Dollar Tree, Inc.

Good day, and welcome to the Dollar Tree, Inc.' 's second quarter earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Randy Geiler, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Cassie. Good morning, and welcome to our conference call to discuss Dollar Tree's performance for the second fiscal quarter of 2019. Participating on today's call will be our President and CEO, Gary Philbin, a family dollar investor. President Duncan McNaughton, and our CFO, Kevin Wamper. 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 the 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 if necessary. Now I'll turn the call over to Gary Philbin, Dollar Tree's President and Chief Executive Officer.

Gary Philbin Thanks, Randy. Good morning, everyone. As we reported today, the turnaround of the Family Dollar business continues to gain momentum. Family Dollar's same-store sales increase of 2.4 percent was the third consecutive quarter of sequential acceleration and represented a 160 basis point improvement in the two-year stacked comp. And despite sales headwinds created by the global helium shortage, the Dollar Tree segment delivered a same-store sales increase of 2.4 percent while cycling a strong 3.7 increase from the prior year's quarter. Dollar Tree has now delivered 46 consecutive quarters of positive same-store sales and eight consecutive quarters of two-year stack comps exceeding 6%. I'm proud of the team's accomplishments. During the quarter, we successfully consolidate our store support centers, and as planned, close to our 96 family dollar stores as part of the store optimization efforts. Additionally, we completed 542 family dollar renovations into the H2 format. Our results for the second quarter included a sales increase of 3.9 percent to 5.74 billion, consolidated same-store sales increased 2.4 percent. Our GAAP EPS of 76 cents exceeded our 64 to 73 cent per share guidance range. Other highlights for the quarter included completing 542 Family Dollar H2 renovations, completing 275 Dollar Tree snack zones, repurchasing 88.4 million of shares during the quarter as part of our share buyback program. At the end of July, we formally moved all business to the Chesapeake, Virginia campus. This represented the work over the past year to bring all functions and especially our merchant teams together. While we still have associates in the moving process, we now have one physical location to conduct our business. Regarding Dollar Tree sales highlights for the second quarter, Dollar Tree had increases in both traffic and ticket, with traffic slightly outpacing the ticket increase. Geographically, all regions comp positively. Cadence of comps through the quarter, all three months were better than 1.5%, with June being the strongest month. Dollar Tree continued to deliver solid positive comps in the consumables category. Our discretionary business also comp positive, but was impacted by the global helium shortage. We estimated that our comp was negatively impacted from lost balloon sales by approximately 40 basis points. We expect this helium shortage headwind to continue, but to a lesser degree in the back half of the year. The first half is more impacted with the timing of our biggest balloon holidays, Valentine's Day, Mother's and Father's Day, as well as school graduations. For real estate, in the second quarter for both segments, we opened a total of 150 new stores, $107 trees, $43 family dollars. We relocated or expanded 17 Dollar Tree and two Family Dollar stores. We renovated 542 Family Dollar stores as part of our H2 renovation initiative. And we re-bannered 106 Family Dollars to Dollar Tree stores for a total of 817 projects during the quarter. We also added freezers and coolers into 210 Dollar Tree stores during the second quarter. bringing our total of dollar tree stores with freezers and cores to 5,970. During the quarter, we closed 305 stores, nine dollar trees, and consistent with our previously announced efforts to optimize the real estate portfolio, 296 family dollar stores. We ended the quarter with 15,115 stores, split out $7,306 tree stores and $7,809 family dollars. Last week, we opened up our 24th U.S. distribution center located in Morrow County, Ohio, on time, on budget. The 1.2 million square foot facility is creating approximately 400 jobs in central Ohio and will initially be serving Dollar Tree stores. It is equipped with the necessary systems to serve both Dollar Tree and Family Dollar segments in the future. I would call out the partnership and support we received from the state of Ohio, Morrow County, and the surrounding communities has been just outstanding. Before I turn the call over to Duncan to discuss the Family Dollar business, I'd like to provide you all an update on tariffs. We have been operating in unique times, to say the least, as it relates to tariffs. As I stated one quarter ago, our merchandising teams have done an outstanding job of mitigating the effects of 25 percent tariffs imposed under Section 301 for Chinese goods, included on Lists 1, 2, and 3. Prior to the recent USTR announcements on List 4, as well as the additional 5 percent tariff increase on all lists, We believe our team had successfully mitigated most of the adverse effects of the Section 301 tariffs. We've negotiated price concessions, canceled orders, modified specs, evolved product mix, and diversified vendors. We're now taking actions to mitigate the recently announced tariff increases, and we'll continue to assess the future impact of those tariffs. Our merchandising team is experienced, committed, and talented. We have developed a tested and proven process for mitigating costs and have the metrics in place to track and measure success. The team will continue to focus on delivering great values to our customers while managing and protecting margins. I'll now turn the call over to Duncan.