Celebrating Our Heroes
2020 Annual Report
Thank you to our heroes
for their extraordinary work!
ollar Tree, Inc. is a leading operator of
discount variety stores that has
served North America for more
D
than thirty years. The Company
operates more than 15,600 stores
across the 48 contiguous states
and five Canadian provinces,
supported by a coast-to-coast
logistics network and more than
200,000 associates. Dollar Tree
is known for its “thrill-of-the-hunt”
shopping experience where
customers discover new treasures
every week, priced at $1. Family
Dollar, known as “the neighborhood
discount store,” provides customers
with a quality, high-value assortment of
basic necessities and seasonal merchandise, all
generally priced at $10 or less.
In 2020, the Company continued testing,
modifying, and expanding its newest
initiatives – Dollar Tree Plus!, which
provides Dollar Tree customers with
even greater deals at the $3
and $5 price points, and the
Combination “Combo” Store
format, bringing the best of
both brands together under
one roof in rural markets
across the U.S. The Company
continues to grow its
store footprint and is also
reaching new customers online
at www.DollarTree.com,
www.FamilyDollar.com, the Family
Dollar mobile app and through Family
Dollar’s new partnership with Instacart,
providing customers with same-day delivery options.
Store Count
(at year end)
15,685
15,288
15,237
14,835
14,334
ʻ16
ʻ17
ʻ18
ʻ19
ʻ20
“Each of our associates
were heroes over the past
year. The Company values
their dedication to serving
millions of households across
North America who rely on
our stores for great value
and essentials in safe,
close-to-home locations.”
Net Sales
(in billions)
$25.5
$23.6
$22.8
$22.2
$20.7
ʻ16
ʻ17*
ʻ18
ʻ19
ʻ20
*Includes impact of extra calendar week.
To Our Valued Shareholders:
My hope is that each of you and your loved ones are
safe and doing well. 2020 presented numerous unique
challenges, not just to retail, but to the lives of millions in
the communities we serve across North America. The
tenacity, perseverance, and strength demonstrated by
frontline workers – medical professionals, first responders,
health agencies, scientists and researchers, assisted living
staff and caretakers, education administrators and teachers,
essential workers, and others – has been
truly inspiring.
“Thank you to our heroes for
their extraordinary work!“
My sincerest gratitude goes out to the Dollar Tree and
Family Dollar heroes, our more than 200,000 associates,
working in more than 15,600 stores and 26 distribution
centers, as well as the support teams in the field and in
the Store Support Center (SSC) in Chesapeake, Virginia.
While fiscal 2020 had one of the most unpredictable
and challenging business environments in my 40-year
retail career, I am incredibly proud of each associate’s
dedication to serving our shoppers in their critical times of
need. I have had the pleasure of reading hundreds
of customer letters regarding how our associates have
gone “above and beyond” to serve their communities
and neighbors. Their efforts contributed to our Company’s
successes in 2020. As an essential retailer in the value
segment, we have been, and will continue to be, “part of
the solution” for millions of households seeking great value,
in convenient and safe shopping locations. Thank you to
our heroes for their extraordinary work!
Additionally, I would like to recognize the efforts of our
business partners, both supply chain and suppliers, for their
support of our stores throughout the year. As we continue
to grow, so does our need and support from each of our
business partners. We appreciate their partnership and
look forward to many successful years ahead of us.
Year in Review
In 2020, we exceeded $25 billion in annual sales for
the first time in our Company’s history. The strategic
initiatives that have been refined and proven, along
with a streamlined execution plan led by our seasoned
leadership team, built a strong foundation to produce
record results, including:
• Driving an enterprise same-store sales increase of
6.1%, on top of the prior year’s 1.8% increase;
• Growing gross profit by more than $740.0 million,
a 70 basis point improvement from the prior year,
despite incurring $36.3 million of COVID-related
costs;
• Leveraging selling, general and administrative
expenses by 140 basis points, despite incurring
$242.8 million in COVID-related costs;
• Improving enterprise operating profit margin to 7.4%,
a 210 basis point improvement from fiscal 2019;
and
• Delivering annual diluted earnings per share of
$5.65.
Along with a strong operating performance in 2020,
our teams were extremely focused on the ongoing
proactive and precautionary actions to help mitigate the
effects of COVID-19. Since the onset of the pandemic, our
associates have worked diligently to maintain safe and
clean environments to help mitigate risks, while keeping
store shelves stocked with essential products at great value
in convenient, close-to-home locations. Our teams are
focused on value, convenience, and safety and we will
continue to be relentless in our efforts to help protect one
another until this pandemic is behind us.
Dollar Tree
The Dollar Tree segment delivered its 15th consecutive
year of same-store sales increases, with a positive 2.2%
comp. In fact, the team has now delivered same-store
sales increases in 51 of its last 52 quarters, with the first
quarter of 2020 being the only exception due to the
effects that the pandemic had on the brand’s Easter
seasonal business.
“Our teams are focused on
value, convenience, and safety.“
Building on the success of our craft department, we
completed the rollout of Crafter’s Square® to all U.S. Dollar
Tree stores in late fiscal 2020. Inspiring the creativity of
our customers is at the core of the Dollar Tree brand
and we are thrilled to provide a broader assortment of
art and craft supplies to our shoppers. With our $1 price
point and more than 7,500 U.S. store locations, Crafter’s
Square provides unlimited solutions for the “learn-from
home” and “work-from-home” environment. Additionally,
terrific opportunities exist for DIY home projects and
décor, crafts for the entire family, seasonal decorations,
and handmade gifts.
Throughout the year, we continued to test, modify,
and improve the Dollar Tree Plus! initiative and we are
expanding the multi-price assortment to a total of 500
stores by August 2021. Dollar Tree Plus! exceeded our
sales plan for the holiday season as we experienced
great sell-through on seasonal products, toys, and
household consumables. When multi-price items are
included in the basket, the average transaction value is
approximately twice the size. Additionally, we expect
to benefit from buying synergies, since many of the $3
and $5 items will also now be offered at Family Dollar
stores. We anticipate providing periodic updates on our
progress with this exciting initiative.
Family Dollar
Our Family Dollar team delivered a 10.5% same-store
sales increase and a 610 basis point improvement in
operating margin in fiscal 2020.
Since consolidating our support teams into one SSC
location and realigning our merchandising and operations
leadership in 2019, we have enhanced and aligned
communications, strategies, processes, workflows, and
accountability, throughout the entire enterprise.
“The goal is to have various store
formats that offer the best of
the Dollar Tree and Family Dollar
brands to serve customers in all
types of geographic markets.“
The progress we have made at Family Dollar in
the past year has been remarkable. Our shoppers
are responding to the new merchandise offerings and
improved operational execution in our stores and we
are seeing a considerable lift in our customer satisfaction
survey scores highlighting four key categories: store
cleanliness; product assortment; customer service; and
speed of check-out. Contributors to this success have
been:
• The new and renovated H2 store format, where we
see a same-store sales lift of greater than 10% in the
first year (when compared to non-renovated stores);
• Improved merchandise offerings, including a larger
variety of $1 products;
• An enhanced brand standards program, which
clearly conveys expectations to the store teams;
and
• Family Dollar’s lowest annual store manager
turnover rate in a decade.
The improved customer satisfaction results give us
confidence that we will be able to retain shoppers that
have discovered, or re-engaged with, Family Dollar within
the past year. I am confident that Family Dollar will exit the
pandemic as a much stronger brand.
In late 2020, we announced our new national
partnership with Instacart, providing customers with same-
day delivery options from more than 6,000 Family Dollar
stores. The initial results have exceeded our expectations
and these transactions have a materially higher average
ticket. We are focused on meeting the evolving needs of
our Family Dollar customers and we believe the Instacart
platform is enabling us to broaden the reach of our Family
Dollar customer base.
We have also just begun testing the addition of fresh
produce and frozen meats to select Family Dollar stores,
geared toward markets where shoppers have fewer local
grocery options. We want to provide these customers
with convenient access to basic produce items, as well as
beef, poultry, and pork.
Two Great Stores, One Big Deal!
Building on the success of the Family Dollar H2 store
renovation program, we recently announced our newest,
tested, and proven concept, the Combination (or Combo)
Stores. These stores are more productive, produce higher
gross margins, are better leveraging store costs, and, in
aggregate, have delivered same-store sales lifts of greater
than 20%.
The Combo Stores combine Family Dollar’s great
value and assortment with Dollar Tree’s “thrill-of-the-hunt”
and $1 price point – creating a new store format targeting
small towns and rural areas with populations ranging
from 3,000 to 4,000 people. These are markets where
we would traditionally not open a Dollar Tree store alone.
Nearly 50 Combo Stores were open at the end of fiscal
2020, and we will continue to expand the store format
offering in 2021, with more than 3,000 markets identified
for future growth. We are writing a bold new chapter for
our business, with two great stores coming together under
one roof, providing years of opportunity to grow across
small-town America.
We are extremely pleased with our customers’
response to the Combo Stores and we will continue to
refine strategic store formats designed to serve more
customers. The goal is to have various store formats that
offer the best of the Dollar Tree and Family Dollar brands
to serve customers in all types of geographic markets.
Both the H2 format and Combo Stores will be part of the
Family Dollar new store and renovation strategy moving
forward.
Diversity, Equity, and Inclusion (DEI)
Executive Council
Our organization has a cascading impact on all of
the communities we serve, from our associates and
their families, to vendors, suppliers, and the millions of
households who rely on our convenient store locations
to get the products they need at great value. With the
support of our newly created DEI Executive Council, we
are focused on embracing our differences, ensuring fair
treatment, and providing equal access to opportunities
and resources.
Our Company is firmly committed to creating a
positive and professional work environment where all
associates demonstrate courtesy, dignity, and respect
for others. We are committed to fostering an inclusive
environment where the individual differences among
us are understood, respected, and appreciated as a
valuable source to strengthen our Company. These
principles are supported by our commitment to being an
Equal Opportunity Employer with anti-harassment, non
discrimination, and non-retaliation policies.
Doing the right thing is fundamental to creating
and sustaining an effective, organizational value
system. Demonstrating ethical behavior towards our
customers, communities, and each other is essential to our
sustainability. Our Company is committed to equity and
inclusion and we will not tolerate racism or discrimination
in any form.
I stand in unity with our associates, and together, we
can drive an inclusive culture that continuously strives for
better and equal outcomes for every life we touch.
Commitment to Governance
and Shareholder Value
We are committed to responsible corporate governance
that delivers sustainable, long-term value to our
shareholders. Our Board, led by our Executive Chairman,
Lead Independent Director, and Committee Chairpersons,
is active and engaged in setting the strategic direction of
our business.
We again achieved a “clean bill of health” in 2020
from our external auditors, with no material control
weaknesses noted in the assessment, underscoring that
our accounting and reporting processes are compliant
with the intentions and requirements of Sarbanes-Oxley
legislation.
