Dollar Tree, Inc.

Ladies and gentlemen, please stand by. We're about to begin. Good day and welcome to Dollar Tree Inc.' 's first quarter earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Randy Geiler, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Aaron. Good morning and welcome to our conference call to discuss Dollar Tree's performance for Q1 2019. Participating on today's call will be President and CEO Gary Philbin, Family Dollar President Duncan McNaughton, and our CFO Kevin Wampler. 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 provisions 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 8K, 10Q, and annual reports, 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 prepared remarks, we will open the call to your questions. Please limit your questions to one and one follow-up question if necessary. Now I will turn the call over to Gary Philbin, Dollar Tree's president and chief executive officer.

Thank you, Randy. Good morning, everyone. I'm proud of our team's efforts throughout the first quarter. As many of the initiatives we discussed in Q4 have been kicked off and are progressing nicely. Our Dollar Tree team delivered a solid increase in same-store sales while cycling its toughest quarterly compare from the prior year. And Family Dollar again demonstrated a sequential acceleration in comp sales, In fact, the Family Dollar segment delivered its strongest quarterly same-store sales increase since we began reporting comps for the banner. Results for the first quarter included a sales increase of 4.6% to $5.81 billion, consolidated same-store sales increase of 2.2%. The Dollar Tree segment delivered its 45th consecutive positive comp quarter with a 2.5 comp, and Family Dollar same-store sales delivered a positive 1.9% despite the shift of early SNAP sales into Q4 from February. Gap earnings per share were $1.12 on an adjusted basis, excluding the accelerated rent expense for Family Dollar stores scheduled to close in 2019 related to ASC 842, diluted EPS was $1.14, within a penny of the high end of our guidance range. Other key highlights for the quarter included completing 372 family dollar H2 model renovations, completing 324 Dollar Tree snack zones, reinitiating our share buyback program, purchasing $100 million worth of shares in the quarter, and continue to remain on track with our consolidation of store support centers, as many of our family dollar associates and new hires are now in the process of moving to the Chesapeake campus. As we outlined in the previous call, due to the costs associated with our store optimization initiatives and store support center consolidation project, year-over-year operating income is expected to be lower in the first half of fiscal 2019, but is expected to show improvement in the second half as the initiatives gain traction. The majority of our previously announced store closings are taking place in the second quarter, along with the completion of our store support center consolidation. For Dollar Tree, sales highlights in the first quarter. Dollar Tree saw nice increases in both traffic and ticket, with traffic slightly outpacing the ticket increase. Geographically, all regions comp positively. Cadence of comps through the quarter. April was the strongest comp month of the quarter, and March was negative. Both months were impacted by the timing shift of the Easter holiday. Dollar Tree continues to deliver solid positive comps in the consumables category, and our seasonal business performed very well. They remain strong in our Dollar Tree's Easter season, was one of our best sell-throughs ever. At Dollar Tree Canada, the team delivered mid-single-digit positive comps for the quarter, with increases in both ticket and traffic. The consumable comp outperformed discretionary. Top performing categories include Easter seasonal, food, and household products. Highlights in Q1 for Dollar Tree Direct, our online business, we saw increases on our inline comp sales, items available for sale, site visitors, and engagement. Our e-commerce team continues to do a great job of engaging with our customers through a number of avenues. Our online content is constantly evolving to reflect our changing assortment, and we are very active in promoting the Dollar Tree brand through blog posts, banner ads, and social media. The team also did a great job in producing and distributing our Kellogg's for the Easter holiday and the upcoming summer season. Looking at real estate for both banners in the first quarter, we opened a total of 91 new stores, $65 trees, and 26 family dollar stores. We relocated or expanded 11 stores, $6 tree and $5 family dollar. We renovated 372 family dollar stores as part of our H2 renovation initiative. And we re-bannered 45 former family dollar stores to dollar tree. for a total of 519 projects during the quarter. We also added freezers and coolers into 102 Dollar Tree stores during the first quarter, now bringing our total of Dollar Tree stores with freezers and coolers to 5,766. During the quarter, we closed 25 stores, 9 Dollar Tree and 16 Family Dollars, and we ended with 15,264 stores, $7,102 being Dollar Trees and $8,162 being Family Dollar. Before I turn the call over to Duncan to discuss the Family Dollar business, I'd like to provide you an update on tariffs. Our merchandising teams have done a terrific job of mitigating the effects of 25 percent tariffs imposed under Section 301 for Chinese goods included on Lists 1, 2, and 3. We are uncertain as to whether or when tariffs will be applied to the List 4 products currently being considered by the U.S. Trade Representative. If tariffs on List 4 products are implemented, we expect that will be impactful to our business and especially to consumers in general. Until we have more clarity, our outlook excludes the impact of tariffs on List 4 products. However, our outlook continues to include the impact of tariffs on List 1, 2, and 3 products. Our teams are doing a nice job managing the controllables and running our business. We continue to believe we are well-positioned with the initiatives for both Family Dollar and Dollar Tree banners to capture the significant opportunity ahead of us. Now I'll turn the call over to Duncan.