the customers who buy week in and week out most often and provide them savings on the items they buy most often. And so it's the combination of all those things that have been driving margin. And the continued emphasis on private label, driving discretionary, driving more imports, all those things that we've talked about from day one are all the pieces that continue to drive progress