We continue to generate free cash flow in excess
of our investment needs, which we have used to pay
down more than $5 billion of debt and repurchase $600
million in shares since completing the acquisition of the
Family Dollar business in July 2015. The best use of capital,
in our view, is to support the continued growth of our
business at a sustainable pace.
“I stand in unity with our
associates, and together, we
can drive an inclusive culture
that continually strives for better
and equal outcomes for every
life we touch.“
Our Board values diversity, in its broadest sense,
reflecting, but not limited to, geography, gender, ethnicity,
and life experience and is committed to a policy of
inclusiveness. The Board and our management team
recognizes the importance of assessing, planning for, and
disclosing the potential impact of environmental, social,
and governance (ESG) risks to our business. The Board’s
Nominating, Governance and Sustainability Committee
has the lead role in overseeing our risks and reporting
related to ESG matters and sustainability, with the
Compensation Committee having the lead role in Human
Capital Management and DEI oversight. Among other
initiatives, it has directed the creation of the following
new corporate policies to provide enhanced ESG
transparency and guidance to our stakeholders:
• Environmental Policy;
• Human Rights Policy;
• Health and Safety Policy;
• Code of Vendor Conduct; and
• Political Contribution and Expenditure Policy.
Additionally, it is our strong belief that safeguarding
shareholder value requires that the Company carefully
assess and address the risks inherent in our business. In
particular, our Board and management recognize the
importance of planning for the potential impact of climate
change and other sustainability risks, and we are taking
action to evaluate how our long-term business strategy
may be adapted to address these potential challenges.
We have recently issued an expanded Corporate
Sustainability Report regarding our recent findings and
identified opportunities.
“I wish you and your family
good health and many
prosperous years to come.“
We maintain an open dialogue with shareholders
on governance-related practices, which reflect the
input and best interests of our shareholders. We value
honesty, integrity, and transparency in all aspects of our
business and these values are reflected in the strength
of our financial controls and in the relationships with our
customers, vendor partners, associates, and especially our
shareholders.
2021 and Beyond
I am extremely enthusiastic about our opportunities in
2021 and beyond, including innovative and traffic-driving
initiatives, the expansion of Dollar Tree Plus! and the new
Combo Stores opening in small towns and rural markets
across America. It is truly an exciting time of growth for
both our brands and we are building on the momentum
following last year’s strong performance.
At the end of fiscal 2020, we had more than $1.4
billion in cash on our balance sheet and we have $2.4
billion remaining on our share repurchase authorization.
As communicated on our 2020 fourth quarter earnings
conference call, we expect that capital expenditures for
2021 will total approximately $1.2 billion and the majority
of the excess cash flow may be dedicated to share
repurchases. Our 2021 capital expenditures will focus on:
• 600 new stores and 1,250 Family Dollar
renovations;
• Addition of frozen and refrigerated capability in
select stores;
• I.T. systems enhancements and projects;
• Development of our Chesapeake, Virginia campus;
• Installation of LED lighting and efficient HVAC in
select stores;
• Flooring replacements in select stores; and
• The ongoing construction of the 2nd phase of our
new distribution center in Ocala, Florida.
I am incredibly proud of our talented teams’
accomplishments, commitment, dedication, and focus. We
believe our proven strategic store formats, an accelerated
store growth plan, planned store renovations, and several
key sales- and traffic-driving initiatives, along with a robust
balance sheet, will enable us to deliver long-term value
for each of our stakeholders – customers, associates,
suppliers, and shareholders.
I wish you and your family good health and many
prosperous years to come. Thank you for your interest and
continued support of Dollar Tree.
Stay safe and be well,
Michael A. Witynski
President and Chief Executive Officer
Table of Contents
(Mark One)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended January 30, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from
to
Commission file number: 0-25464
DOLLAR TREE, INC.
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of incorporation or organization)
26-2018846
(I.R.S. Employer Identification No.)
500 Volvo Parkway
Chesapeake, Virginia
(Address of principal executive offices)
23320
(Zip Code)
Registrant’s telephone number, including area code: (757) 321-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s) Name of each exchange on which registered
Common Stock, par value $.01 per share
DLTR
NASDAQ Global Select Market
Securities registered pursuant to section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒
No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐
No ☒
Table of Contents
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒
No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☒
No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report.
☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐
No ☒
The aggregate market value of common stock held by non-affiliates of the registrant on July 31, 2020, the last business day of the
registrant’s most recently completed second fiscal quarter, was $21,864,456,043, based upon the closing sale price for the registrant’s
common stock on such date. For purposes of this computation, all executive officers and directors have been deemed to be affiliates.
Such determination should not be deemed to be an admission that such executive officers and directors are, in fact, affiliates of the
registrant.
On March 10, 2021, there were 233,420,925 shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The information called for in Items 10, 11, 12, 13 and 14 of Part III, to the extent not set forth herein, is incorporated by reference
to the definitive Proxy Statement for the Annual Meeting of Stockholders to be held June 10, 2021, which will be filed with the
Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended January 30, 2021.
2
DOLLAR TREE, INC.
FORM 10-K
FOR THE FISCAL YEAR ENDED JANUARY 30, 2021
TABLE OF CONTENTS
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
PART I
PART II
Item 5.
Item 6.
Item 7.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Item 12.
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accountant Fees and Services
PART IV
Item 15.
Exhibit and Financial Statement Schedules
Item 16.
Form 10-K Summary
Signatures
Page
6
13
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42
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Table of Contents
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains “forward-looking statements” as that term is used in the Private Securities Litigation
Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments and
results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical facts may be
deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed
by or including words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “view,” “target” or “estimate,” “may,” “will,”
“should,” “predict,” “possible,” “potential,” “continue,” “strategy,” and similar expressions. For example, our forward-looking
statements include, without limitation, statements regarding:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
The potential effect of general business or economic conditions on our business, including the direct and indirect effects of
the COVID-19 pandemic on the economy, consumer spending levels, and unemployment in our markets;
The uncertainty of the impact of the COVID-19 pandemic and public health measures on our business and results of
operations, including uncertainties surrounding possible disruptions in our supply chain or sources of supply, the physical
and financial health of our customers, the effectiveness and duration of government assistance programs to individuals,
households and businesses to support consumer spending, levels of foot traffic in our stores, changes in customer demand
for our consumable and essential products as well as our discretionary products, and increased expenses for higher wages
and bonuses paid to associates and the cost of personal protective equipment and additional cleaning supplies and protocols
for the safety of our associates;
Our expectations regarding cost increases in the future, including costs relating to our COVID-19 response initiatives,
increases in the minimum wage by states and localities, potential federal minimum wage legislation, increases in shipping
rates, domestic freight, other distribution costs, and fuel costs and potential new legal requirements to provide increased
pay for associates who work during pandemic restrictions (“hero pay”) and a potential increase in the minimum salary for
exempt store managers;
The disruptions in shipping from China, particularly the shortages in shipping capacity resulting from container shortages,
and the resulting delays in having merchandise from China delivered to our distribution centers when needed.
Our growth plans, including our plans to add, renovate, re-banner, expand, remodel, relocate or close stores and any related
costs or charges, our anticipated square footage increase, our leasing strategy for future expansion, and our ability to renew
leases at existing store locations;
Our anticipated sales, comparable store net sales, net sales growth, gross profit margin, costs of goods sold (including
product mix), shrink rates, earnings and earnings growth, inventory levels, selling, general and administrative and other
fixed costs, and our ability to leverage those costs;
The expected and possible outcome, costs, and impact of pending or potential litigation, arbitrations, other legal
proceedings or governmental investigations (including the proceeding by the Food and Drug Administration);
The effect of our initiatives to renovate Family Dollar stores to the H2 store format and the performance of that format, the
sales mix of consumable and higher margin merchandise in Dollar Tree and Family Dollar stores, including an increase in
the number of stores with freezers and coolers and the roll-out of adult beverages, on our results of operations;
Our plans relating to new store openings and new store concepts such as Dollar Tree Plus! and our Combination Store
format;
The impact of trade relations and the ongoing trade dispute between the United States and China, including the actual and
potential effect of Section 301 tariffs on Chinese goods imposed by the United States Trade Representative, uncertainties
surrounding the policies of the new presidential administration, and other potential impediments to imports;
The reliability of, and cost associated with, our sources of supply, particularly imported goods such as those sourced from
China and domestic goods which are in higher demand as a result of the COVID-19 pandemic;
The effect of changes in labor laws, and the effect of the Fair Labor Standards Act as it relates to the qualification of our
managers for exempt status, minimum wage and health care law;
Our seasonal sales patterns and customer demand including those relating to the important holiday selling seasons and
party merchandise;
The average size and productivity of our stores, including those to be added in 2021 and beyond;
Our cash needs, including our ability to fund our future capital expenditures, working capital requirements and repurchases
4
Table of Contents
of common stock under our repurchase program, and our ability to service our debt obligations, including our expected
annual interest expense;
Our expectations regarding the construction of new distribution centers and the capabilities of our distribution center
network;
Our expectations regarding compliance with debt covenants and stock repurchases;
Our expectations regarding competition and our potential for long-term growth;
Our assessment of the impact on us of certain actions by activist shareholders and our potential responses to these actions;
Our assessment of the materiality and impact on our business of recent accounting pronouncements adopted by the
Financial Accounting Standards Board;
•
•
•
•
•
•
Management’s estimates and expectations as they relate to income tax liabilities, deferred income taxes and uncertain tax
positions; and
•
Management’s estimates associated with our critical accounting policies, including inventory valuation, self-insurance
liabilities and valuations for our goodwill and indefinite-lived intangible assets impairment analyses.
A forward-looking statement is neither a prediction nor a guarantee of future results, events or circumstances. You should not
place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. Our
forward-looking statements are all based on currently available operating, financial and business information. The outcome of the
events described in these forward-looking statements is subject to a variety of factors, including, but not limited to, the risks and
uncertainties discussed under “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and elsewhere in this Form 10-K.
We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or
occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
Moreover, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that
could have an impact on our forward-looking statements.
We do not undertake to publicly update or revise any forward-looking statements after the date of this Form 10-K, whether as a
result of new information, future events, or otherwise.
Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, it is against
our policy to disclose to them any material, nonpublic information or other confidential commercial information. Accordingly,
shareholders should not assume that we agree with any statement or report issued by any securities analyst regardless of the content of
the statement or report. Furthermore, we have a policy against confirming projections, forecasts or opinions issued by others. Thus, to
the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our
responsibility.
