FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: July 30, 2002
Date of Earliest Event Reported: July 25, 2002
DOLLAR TREE STORES, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER: 0-25464
VIRGINIA 54-1387365
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Volvo Parkway
Chesapeake, VA 23320
(Address of principal executive offices)
Registrant's telephone number, including area code: (757) 321-5000
Item 9. Regulation FD Disclosure
The following summarizes information discussed in Dollar Tree Stores, Inc.'s
(the Company's) publicly available telephone conference call on July 25, 2002
regarding its second quarter 2002 earnings results. In addition, the Company's
second quarter earnings press release dated July 25, 2002 is attached as Exhibit
99.1. The Company is filing this Form 8-K pursuant to the Securities and
Exchange Commission's Regulation FD.
Sales
We expect sales to increase approximately 18%-19% for the full year 2002 based
on an underlying comparable store net sales increase of approximately 1%-2% for
the remainder of 2002. There are six fewer selling days between Thanksgiving and
Christmas this year, which represents significant sales for us. There can be no
assurance that comparable store net sales increases will be realized in the
second half of 2002.
Gross Margin
Gross profit margin for the second quarter improved compared to the second
quarter of 2001 primarily due to improved shrink results, particularly in our
Dollar Express stores. Decreased markdowns due to better inventory flow, good
seasonal sell through and lower inventory levels also contributed to our gross
profit margin improvement. These improvements were partially offset by an
increase in occupancy costs, as a percentage of net sales, due to a loss of
leverage resulting from the 2.5% decrease in comparable store net sales.
Depreciation and Amortization
Depreciation and amortization expense increased to 3.6% of net sales for the
second quarter of 2002 compared to 2.9% for the same period in 2001. The
increase resulted primarily from the implementation of our supply chain system
in April 2002, as well as accelerated depreciation of store registers being
replaced by our new point-of-sale systems. Our new and expanded stores also
contributed to the increase in depreciation expense.
We estimate depreciation and amortization expense will total approximately $19
million in the third quarter and $20 million in the fourth quarter of 2002.
Operating Income
We expect operating income margin improvement in the third and fourth quarters
of 2002 compared to 2001, as a result of our store-level expense management
initiatives.
Inventories
Inventory levels increased 14.0% compared to June 30, 2001, while sales
increased approximately 19.4% and selling square footage increased approximately
26.0%. Inventory at comparable stores declined 2.0%. We expect that our
inventory growth will continue to be less than our sales growth in the second
half of 2002 because of management's increased focus on inventory management and
merchandise flow. In addition, we have planned inventory to support sales growth
of approximately 18-19%.
Real Estate
We opened 148 stores, expanded 51 stores and closed 18 stores during the first
half of 2002. Of the 18 stores closed, eight represented unprofitable Spain's
Card and Gift stores acquired in connection with our Dollar Express merger in
May 2000. We expect to increase selling square-footage by approximately 25% in
2002 and 20%-25% in 2003.
Supply Chain
We are currently operating point-of-sale in over 600 stores and expect to end
2002 with a total of 750-800 point-of-sale stores.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS:
This filing contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
address future events, developments or results and typically use words such as
believe, anticipate, expect, intend, plan or estimate. For example, our
forward-looking statements include statements regarding:
o future sales, operating expenses, depreciation and amortization, and
operating income margin;
o planned inventory growth;
o selling square-footage growth; and
o our supply chain initiative.
These forward-looking statements are subject to numerous risks and uncertainties
that may affect us including:
o adverse economic conditions, such as declining consumer confidence or
spending, or bad weather;
o possible difficulties in meeting our sales and other expansion
goals and anticipated comparable store net sales results, which may result
in loss of leverage of selling, general and administrative expenses;
o the seasonality of our sales, changes in calendar dates of holidays and the
importance of our fourth quarter operating results;
o increase in the cost of or disruption of the flow of our imported goods;
o the difficulties in managing our aggressive growth plans, including opening
stores on a timely basis;
o competition and possible increases in merchandise
costs, shipping rates, freight costs, or other operating costs such as
wage levels; and
o the capacity and performance of our distribution network and our ability to
expand its capacity in time to support our sales growth.
For a discussion of the risks, uncertainties and assumptions that could affect
our future events, developments or results, you should carefully review the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" sections in our Annual Report on Form 10-K filed
March 14, 2002. Also, carefully review "Risk Factors" in our most recent
prospectuses filed November 15, 2000 and August 3, 2000. In light of these risks
and uncertainties, the future events, developments or results described by our
forward-looking statements in this document could turn out to be materially and
adversely different from those we discuss or imply.
We are not obligated to release publicly any revisions to any forward-looking
statements contained in this filing to reflect events or circumstances occurring
after the date of this report or to reflect the occurrence of future events and
you should not expect us to do so.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit # Description
99.1 Dollar Tree Stores, Inc.'s press release regarding earnings
results for the second quarter ended June 30, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
DATE: July 30, 2002
DOLLAR TREE STORES, INC.
By: /s/ Frederick C. Coble
--------------------------------
Frederick C. Coble
Chief Financial Officer