Introductory Note
Unless otherwise stated, references to “we,” “our” and “us” generally refer to Dollar Tree, Inc. and its direct and indirect
subsidiaries on a consolidated basis. Unless specifically indicated otherwise, any references to “2021” or “fiscal 2021,” “2020” or
“fiscal 2020,” “2019” or “fiscal 2019,” and “2018” or “fiscal 2018,” relate to as of or for the years ended January 29, 2022,
January 30, 2021, February 1, 2020 and February 2, 2019, respectively.
Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on our website
at www.dollartree.com as soon as reasonably practicable after electronic filing of such reports with the Securities and Exchange
Commission (“SEC”).
5
Table of Contents
Item 1. Business
Overview
PART I
We are a leading operator of discount variety stores. We believe the convenience and value we offer are key factors in serving and
growing our base of loyal customers. At January 30, 2021, we operated 15,685 discount variety retail stores. Our stores operate under
the brand names of Dollar Tree, Family Dollar and Dollar Tree Canada.
We operate in two reporting business segments: Dollar Tree and Family Dollar. For discussion of the operating results of our
reporting business segments, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” under the caption “Segment Information” and Note 12 to our consolidated financial statements.
Impact of COVID-19
Beginning in fiscal 2020, our business was affected by the COVID-19 pandemic. As an essential business, our stores and
distribution centers have remained open during the pandemic; however, our business trends and operations have been impacted in
various ways. For example, we have experienced fewer customer visits and higher average ticket and the mix and profit margin of
products purchased by our customers has differed from historical patterns. We have seen a shift in our customers’ purchases towards
higher-margin discretionary products. We have also experienced changes in when our customers are shopping relative to the dates of
seasonal holidays with spending occurring further in advance of the holidays than in previous years.
The future impact of COVID-19 on our customers is difficult to predict as the course of the pandemic, the effectiveness of health
measures, and the impact of ongoing economic stabilization efforts is uncertain and government assistance payments may not provide
enough funding to support current spending levels. The American Rescue Plan Act of 2021 (“Rescue Act”), which was enacted on
March 11, 2021, provides U.S. government funding to address the continuing impact of COVID-19 on the economy, public health,
individuals and businesses. Among other things, the Rescue Act provides for $1,400 direct payments to individuals, continues
supplemental unemployment benefits until September 2021, extends a prior increase in food stamp benefits, expands the child tax
credit and earned income tax credit, provides for rent and utility assistance, and funds COVID-19 vaccinations, testing, treatment and
prevention. An increase in the federal minimum wage was not included in the Rescue Act as enacted. During fiscal 2020, we paid
wage premiums to our store and distribution center associates as well as “Thank You” bonuses to our store managers in recognition of
their extraordinary efforts during the COVID-19 pandemic, which increased our costs. We currently do not anticipate paying these
types of premiums and bonuses in fiscal 2021.
As a result of COVID-19, our supply chain has been strained and our suppliers have faced challenges in keeping up with the
unprecedented demand for essential goods, as well as discretionary goods. Recently, the ocean-shipping industry has faced capacity
issues resulting in higher costs and delays in the shipment of products from Asia. We continue to make operational changes in an
attempt to minimize the impact of these challenges on our business; however, we do not know how long these disruptions will
continue. For additional information regarding the impact of COVID-19 on our business, refer to the discussion in this Item 1. below
and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Dollar Tree
Our Dollar Tree segment is the leading operator of discount variety stores offering merchandise predominantly at the fixed price
point of $1.00. The Dollar Tree segment includes 7,805 stores operating under the Dollar Tree and Dollar Tree Canada brands, 15
distribution centers in the United States and two in Canada. Our stores predominantly range from 8,000 - 10,000 selling square feet. In
our Dollar Tree stores in the United States, we sell items primarily for $1.00 or less and in our Dollar Tree Canada stores, we sell
items principally for $1.25(CAD) or less. Our revenue and assets in Canada are not material. We are the owners of several trademarks
including “Dollar Tree” and the “Dollar Tree” logo.
We strive to exceed our customers’ expectations of the variety and quality of products they can purchase for $1.00 by offering
items we believe typically sell for higher prices elsewhere. We buy approximately 60% to 62% of our merchandise domestically and
import the remaining 38% to 40%. Our domestic purchases include basic, home, closeouts and promotional merchandise. We believe
our mix of imported and domestic merchandise affords our buyers flexibility that allows them to consistently exceed our customers’
expectations. In addition, direct relationships with manufacturers permit us to select from a broad range of products and customize
packaging, product sizes and package quantities that meet our customers’ needs.
We believe that our initiatives positively affect our comparable store net sales. In fiscal 2019, we introduced our Crafter’s Square
initiative in more than 650 stores. This offering includes a new expanded assortment of arts and crafts supplies. During fiscal 2020, we
expanded this program, completing the roll-out to all of our Dollar Tree stores. The Crafter’s Square assortment carries mark-ups
which are higher than our average mark-up. Additionally, for more than a year, we have tested a multi-price initiative referred to as
Dollar Tree Plus! Beginning in fiscal 2019, we began testing multi-price assortments in more than 100 stores in southwestern markets.
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Based on learnings from the test, we made modifications to: the mix of products offered to include primarily discretionary items; the
displays and signage to drive awareness and excitement to the stores; the price points to focus on the $1, $3 and $5 price points; and
increase the number of offerings above the $1 price point. We plan to expand this initiative into a total of 500 stores beginning in the
first quarter of fiscal 2021. We believe these initiatives have and will continue to enable us to increase sales and earnings.
We carry approximately 7,500 items in our Dollar Tree stores and as of the end of fiscal 2020 approximately 34% of our items are
automatically replenished. The remaining items are pushed to the stores and a portion can be reordered by our store managers on a
weekly basis. Through automatic replenishment and our store managers’ ability to order product, each store manager is able to satisfy
the demands of their particular customer base.
We maintain a balanced selection of products within traditional variety store categories. We offer a wide selection of everyday
basic products and we supplement these basic, everyday items with seasonal, closeout and promotional merchandise. We attempt to
keep certain basic consumable merchandise in our stores continuously to establish our stores as a destination and increase traffic in our
stores. Closeout and promotional merchandise is purchased opportunistically and represents less than 10% of our purchases.
The merchandise mix in our Dollar Tree stores consists of:
•
•
•
consumable merchandise, which includes everyday consumables such as household paper and chemicals, food, candy,
health and personal care products, and in many stores, frozen and refrigerated food;
variety merchandise, which includes toys, durable housewares, gifts, stationery, party goods, greeting cards, softlines, arts
and crafts supplies and other items; and
seasonal goods, which include, among others, Christmas, Easter, Halloween and Valentine’s Day merchandise.
For information regarding the amounts and percentages of our net sales contributed by the above merchandise categories for the
last three fiscal years, please refer to Note 12 to our consolidated financial statements.
Family Dollar
Our Family Dollar segment operates general merchandise retail discount stores providing customers with a selection of
competitively-priced merchandise in convenient neighborhood stores. Our stores predominantly range from 6,000 - 8,000 selling
square feet. In our 7,880 Family Dollar stores, we sell merchandise at prices that generally range from $1.00 to $10.00. The Family
Dollar segment consists of our store operations under the Family Dollar brand and 11 distribution centers. We are the owners of the
trademarks “Family Dollar,” “Family Dollar Stores” and other names and designs of certain merchandise sold in Family Dollar stores.
Our Family Dollar stores provide customers with a quality, high-value assortment of basic necessities and seasonal merchandise.
We offer competitively-priced national brands from leading manufacturers alongside name brand equivalent-value, lower-priced
private labels. We purchase merchandise from a wide variety of suppliers and generally have not experienced difficulty in obtaining
adequate quantities of merchandise. In fiscal 2020, we purchased approximately 13% of our merchandise through our relationship
with McLane Company, Inc., which distributes consumable merchandise from multiple manufacturers. In addition, approximately
16% of our merchandise is imported directly.
We are executing several initiatives in our Family Dollar stores to increase sales. During 2020, we entered into a partnership with
Instacart to enable our customers to shop online and receive merchandise without having to visit a store. During 2019, we introduced a
new model for both new and renovated Family Dollar stores internally known as H2. This H2 model has significantly improved
merchandise offerings, including approximately 20 Dollar Tree $1.00 merchandise sections and establishing a minimum number of
freezer and cooler doors, throughout the store. H2 stores have higher customer traffic and provide an average comparable store net
sales lift in excess of 10%, when compared to non-renovated stores, in the first year following renovation. H2 stores perform well in a
variety of locations and especially in locations where our Family Dollar stores have been most challenged in the past. As of
January 30, 2021, we have approximately 2,385 H2 stores. We plan to renovate at least 1,250 stores to this format in fiscal 2021 and
also plan to build new stores in this format.
Building on the success of the H2 format, we have developed a Combination Store which leverages both the Dollar Tree and
Family Dollar brands to serve small towns across the country. We are combining Family Dollar’s great value and assortment with
Dollar Tree’s “thrill of the hunt” and fixed price point, creating a new strategic store format targeted for small towns and rural
communities with populations of 3,000 to 4,000 residents.
While the number of items in a given store can vary based on the store’s size, geographic location, merchandising initiatives and
other factors, our typical Family Dollar store generally carries approximately 7,600 basic items alongside items that are ever-changing
and seasonally-relevant throughout the year.
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The merchandise mix in our Family Dollar stores consists of:
•
•
•
•
consumable merchandise, which includes food and beverages, tobacco, health and personal care products, household
chemicals, paper products, hardware and automotive supplies, diapers, batteries, and pet food and supplies;
home products, which include housewares, home décor, giftware, and domestics, including comforters, sheets and towels;
apparel and accessories merchandise, which includes clothing, fashion accessories and shoes; and
seasonal and electronics merchandise, which includes Christmas, Easter, Halloween and Valentine’s Day merchandise,
personal electronics, including pre-paid cellular phones and services, stationery and school supplies, and toys.
For information regarding the amounts and percentages of our net sales contributed by the above merchandise categories for the
last three fiscal years, please refer to Note 12 to our consolidated financial statements.
Business Strategy
Continue to execute our proven and best‑in‑class retail business strategy. We will continue to execute our proven strategies that
have generated a history of success and continued growth for us. Key elements of our strategy include:
•
aiming continuously to “Wow” the customer with a compelling, fun and fresh merchandise assortment comprising a variety
of the things you want and things you need, all at incredible values in bright, clean and friendly stores;
•
maintaining a flexible sourcing merchandise model that allows a variety of products to be sold as long as desired
merchandise margin thresholds are met;
growing and improving both the Dollar Tree and Family Dollar brands;
pursuing a “more, better, faster” approach to the roll-out of new Dollar Tree and Family Dollar stores to broaden our
geographic footprint;
•
•
•
maintaining customer relevance by ensuring that we reinvent ourselves constantly through new merchandise categories and
initiatives;
•
leveraging the complementary merchandise expertise of each segment including Dollar Tree’s sourcing and product
development expertise and Family Dollar’s consumer package goods and national brands sourcing expertise; and
•
maintaining a prudent approach with our use of capital for the benefit of our shareholders.
Operate a diversified and complementary business model across both fixed‑price and multi‑price point strategies. We plan to
operate and grow both the Dollar Tree and Family Dollar brands. We will utilize the reach and scale of our combined company to
serve a broader range of customers in more ways, offering better prices and more value for the customer. At Dollar Tree, everything is
predominantly $1.00, offering the customer a balanced mix of things they need and things they want. Our shopping experience will
remain fun and friendly as we exceed our customers’ expectations for what they can buy for $1.00. As noted previously, we plan to
expand our Dollar Tree Plus! initiative into a total of 500 stores beginning in the first quarter of fiscal 2021. Merchandise in these
stores includes select items which retail for more than $1.00 but not more than $5.00 and maintain our customers’ expectations of
extreme value. Dollar Tree serves a broad range of income customers in suburban locations. Family Dollar stores will continue to
operate using multiple price points, serving customers as their “neighborhood discount store,” offering great values on everyday items
and a convenient shopping experience. Family Dollar primarily serves a lower than average income customer in urban and rural
locations. We expect to benefit from an expanded target customer profile and utilize the store concepts of both Dollar Tree and Family
Dollar to serve a broader range of customer demographics to drive further improvements in sales and profitability.
Take advantage of significant white-space opportunity. Over the past decade we have built a solid and scalable infrastructure,
which provides a strong foundation for our future growth. We are committed to growing our combined business to take advantage of
significant market or white space opportunities that we believe exist for both the Dollar Tree and Family Dollar store concepts. Using
our proven real estate strategy across our combined business, we intend to drive future store openings by capitalizing on data‑driven
insights regarding location, target customer profile, competitive dynamics and cost structure. Over the long-term, we believe that the
market can support more than 10,000 Dollar Tree stores and 15,000 Family Dollar stores across the United States, and approximately
1,000 Dollar Tree stores in Canada.
Convenient Locations and Store Size. We focus primarily on opening new Dollar Tree stores in strip shopping centers anchored
by large retailers who draw target customers we believe to be similar to ours. Our stores are successful in metropolitan areas, mid-
sized cities and small towns. We open new Family Dollar stores in strip shopping centers, freestanding buildings and downtown
buildings. The range of our new store sizes, 8,000 - 10,000 selling square feet for Dollar Tree and 7,000 - 10,000 selling square feet
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for Family Dollar, allows us to target a particular location with a store that best suits that market and takes advantage of available real
estate opportunities. Our stores are attractively designed and create an inviting atmosphere for shoppers by using bright lighting,
vibrant colors and decorative signs. We enhance the store design with attractive merchandise displays. We believe this design attracts
new and repeat customers and enhances our image as both a destination and impulse purchase store.
Profitable Stores with Strong Cash Flow. We maintain a disciplined, cost-sensitive approach to store site selection in order to
minimize the initial capital investment required and maximize our potential to generate high operating margins and strong cash flows.
We believe that our Dollar Tree stores and our urban Family Dollar stores have a relatively small shopping radius, which allows us to
profitably concentrate multiple stores within a single market. In addition, our rural Family Dollar stores have a larger shopping radius,
allowing us to profitably locate in these areas because of our ability to reach customers who live farther from our stores. Our ability to
open new stores is dependent upon, among other factors, locating suitable sites and negotiating favorable lease terms.
The strong cash flows generated by our stores allow us to self-fund infrastructure investment and new stores. Typically, our cash
flows from operating activities exceed our capital expenditures.
For more information on our results of operations, see “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.”
Merchandising Cost Control. We believe that our substantial buying power and our flexibility in making sourcing decisions
contributes to our successful purchasing strategy, which includes targeted merchandise margin goals by category. We also believe our
ability to negotiate with our vendor partners allows us to minimize the margin impact of economic pressures such as tariffs. We buy
products on an order-by-order basis and have no material long-term purchase contracts or other assurances of continued product
supply or guaranteed product cost. Historically, no vendor has accounted for more than 10% of total merchandise purchased by us.
Our supply chain systems continue to provide us with valuable sales information to assist our buyers and improve merchandise
allocation to our stores. We use this information to target our inventory levels in our distribution centers and stores in order to plan for
capacity and labor needs.
Information Systems. We believe that investments in technology help us to increase sales and control costs. Our inventory
management system provides information to calculate our estimate of inventory cost under the retail inventory method, which is
widely used in the retail industry. Our automated replenishment system replenishes key items, based on actual store-level sales and
inventory.
Point-of-sale data allows us to track sales and inventory by merchandise category at the store level and assists us in planning for
future purchases of inventory. We believe that this information allows us to ship the appropriate product to stores at the quantities
commensurate with selling patterns. Using this point-of-sale data to plan purchases has helped us manage our inventory levels.
Corporate Culture and Values. We believe that honesty and integrity, and treating people fairly and with respect are core values
within our corporate culture. We believe that running a business, and certainly a public company, carries with it a responsibility to be
above reproach when making operational and financial decisions. Our executive management team visits and shops at our stores like
every customer, and ideas and individual creativity on the part of our associates are encouraged, particularly from our store managers
who know their stores and their customers. We have standards for store displays, merchandise presentation, and store operations. We
maintain an open door policy for all associates. Our distribution centers are operated based on objective measures of performance and
virtually everyone in our store support centers is available to assist associates in our stores and distribution centers.
During 2020, we launched an enterprise Executive Diversity Council comprised of diverse leaders from every department within
the company who are charged with creating a diversity, equity and inclusion (“DEI”) strategy which is linked with our business goals,
catalyzing cultural change throughout the organization and driving accountability at the senior management level for progress on key
DEI objectives.
Our disclosure committee meets at least quarterly and monitors our internal controls over financial reporting to ensure that our
public filings contain discussions about the potential risks our business faces. We believe that we have appropriate controls in place to
be able to certify our financial statements. Additionally, we have complied with the listing requirements for the Nasdaq Global Select
Market.
Seasonality. For information on the impact of seasonality, see “Item 1A. Risk Factors” and “Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations.”
Growth Strategy
Store Openings, Relocations and Square Footage Growth. The primary factors contributing to our net sales growth have been
new store openings and an active store relocation, expansion and remodel program. In the last five years, net sales increased at a
compound annual growth rate of 5.3%. During this time, our store count and approximate selling square footage increased from
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13,851 and 108.4 million square feet at January 30, 2016 to 15,685 and 125.1 million square feet at January 30, 2021. We expect that
the majority of our future sales growth will come from new store openings in our Dollar Tree and Family Dollar segments and our
store expansion and relocation program as well as our renovation initiatives.
Our growth and productivity statistics are reported based on selling square footage because our management believes the use of
selling square footage yields a more accurate measure of store productivity. We expect to increase the selling square footage in our
stores in the future by opening new stores in underserved markets and strategically increasing our presence in our existing markets via
new store openings and store expansions (expansions include store relocations). In fiscal 2021 and beyond, we plan to predominantly
open Dollar Tree stores that are approximately 8,000 - 10,000 selling square feet and Family Dollar stores that are approximately
7,000 - 10,000 selling square feet. We believe these store sizes allow us to achieve our objectives in the markets in which we plan to
expand.
In addition to new store openings, we plan to continue our Dollar Tree and Family Dollar store relocation and expansion program
to increase our net sales per store and take advantage of market opportunities. We target stores for expansion based on the current
sales per selling square foot and changes in market opportunities. Stores targeted for expansion are generally less than 7,000 selling
square feet in size. Store expansions generally increase the existing store size by approximately 2,500 selling square feet. At
January 30, 2021, 6,591 of our Dollar Tree stores, totaling approximately 88% of our Dollar Tree segment selling square footage, were
7,000 selling square feet or larger.
Since 1995, we have added a total of 695 stores through several mergers and acquisitions, excluding our acquisition of Family
Dollar. Historically, our acquisition strategy has been to target companies that have a similar single price point concept that have
shown success in operations or companies that provide a strategic advantage. We evaluate potential acquisition opportunities as they
become available. In 2015, we completed our acquisition of Family Dollar which allowed us to create a diversified company with
complementary business models.
From time to time, we also acquire the rights to store leases through bankruptcy or other proceedings. We will continue to take
advantage of these opportunities as they arise depending upon several factors including their fit within our location and selling square
footage size parameters.
Merchandising and Distribution. Expanding our customer base is important to our growth plans. We plan to continue to stock our
stores with a compelling mix of ever-changing merchandise that our customers have come to appreciate. Consumable merchandise
typically leads to more frequent return trips to our stores resulting in increased sales. The presentation and display of merchandise in
our stores are critical to communicating value to our customers and creating a more exciting shopping experience. We believe our
approach to visual merchandising results in higher sales volume and an environment that encourages impulse purchases. We leverage
our merchandising team to source products that can be sold in both Dollar Tree and Family Dollar stores. Our Family Dollar H2 stores
include $1.00 sections of Dollar Tree merchandise and our Dollar Tree Plus! stores sell items at the $1.00, $3.00 and $5.00 price
points.
A strong and efficient distribution network is critical to our ability to grow and to maintain a low-cost operating structure. In fiscal
2020, we completed construction of our Rosenberg, Texas automated distribution center, which is 1.2 million square feet and currently
serves stores in our Dollar Tree segment. Additionally, in fiscal 2020, we completed construction of a 0.5 million square foot
distribution center in Ocala, Florida and we began shipping product from this facility during the third quarter of fiscal 2020. We
expect to complete an expansion of the Ocala, Florida distribution center in 2023. New distribution sites are strategically located to
reduce stem miles, maintain flexibility and improve efficiency in our store service areas.
We currently operate 26 distribution centers in the United States, 15 of which are primarily dedicated to serving our Dollar Tree
stores and 11 distribution centers primarily serve our Family Dollar stores. Our St. George, Utah distribution center, which is a legacy
Family Dollar facility, services both Dollar Tree and Family Dollar stores and we expect future distribution centers to be built with the
capability to service both Dollar Tree and Family Dollar stores.
Our distribution network supports multiple store formats including H2, Combination Stores and Dollar Tree Plus! We ship to our
H2 format stores from our Family Dollar distribution centers and we ship to our Dollar Tree Plus! format stores from our Dollar Tree
distribution centers. We ship to our Combination Stores from both Dollar Tree and Family Dollar distribution centers. We believe our
distribution center network is currently capable of supporting approximately $30.2 billion in annual sales in the United States. We also
are party to an agreement which provides distribution services from two facilities in Canada.
Our Dollar Tree stores receive approximately 90% of their inventory from our distribution centers via contract carriers and our
Family Dollar stores receive approximately 74% of their inventory from our distribution centers. The remaining store inventory,
primarily perishable consumable items and other vendor-maintained display items, are delivered directly to our stores from vendors.
Our Family Dollar stores receive approximately 13% of their merchandise from McLane Company, Inc. For more information on our
distribution center network, see “Item 2. Properties.”
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Competition
Our segment of the retail industry is fragmented and highly competitive and we expect competition to increase in the future. We
operate in the discount retail sector, which is currently and is expected to continue to be highly competitive with respect to price, store
location, merchandise quality, assortment and presentation, and customer service, including merchandise delivery and checkout
options. Our competitors include single-price dollar stores, multi-price dollar stores, mass merchandisers, on-line retailers, discount
retailers, drug stores, convenience stores, independently-operated discount stores, grocery stores and a wide variety of other retailers.
In addition, several competitors have sections within their stores devoted to “one dollar” price point merchandise, which further
increases competition. We believe we differentiate ourselves from other retailers by providing high-value, high-quality, low-cost
merchandise in attractively-designed stores that are conveniently located. Our sales and profits could be reduced by increases in
competition. There are no significant economic barriers for others to enter our retail sector.
Government Regulation
We are subject to a wide variety of local, state and federal laws and regulations within the United States and Canada. Compliance
with these laws and regulations often requires the dedication of our associates’ time and attention, as well as financial resources. In
fiscal 2020, compliance with these laws and regulations did not have a material effect on our capital expenditures, earnings or
competitive position.
Human Capital Resources
Our business success is built upon our dedicated, passionate and diverse associates who work and live in the communities we
serve. Our associates share our corporate values, “Attitude, Judgment, and Commitment.” We recruit and hire in these communities
using local job fairs, social media as well as local community service partners to provide part-time and full-time jobs that can become
lasting careers. Our Human Resources team, with oversight from our Board of Directors and their Committees, develops and executes
programs for compensation and benefits, onboarding and training, professional development, performance management, retention and
succession planning. We strive to create and maintain a safe working environment for our associates. We consider our relationship
with our associates to be good, and have not experienced significant interruptions of operations due to labor disagreements. We greatly
value our people and invest in their personal well-being and professional growth through various human capital programs and
initiatives, including the following:
•
•
•
•
Compensation and benefits: We are committed to providing market-competitive pay for all positions and we are a pay-for-
performance organization, offering performance-based compensation opportunities at nearly all levels of the organization,
including hourly-paid positions. We strive to ensure gender and racial pay equity for employees performing equal or
substantially similar work. Full-time associates can participate in our Retirement Savings Plan, which provides a dollar for
dollar match on the first 5% of employee contributions and all associates can participate in our Employee Stock Purchase
Plan. All full-time and part-time associates are eligible for competitive health and welfare benefits, including medical,
dental, vision, disability, life insurance and other benefits.
Health, wellness and family resources: In addition to making health and welfare benefits available to our associates, we
also support our associates and members of their household through our Employee Assistance Program, which includes
financial and legal services, as well as expert counsel in areas such as parenting, family issues and resilience skills. We
offer primary caregiver and parental leave to support our associates while they are starting or growing their families and we
have a program that provides financial support to associates recovering from natural disasters and personal hardships. To
support our associates with high school-aged children, we recently launched a scholarship program to provide access to
financial support in their pursuit of higher education.
Talent development: We believe in the growth and development of our associates and provide a multitude of professional
and leadership development experiences, including online and instructor-led trainings that enable associates to consume
relevant learning content for their current role and future career growth. To remove barriers to education, we recently
launched an education assistance program that provides tuition reimbursement, as well as discounted tuition at over 200
colleges and universities for our associates and their families. Our associates also receive personalized coaching and
advisement on degree programs that meet their needs. Retention of our associates is a focus for all leaders and we continue
to strive to improve our turnover rate. We monitor associate turnover as we know our success depends on retaining and
engaging talent in all areas of the business. To identify high-potential talent, leadership assesses talent at the store manager
level and above on a regular basis through structured talent reviews and succession planning paired with customized
development plans. This focus on talent has resulted in more than 35,600 promotions in 2020.
Diversity, equity and inclusion: We believe our associates should mirror our diverse customer base and the communities
we serve. In 2020, we launched an enterprise Executive Diversity Council comprised of diverse leaders from every
department within the company who are charged with creating a DEI strategy which is linked with our business goals,
catalyzing cultural change throughout the organization and driving accountability at the senior management level for
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progress on key DEI objectives.
As of January 30, 2021, we employed more than 199,300 associates, as follows:
Store and Distribution Center Associates
Dollar Tree
Family Dollar
Store Support Center
Associates
Total
Full-time Associates
Part-time Associates
Total
27,952
97,913
125,865
29,862
41,184
71,046
2,403
60,217
13
139,110
2,416
199,327
Part-time associates work an average of less than 30 hours per week and the number of part-time associates fluctuates depending
on seasonal needs.
COVID-19 Response. We implemented several changes to protect our associates and our customers in response to the COVID-19
pandemic and to ensure adherence to Centers for Disease Control and Prevention (CDC) recommendations. We provided personal
protective equipment including masks, gloves and sanitizers for our store and distribution center associates, installed plexiglass sneeze
guards at all store registers and enabled the majority of our store support center teams to work remotely. We provided wage premiums
for store and distribution center hourly associates, provided minimum guaranteed sales bonuses for store managers and pay
continuation for associates who tested positive for COVID-19. For additional information on the steps taken to support our associates
in response to the COVID-19 pandemic, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations.”
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Item 1A. Risk Factors
An investment in our common stock involves a high degree of risk. Any failure to meet market expectations, including our
comparable store sales growth rate, earnings and earnings per share or new store openings, could cause the market price of our stock to
decline. You should carefully consider the specific risk factors listed below together with all other information included or
incorporated in this report and other filings that we make from time to time with the SEC, including our consolidated financial
statements and accompanying notes. However, the risks and uncertainties that we face are not limited to those described below and
those set forth in our SEC filings. Additional risks and uncertainties not presently known to us or that we currently believe to be
immaterial may also arise. In such event, our business, financial condition, results of operations or prospects could be materially
adversely affected.
Profitability and Operational Risks
Our profitability is vulnerable to cost increases.
Future increases in costs such as wage and benefit costs, ocean shipping rates, domestic freight costs, fuel and energy costs, the
cost of merchandise, duties and tariffs, merchandise loss (due to theft, damage, or errors) and store occupancy costs would reduce our
profitability. Without respect to COVID-19-related premium pay, we expect material increases in wage rates and labor costs as well as
in shipping rates, freight and fuel costs in 2021. Certain states and localities have passed laws to increase the minimum wage
beginning in 2021 and are considering “hero pay”, i.e., laws that would require increasing the pay of certain associates if we remain
open when certain pandemic restrictions are implemented. In addition, the U.S. Congress is considering whether to pass national
minimum wage increases in 2021, and the current administration may consider raising the minimum salary for store managers who
have exempt status under the Fair Labor Standards Act. Separately, government or industry actions addressing the impact of climate
change may result in increases in merchandise or operating costs.
In our Dollar Tree segment, we do not raise the sales price of our merchandise to offset cost increases because we are committed
to selling primarily at the $1.00 price point to continue to provide value to the customer. We are dependent on our ability to adjust our
product assortment, to operate more efficiently or to increase our comparable store net sales in order to offset cost increases. We can
give no assurance that we will be able to operate more efficiently or increase our comparable store net sales in the future. Although
Family Dollar, unlike Dollar Tree, can raise the price of merchandise, customers may buy fewer products if prices were to increase.
Please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion
of the effect of economic factors on our operations.
If the COVID-19 pandemic worsens or continues longer than expected, there could be a material adverse impact on our business
and results of operations.
In March 2020, the World Health Organization declared a pandemic arising from a novel strain of coronavirus and its related
disease, known as COVID-19. Nations and governments at every level responded with significant actions to attempt to mitigate the
public health crisis and the impact of the pandemic on the economy. The continuing COVID-19 pandemic and related public health
measures have caused economic disruptions that have adversely affected, and are expected to continue to adversely affect, elements of
our business. We have, however, been classified as an essential business and been allowed to remain open but our operational costs
have increased significantly because of COVID-19. To date, sales at Family Dollar have increased during the pandemic. However,
sales at Dollar Tree have been adversely affected, especially in our party departments and for Easter in 2020 and, as a result of fewer
customer trips, in certain consumable departments such as snacks and candy.
There continues to be uncertainty and unpredictability about the impact of the COVID-19 pandemic on our financial and
operating results in future periods. If the pandemic worsens or continues longer than expected, governments may reinstate or extend
business or personal restrictions, and we could be forced to curtail or restrict operations or incur additional costs. Certain states and
localities are considering laws that would require increasing the pay of store associates if we remain open when certain COVID-19
restrictions are implemented. We might also experience new disruptions in our supply chain and sources of supply, suffer facility
closures or encounter difficulties in hiring or retaining the workforce required for our business. These circumstances, if applicable for
an extended duration or across significant parts of our operating footprint, could have a material adverse effect on our business and
results of operations.
The COVID-19 pandemic and public health measures have already contributed to, among other things:
•
•
Increases in the cost of operating our stores and distribution centers, including temporarily higher wages and bonuses paid
to associates, enhanced cleaning protocols and the cost of personal protection equipment.
Disruptions in the patterns of consumer demand, which has led to, among other things, decreased demand for party
merchandise and, during 2020, Easter merchandise in the Dollar Tree segment, an increase in consumer demand for
household cleaning and other essential supplies and corresponding difficulty in our ability to maintain those items in stock,
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fluctuations in demand for discretionary products, and an increase in demand for online sales (which is an insignificant part
of our business) and home (which we recently began providing in the Family Dollar segment) or curbside deliveries (which
we do not offer).
•
Decreasing foot traffic in our stores as a result of the promotion of social distancing, the adoption of various governmental
restrictions on personal and business activities and changing consumer attitudes with respect to in-person shopping and
changes in shopping patterns.
Reduced consumer demand for holiday, seasonal, party, and other discretionary products that generally carry a higher margin may
have a negative impact on our gross profit margin, especially in the later part of the year when they typically form a larger part of our
merchandise mix. It is uncertain what effect the COVID-19 pandemic will have on holiday merchandise sales in the future. Also, other
sales have decreased in the past, and may decrease in the future when COVID-19 infection rates spike.
Our business and results of operations could be materially harmed if we experience a decline in consumer confidence and
spending as a result of continued unfavorable economic conditions, for example because government assistance to households and
businesses terminate or are reduced.
Governmental authorities have adopted substantial measures, including fiscal and monetary stimulus, to provide economic
assistance to individual households and businesses and support economic stability during the COVID-19 pandemic and the related
recession and increase in unemployment. We believe the economic intervention that occurred in fiscal 2020 benefited our sales. While
the enactment of the American Rescue Plan Act of 2021 on March 11, 2021 is expected to provide additional economic assistance to
individual households and businesses, there can be no assurance that current or future governmental efforts to support the economy
during the pandemic will be sufficient to mitigate the negative effect of the pandemic on the economy. If consumer spending on the
goods we sell declines as a result, there could be a material adverse impact on our business and results of operations.
We are unable to predict the full extent to which the COVID-19 pandemic will affect the economy and our customers, associates,
suppliers, vendors, other business partners or our business, results of operations and financial condition. If the economic consequences
of the pandemic are prolonged and/or worsen, it could amplify many of the other risks described in this Form 10-K.
We may continue to encounter higher costs and disruptions in our distribution network.
Our success is dependent on our ability to import or transport merchandise to our distribution centers and then truck merchandise
to our stores in a timely and cost-effective manner. We rely heavily on third parties including ocean shippers and truckers in that
process. We may not anticipate, respond to or control all of the challenges of operating our distribution network. Additionally, when a
shipping or trucking line fails to deliver on its commitments or our distribution centers fail to operate effectively, we could experience
increased freight costs or merchandise shortages that could lead to lost sales. We are experiencing ocean shipping disruptions, trucking
shortages, increased ocean shipping rates and increased trucking and fuel costs. In the last several years, we have incurred higher
distribution costs due to a variety of factors. Some of the factors that could have an adverse effect on our distribution network or costs
in 2021 are:
•
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Shipping disruptions. There is currently a shortage of shipping containers in China and other parts of Asia, and as a result
we are experiencing significant delays in importing our goods. We are also experiencing issues with port congestion. Our
shipping schedules and shipping capacity may be further disrupted or delayed as a result of these or other factors. Although
these delays have not yet impacted our sales and we believe we are adequately stocked with merchandise for Easter, the
delays could potentially have a material adverse impact on our sales after Easter, especially at Dollar Tree, if the delays do
not improve. The global COVID-19 pandemic is also expected to continue to present a risk to trans-Pacific shipping in
2021 and may affect shipping from China, where we buy a significant portion of our merchandise. Our supply chain may
be disrupted as a result of the pandemic as well as other international events such as war or acts of terrorism.
Shipping costs. We are experiencing increases in shipping rates from the trans-Pacific ocean carriers. We are currently
projecting approximately $80.0 to $100.0 million of additional costs in fiscal 2021 as a result of higher shipping and
domestic freight costs. Changes in import duties, import quotas and other trade sanctions could also increase our costs.
Efficient operations and management. Distribution centers and other aspects of our distribution network are difficult to
operate efficiently, and we have and could experience a reduction in operating efficiency as a result of high turnover and
challenges in maintaining a stable workforce, especially if the COVID-19 crisis continues.
Diesel fuel costs. We have experienced volatility in diesel fuel costs over the past few years and are expecting increases
this year.
Trucking costs. We have experienced significant increases in trucking costs in recent years due to the truck driver shortage
and other factors, and our trucking costs are expected to increase in the future.
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•
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Vulnerability to natural or man-made disasters, including climate change. A fire, explosion or natural disaster at a port or
any of our distribution facilities could result in a loss of merchandise and impair our ability to adequately stock our stores.
Some facilities are vulnerable to earthquakes, hurricanes, tornadoes or floods, and an increase in the severity and frequency
of extreme weather events may increase our operating costs or disrupt our supply chain.
Labor disagreement. Labor disagreements, disruptions or strikes, for example at ports, may result in delays in the delivery
of merchandise to our distribution centers or stores and increase costs.
•
McLane Company, Inc. In fiscal 2020, we purchased and delivered approximately 13% of our merchandise for our Family
Dollar segment through our relationship with McLane Company, Inc., which distributes consumable merchandise from
multiple manufacturers. A disruption in our relationship with McLane Company, Inc. could have a significant near-term
impact on our operations.
Risks associated with our domestic and foreign suppliers, including tariffs or restrictions on trade or disruptions arising from the
COVID-19 pandemic, could adversely affect our financial performance.
We are dependent on our vendors to supply merchandise in a timely and efficient manner. If a vendor fails to deliver on its
commitments due to financial or other difficulties, we could experience merchandise shortages which could lead to lost sales or
increased merchandise costs if alternative sources must be used.
We rely on the availability of imported goods at favorable wholesale prices. Merchandise imported directly accounts for
approximately 38% to 40% of our Dollar Tree segment’s total retail value purchases and 15% to 17% of our Family Dollar segment’s
total retail value purchases. In addition, we believe that a significant portion of our goods purchased from domestic vendors is
imported. Imported goods are generally less expensive than domestic goods and increase our profit margins. A disruption in the flow
of our imported merchandise or an increase in the cost of those goods may significantly decrease our profits. Risks associated with our
reliance on imported goods may include disruptions in the flow of or increases in the cost of imported goods because of factors such
as:
•
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•
•
•
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duties, tariffs or other restrictions on trade, including Section 301 tariffs that have already been imposed on imported
Chinese goods, and it is unclear whether the current presidential administration will support rolling back these tariffs. We
are currently expecting the amount of Section 301 tariffs we pay in 2021 to increase above 2020 levels because the amount
of our imports is expected to increase and we expect to pay tariffs on products which were temporarily excluded from
tariffs during 2020;
raw material shortages, work stoppages, government travel restrictions, strikes and political unrest, including any impact on
vendors or shipping arising from epidemics and related travel restrictions, such as the recent COVID-19 pandemic;
economic crises and international disputes or conflicts;
changes in currency exchange rates or policies and local economic conditions, including inflation (including energy prices
and raw material costs) in the country of origin;
potential changes to, or withdrawal of the United States from, international trade agreements or the failure of the United
States to maintain normal trade relations with China and other countries;
changes in leadership and the political climate in countries from which we import products and their relations with the
United States; and
failure of manufacturers outside the United States to meet food, drug and cosmetic safety and labeling requirements or
environmental standards set by government regulators or consumer expectations.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion of
the effect of foreign suppliers on our operations.
Our supply chain may be disrupted by changes in United States trade policy with China.
We rely on domestic and foreign suppliers to provide us with merchandise in a timely manner and at favorable prices. Among our
foreign suppliers, China is the source of a substantial majority of our imports. A disruption in the flow of our imported merchandise
from China or an increase in the cost of those goods may significantly decrease our profits.
The United States has scaled back punitive Section 301 tariffs on certain Chinese imports based on an agreement reached with
China in 2020. However, there is uncertainty as to the actions that may be taken under the current presidential administration with
respect to U.S. trade policy with China, including whether the administration will support reductions in tariffs. The imposition of any
new U.S. tariffs on Chinese imports or the taking of other actions against China in the future, and any responses by China, could
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impair our ability to meet customer demand and could result in lost sales or an increase in our cost of merchandise, which would have
a material adverse impact on our business and results of operations.
Our growth is dependent on our ability to increase sales in existing stores and to expand our square footage profitably.
Existing store sales growth is critical to good operating results and is dependent on a variety of factors including merchandise
quality, relevance and availability, store operations and customer satisfaction. In addition, increased competition could adversely
affect our sales. Failure to meet our sales targets, including in our renovated stores, could result in our needing to record material non-
cash impairment charges related to our intangible assets. We believe improving sales at Family Dollar depends in significant part on
the success of the H2 renovations and other new store concepts.
Our highest sales periods are during the Christmas and Easter seasons, and we generally realize a disproportionate amount of our
net sales and our operating and net income during the fourth quarter. In anticipation, we stock extra inventory and hire many
temporary employees to prepare our stores. A reduction in sales during these periods could adversely affect our operating results,
particularly operating and net income, to a greater extent than if a reduction occurred at other times of the year. Untimely merchandise
delays due to receiving or distribution problems could have a similar effect.
When Easter is observed earlier in the year, the selling season is shorter and, as a result, our sales could be adversely affected.
Easter was observed on April 12, 2020 and will be observed on April 4, 2021.
Expanding our square footage profitably depends on a number of uncertainties, including our ability to locate, lease, build out and
open or expand stores in suitable locations on a timely basis under favorable economic terms. Obtaining an increasing number of
profitable stores is an ever-increasing challenge. In addition, our expansion is dependent upon third-party developers’ abilities to
acquire land, obtain financing, and secure necessary permits and approvals. We also open or expand stores within our established
geographic markets, where new or expanded stores may draw sales away from our existing stores. We may not manage our expansion
effectively, and our failure to achieve our expansion plans could materially and adversely affect our business, financial condition and
results of operations.
Our profitability is affected by the mix of products we sell.
Our gross profit margin decreases when we increase the proportion of higher cost goods we sell. Imported merchandise is
generally lower cost than domestic goods. Our supply of goods, including imported goods, could be negatively impacted by the
COVID-19 pandemic. In recent years, the percentage of our sales from higher cost consumable products has increased, and we can
give no assurance that this trend will not continue.
In our Family Dollar segment, our success also depends on our ability to select and obtain sufficient quantities of relevant
merchandise at prices that allow us to sell such merchandise at profitable and appropriate prices. A sales price that is too high causes
products to be less attractive to our customers and our sales at Family Dollar could suffer. We are continuing to refine our pricing
strategy at Family Dollar to drive customer loyalty and have a strategic pricing team to improve our value and to increase profitability.
Inability to successfully implement our pricing strategies at Family Dollar could have a negative effect on our business.
In addition, our Family Dollar segment has a substantial number of private brand items and the number of items has been
increasing. We believe our success in maintaining broad market acceptance of our private brands depends on many factors, including
our pricing, costs, quality and customer perception. We may not achieve or maintain our expected sales for our private brands and, as a
result, our business and results of operations could be adversely impacted. Additionally, the increased number of private brands could
negatively impact our existing relationships with our non-private brand suppliers.
We may stop selling or recall certain products for safety-related issues.
We may stop selling or recall certain products produced by certain manufacturers for safety-related issues, including product
contamination, product content such as lead, spoilage or other adulteration, improper manufacturing processes, improper testing,
product mislabeling or product tampering. For example, we may stop selling or recall products if the products or operations of our
suppliers violate applicable laws or regulations, including food, drug and cosmetic safety laws, or when our suppliers’ products cause
injury, illness or death. In addition, our marketing of adulterated products could subject us to claims of false or deceptive advertising
or other criticism. A significant product liability or other legal judgment against us, a related regulatory enforcement action or a
widespread product recall could materially and adversely affect our reputation and results of operations. Moreover, even if a product
liability, consumer fraud or other claim is unsuccessful, has no merit or is not pursued, the negative publicity surrounding assertions
against the products we sell could materially and adversely affect our business, reputation and profitability.
Pressure from competitors may reduce our sales and profits.
The retail industry is highly competitive. The marketplace is highly fragmented as many different retailers compete for market
share by utilizing a variety of store formats and merchandising strategies, including mobile and online shopping. We expect
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competition to increase in the future. There are no significant economic barriers for others to enter our retail sector. Some of our
current or potential competitors have greater financial resources than we do. We cannot guarantee that we will continue to be able to
compete successfully against existing or future competitors or that doing so will not require substantial capital expenditures. Please see
“Item 1. Business” for further discussion of the effect of competition on our operations.
A downturn or adverse change in economic conditions could impact our sales or profitability.
A deterioration in economic conditions, whether related to the COVID-19 pandemic or otherwise, could reduce consumer
spending or cause customers to shift their spending to products we either do not sell or do not sell as profitably. Adverse economic
conditions could disrupt consumer spending and significantly reduce our sales, decrease our inventory turnover, cause greater
markdowns or reduce our profitability due to lower margins. Other factors that could result in or exacerbate adverse economic
conditions include a prolonged or deep recession, inflation, higher unemployment, consumer debt levels, trade disputes, as well as
adverse climate or weather conditions, epidemics, terrorism or international conflict.
Furthermore, factors that could adversely affect consumer disposable income could decrease our customers’ spending on products
we sell. Factors that could reduce our customers’ disposable income and over which we exercise no influence include but are not
limited to, the pandemic and other adverse economic conditions described above as well as increases in fuel or other energy costs and
interest rates, lack of available credit, higher tax rates and other changes in tax laws, increasing healthcare costs, and changes in,
decreases in, or elimination of, government subsidies such as unemployment and food assistance programs.
Many of the factors identified above that affect disposable income, as well as commodity rates, transportation costs (including the
costs of diesel fuel), costs of labor, insurance and healthcare, foreign exchange rate fluctuations, lease costs, barriers or increased costs
associated with international trade and other economic factors also affect our ability to implement our corporate strategy effectively,
our cost of goods sold and our selling, general and administrative expenses, and may have other adverse consequences which we are
unable to fully anticipate or control, all of which may adversely affect our sales or profitability. We have limited or no ability to
control many of these factors.
Our business could be adversely affected if we fail to attract and retain qualified associates and key personnel.
Our growth and performance is dependent on the skills, experience and contributions of our associates, executives and key
personnel for both Dollar Tree and Family Dollar. Various factors, including the ongoing pandemic, integration of our segments,
constraints on overall labor availability, wage rates, regulatory or legislative impacts, and benefit costs could impact our ability to
attract and retain qualified associates at our stores, distribution centers and corporate offices.
Risks Relating to Strategic Initiatives
We may not be successful in implementing important strategic initiatives, which may have an adverse impact on our business and
financial results.
We have adopted important strategic initiatives that are designed to create growth, improve our results of operations and drive
long-term shareholder value, including:
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our plans relating to new store openings for Dollar Tree and Family Dollar;
the continued integration of the operations of Family Dollar with Dollar Tree;
the renovation of Family Dollar stores to the H2 format;
the testing and implementation of a multi-price initiative in Dollar Tree stores referred to as Dollar Tree Plus!;
the introduction of selected Dollar Tree merchandise into Family Dollar stores; and
the testing and roll-out of a new store format that combines a Dollar Tree store and Family Dollar store in a single location.
The implementation of these strategic initiatives are subject to various risks and uncertainties, including consumer acceptance of
new store concepts and merchandise offerings, construction and permitting delays relating to new and renovated stores, the success of
our integration strategies, the availability of desirable real estate locations for lease at reasonable rates, the impact of the COVID-19
pandemic and other factors beyond our control. In addition, several of these initiatives depend on the continued success of our
integration of Family Dollar merchandising, supply chain and operations with those of Dollar Tree. There can be no assurance that we
will be able to implement important strategic initiatives in accordance with our expectations or that they will generate expected
returns, which may result in an adverse impact on our business and financial results.
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We could incur losses due to impairment of long-lived assets, goodwill and intangible assets.
Under U.S. generally accepted accounting principles, we review our long-lived assets for impairment whenever economic events
or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Identifiable intangible assets with an
indefinite useful life, including goodwill, are not amortized but are evaluated annually for impairment. A more frequent evaluation is
performed if events or circumstances indicate that impairment could have occurred.
In fiscal 2019 and 2018, we recorded a $313.0 million and a $2.73 billion non-cash pre-tax and after-tax goodwill impairment
charge, respectively, related to our Family Dollar reporting unit. These impairments were a result of business challenges including
slower sales growth, higher freight, shrink and store labor costs. Should we experience similar business challenges or significant
negative industry or general economic trends, we could recognize additional impairments to our goodwill, intangible assets and other
long-lived assets. We monitor key assumptions and other factors utilized in our goodwill impairment analysis, and if business or other
market conditions develop that are materially different than we currently anticipate, we will conduct an additional impairment
evaluation. Any reduction in or impairment of the value of goodwill or intangible assets will result in a charge against earnings, which
could have a material adverse impact on our reported results of operations and financial condition. For additional information on
goodwill impairments please refer to Note 3 to our consolidated financial statements.
Cybersecurity and Technology Risks
We rely on computer and technology systems in our operations, and any material failure, inadequacy, interruption or security
failure of those systems including because of a cyber-attack could harm our ability to effectively operate and grow our business
and could adversely affect our financial results.
We rely extensively on our computer and technology systems and, in certain cases, those of third-party service providers to
manage inventory, process credit card and customer transactions and summarize results. Our ability to effectively manage our business
and coordinate the distribution and sale of our merchandise depends significantly on the confidentiality, integrity and availability of
these systems and on our ability to successfully integrate the Dollar Tree and Family Dollar systems. We also rely on third-party
providers and platforms for some of these computer and technology systems and support.
Although we have operational safeguards in place, they may not be effective in preventing the failure of these systems or
platforms to operate effectively and be available to us. This may be as the result of deliberate breach in the security of these systems or
platforms by bad actors, including through malicious software, ransomware and other cyber-attacks. Failures may also be caused by
various other factors, including power outages, catastrophic events, physical theft, computer and network failures, inadequate or
ineffective redundancy, problems with transitioning to upgraded or replacement systems or platforms, flaws in third-party software or
services, errors or improper use by our employees or third party service providers.
If these systems are damaged or fail to function properly, we may incur substantial costs to repair or replace them, may experience
loss of critical data and interruptions or delays in our ability to manage inventories or process customer transactions and may receive
negative publicity, which could adversely affect our results of operations and business. In addition, remediation of any problems with
our systems could take an extensive amount of time and could result in significant, unplanned expenses.
The potential unauthorized access to customer information may violate privacy laws and could damage our business reputation,
subject us to negative publicity, litigation and costs, and adversely affect our results of operations or business.
Many of our information technology systems, such as those we use for our point-of-sale, web and mobile platforms, including
online and mobile payment systems, and for administrative functions, including human resources, payroll, accounting, and internal
and external communications, contain personal, financial or other confidential information that is entrusted to us by our customers and
associates as well as proprietary and other confidential information related to our business and suppliers.
We have procedures and technology in place to safeguard our customers’ personal information (including debit and credit card
information), our associates’ private data, suppliers’ data, and our business records and intellectual property and other sensitive
information. Despite these measures, we have experienced attempted and ongoing cyber-attacks, which are rapidly evolving.
Perpetrators, who may include well-funded state actors, are becoming increasingly sophisticated and difficult to detect. We and/or our
third party suppliers may be vulnerable to, and unable to anticipate, detect and appropriately respond to such cyber-security attacks,
including data security breaches and data loss.
We are subject to laws and regulations in various jurisdictions in which we operate regarding privacy, data protection and data
security, including those related to the collection, storage, handling, use, disclosure, transfer and security of personal data. For
example, the California Consumer Privacy Act (“CCPA”), which became effective on January 1, 2020, imposes responsibilities on us
for the handling, disclosure and deletion of personal information for consumers who reside in California. The CCPA permits
California to assess potentially significant fines for violating CCPA and creates a right for individuals to bring class action suits
seeking damages for violations. Our efforts to comply with CCPA and other privacy and data protection laws may impose significant
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costs and challenges that are likely to increase over time, and we could incur substantial penalties or be subject to litigation related to
violation of existing or future data privacy laws and regulations.
Likewise, we are subject to the Payment Card Industry Data Security Standards (“PCI-DSS”) which is mandated by the card
brands and administered through the Payment Card industry Security Standards Council. Failure to meet requirements and maintain
compliance could result in a loss of credibility or reputation and our inability to continue to accept credit cards as a tender type
materially impacting our ability to sell our products. There exists the potential to have recurring and accumulating fines levied against
us as a result of not meeting compliance until compliance is achieved. Considerable investments to strengthen our information security
could also be required should we ever be deemed to be non-compliant. As a Level 1 Merchant, we are subject to assessment and
attestation for PCI-DSS compliance on an annual basis.
In addition, our reputation within the business community and with our customers may be affected, which could result in our
customers discontinuing the use of debit or credit cards in our stores or not shopping in our stores altogether.
Moreover, significant capital investments and other expenditures could also be required to remedy cyber-security problems and
prevent future security breaches, including costs associated with additional security technologies, personnel, experts and services (e.g.,
credit-monitoring services) for those whose data has been breached. These costs, which could be material, could adversely impact our
results of operations in the period in which they are incurred and may not meaningfully limit the success of future attempts to breach
our information technology systems.
The unavailability of our information technology systems or the failure of those systems or software to perform as anticipated for
any reason and any inability to respond to, or recover from, such an event, could disrupt our business, decrease performance and
increase overhead costs. If we are unable to secure our customers’ credit card and confidential information, or other private data
relating to our associates, suppliers or our business, we could be subject to negative publicity, costly government enforcement actions
or private litigation and increased costs. Any of these factors could have a material adverse effect on our results of operations or
business.
Legal and Regulatory Risks
Litigation and arbitration may adversely affect our business, financial condition and results of operations.
Our business is subject to the risk of litigation and arbitration involving employees, consumers, suppliers, competitors,
shareholders, government agencies, or others through private actions, class actions, governmental investigations, administrative
proceedings, regulatory actions, mass arbitration or other similar actions. Our products could also cause illness or injury, harm our
reputation, and subject us to litigation. We are dependent on our vendors to ensure that the products we buy comply with all applicable
safety standards. However, product liability, personal injury or other claims may be asserted against us relating to product
contamination, product tampering, mislabeling, recall and other safety issues with respect to the products that we sell. We seek but
may not be successful in obtaining contractual indemnification and insurance coverage from our vendors, and if we do not have
adequate contractual indemnification or insurance available, such product liability or safety claims could adversely affect our business,
financial condition and results of operations. Our ability to obtain the benefit of contractual indemnification from foreign vendors may
be hindered by our ability to enforce contractual indemnification obligations against such vendors. Our litigation-related expenses
could increase as well, which also could have a materially negative impact on our results of operations even if a product liability claim
is unsuccessful or is not fully pursued.
The outcome of such matters is difficult to assess or quantify. Plaintiffs in these types of lawsuits or proceedings may seek
recovery of very large or indeterminate amounts, and the magnitude of the potential loss may remain unknown for substantial periods
of time. In addition, certain of these matters, if decided adversely to us or settled by us, may result in an expense that may be material
to our financial statements as a whole or may negatively affect our operating results if changes to our business operations are required.
The cost to defend current and future litigation or proceedings, including arbitrations, may be significant. There also may be adverse
publicity associated with litigation, including litigation related to product or food safety, customer information and environmental or
safety requirements, which could negatively affect customer perception of our business, regardless of whether the allegations are valid
or whether we are ultimately found liable.
For a discussion of current legal matters, please see “Item 3. Legal Proceedings” and Note 5 to our consolidated financial
statements under the caption “Contingencies.” Resolution of these matters, if decided against us, could have a material adverse effect
on our results of operations, accrued liabilities or cash flows.
Changes in laws and government regulations, or our failure to adequately estimate the impact of such changes, could increase our
expenses, expose us to legal risks or otherwise adversely affect us.
Our business is subject to a wide array of laws and regulations, and changes to those laws and regulations could have an adverse
effect on our business. In 2021, the new presidential administration and Congress are expected to have public policy positions and
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legislative priorities that are significantly different than the positions and priorities of the prior presidential administration including,
among other things, such matters as climate change and sustainability, wage and labor laws, health care, tax policy and less focus on
deregulation. The possible enactment of new environmental laws and regulations and potential new carbon taxes or energy efficiency
standards could increase our costs. In addition, certain states and local governments have passed laws to increase the minimum wage
beginning in 2021, and the minimum wage may increase nationally depending on the outcome of future legislation proposed in
Congress.
Significant legislative changes in laws or regulations that impact our relationship with our workforce, such as minimum wage
increases, “hero pay,” health care, labor laws or workplace safety, could increase our expenses and adversely affect our operations.
Changes in other regulatory areas, such as consumer credit, privacy and information security, product and food safety, energy or
environmental protection, among others, could cause our expenses to increase or product recalls. In addition, if we fail to comply with
applicable laws and regulations, including wage and hour laws, we could be subject to legal risk, including government enforcement
action and class action civil litigation, which could adversely affect our results of operations.
Risks Relating to Indebtedness
Our substantial indebtedness could adversely affect our financial condition, limit our ability to obtain additional financing, restrict
our operations and make us more vulnerable to economic downturns and competitive pressures.
As of January 30, 2021, our total indebtedness is $3.25 billion. In addition, we have $1.25 billion of additional borrowing
availability under our revolving credit facility, less amounts outstanding for letters of credit totaling $98.7 million.
Our level of debt could have significant consequences, including the following:
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limiting our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or
other general corporate purposes;
requiring a substantial portion of our cash flows to be dedicated to debt service payments, instead of other purposes,
thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other
general corporate purposes;
limiting our ability to refinance our indebtedness on terms acceptable to us or at all;
imposing restrictive covenants on our operations;
placing us at a competitive disadvantage to competitors carrying less debt; and
•
making us more vulnerable to economic downturns and limiting our ability to withstand competitive pressures.
In addition, our credit ratings impact the cost and availability of future borrowings and, accordingly, our cost of capital. Our
ratings reflect the opinions of the ratings agencies of our financial strength, operating performance and ability to meet our debt
obligations. There can be no assurance that we will achieve a particular rating or maintain a particular rating in the future.
The terms of the agreements governing our indebtedness may restrict our current and future operations and could adversely affect
our capital resources, financial condition and liquidity.
The agreements that govern our indebtedness contain a number of restrictive covenants that impose significant operating and
financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests. In addition, certain of
these agreements require us to comply with certain financial maintenance covenants. Our ability to satisfy these financial maintenance
covenants can be affected by events beyond our control, and we cannot assure you that we will meet them.
A breach of the covenants under these agreements could result in an event of default under the applicable indebtedness, which, if
not cured or waived, could result in us having to repay our borrowings before their due dates. Such default may allow the debt holders
to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default
provision applies. If we are forced to refinance these borrowings on less favorable terms or if we were to experience difficulty in
refinancing the debt prior to maturity, our results of operations or financial condition could be materially affected. In addition, an
event of default under our credit facilities may permit the lenders under our credit facilities to terminate all commitments to extend
further credit under such credit facilities. In the event our lenders or holders of notes accelerate the repayment of such borrowings, we
cannot assure you that we will have sufficient assets to repay such indebtedness.
As a result of these restrictions, we may be:
•
limited in how we conduct our business;
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•
•
unable to raise additional debt or equity financing to operate during general economic or business downturns; or
unable to compete effectively, take advantage of new business opportunities or grow in accordance with our plans.
Risks Relating to Our Common Stock
Our business or the value of our common stock could be negatively affected as a result of actions by activist shareholders.
We value constructive input from investors and regularly engage in dialogue with our shareholders regarding strategy and
performance. The Board of Directors and management team are committed to acting in the best interests of all of our shareholders.
There is no assurance that the actions taken by the Board of Directors and management in seeking to maintain constructive
engagement with our shareholders will be successful. Activist shareholders who disagree with our strategy or the way we are managed
have sought to effect change, and may seek to effect change in the future, through various strategies that range from private
engagement to publicity campaigns, proxy contests, efforts to force transactions not supported by the Board of Directors and litigation.
Responding to these actions may be costly and time-consuming, disrupt our operations, divert the attention of our Board of
Directors, management and employees, and interfere with our ability to execute our strategic plan and attract and retain qualified
executive leadership. A contested election, for example, could also require us to incur substantial legal and public relations fees and
proxy solicitation expenses. The perceived uncertainty as to our future direction resulting from activist strategies could also affect the
market price and volatility of our common stock.
The price of our common stock is subject to market and other conditions and may be volatile.
The market price of our common stock may fluctuate significantly in response to a number of factors. These factors, some of
which may be beyond our control, include the perceived prospects and actual results of operations of our business; changes in
estimates of our results of operations by analysts, investors or us; trading activity by our large shareholders; trading activity by
sophisticated algorithms (high-frequency trading); our actual results of operations relative to estimates or expectations; actions or
announcements by us or our competitors; litigation and judicial decisions; legislative or regulatory actions or changes; and changes in
general economic or market conditions. In addition, the stock market in general has from time to time experienced extreme price and
volume fluctuations. These market fluctuations could reduce the market price of our common stock for reasons unrelated to our
operating performance.
Certain provisions in our Articles of Incorporation and By-Laws could delay or discourage a change of control transaction that
may be in a shareholder’s best interest.
Our Articles of Incorporation and By-Laws currently contain provisions that may delay or discourage a takeover attempt that a
shareholder might consider in his/her best interest. These provisions, among other things:
•
•
•
provide that only the Board of Directors, the chairman of the Board or the chief executive officer may call special meetings
of the shareholders;
establish certain advance notice procedures for nominations of candidates for election as directors and for shareholder
proposals to be considered at shareholders’ meetings; and
permit the Board of Directors, without further action of the shareholders, to issue and fix the terms of preferred stock,
which may have rights senior to those of the common stock.
However, we believe that these provisions allow our Board of Directors to negotiate a higher price in the event of a takeover
attempt which would be in the best interest of our shareholders.
Item 1B. Unresolved Staff Comments
None.
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Item 2. Properties
As of January 30, 2021, we operated 15,455 stores across the contiguous United States and the District of Columbia and operated
230 stores within five Canadian provinces.
The Dollar Tree segment includes 7,805 stores operating under the Dollar Tree and Dollar Tree Canada brands with stores
predominantly ranging from 8,000 - 10,000 selling square feet. The Family Dollar segment includes 7,880 stores operating under the
Family Dollar brand with stores predominantly ranging from 6,000 - 8,000 selling square feet. For additional information on store
counts and square footage by segment for the years ended January 30, 2021 and February 1, 2020, see “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Overview.”
We lease the vast majority of our stores and expect to lease the majority of our new stores as we expand. Our leases typically
provide for a short initial lease term, generally five years, with options to extend; however, in some cases we have initial lease terms of
seven to fifteen years. We believe this leasing strategy enhances our flexibility to pursue various expansion opportunities resulting
from changing market conditions. As current leases expire, we believe that we will be able to obtain lease renewals, if desired, for
present store locations, or to obtain leases for equivalent or better locations in the same general area.
Our network of distribution centers is strategically located throughout the United States to support our stores. As of January 30,
2021, we operated 26 distribution centers occupying a total of 24.0 million square feet, 15 of which are primarily dedicated to serving
our Dollar Tree stores and 11 distribution centers primarily serve our Family Dollar stores. Our St. George, Utah distribution center
services both Family Dollar and Dollar Tree stores and we expect future distribution centers to be built with the capability to service
both Dollar Tree and Family Dollar stores. Our distribution network supports multiple store formats including H2, Combination Stores
and Dollar Tree Plus! We ship to our H2 format stores from our Family Dollar distribution centers and we ship to our Dollar Tree
Plus! format stores from our Dollar Tree distribution centers. We ship to our Combination Stores from both Dollar Tree and Family
Dollar distribution centers. We believe our distribution center network is currently capable of supporting approximately $30.2 billion
in annual sales in the United States. Except for 0.4 million square feet of our distribution center in San Bernardino, California, all of
our distribution center capacity is owned.
Each of our distribution centers contains advanced materials handling technologies, including radio-frequency inventory tracking
equipment and specialized information systems. With the exception of four of our facilities, each of our distribution centers in the
United States also contains automated conveyor and sorting systems.
Distribution services in Canada are provided by a third party from facilities in British Columbia and Ontario.
During fiscal 2019, we consolidated our Matthews, North Carolina store support center with our store support center in
Chesapeake, Virginia, which is located in an approximately 0.5 million square foot office tower that we own in the Summit Pointe
development in Chesapeake, Virginia. We are also developing additional parcels on our Summit Pointe property for mixed-use
purposes and began leasing some portions during 2020.
For more information on financing of our new and expanded stores, distribution centers and the Summit Pointe development
activities, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption
“Funding Requirements.”
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Item 3. Legal Proceedings
From time to time, we are defendants in ordinary, routine litigation or proceedings incidental to our business, including
allegations regarding:
•
•
•
•
•
•
employment-related matters;
infringement of intellectual property rights;
personal injury/wrongful death claims;
real estate matters;
environmental and safety issues; and
product safety matters, which may include regulatory matters.
In addition, we are currently defendants in national and state proceedings described in Note 5 to our consolidated financial
statements under the caption “Contingencies.”
We will vigorously defend ourselves in these matters. We do not believe that any of these matters will, individually or in the
aggregate, have a material effect on our business or financial condition. We cannot give assurance, however, that one or more of these
matters will not have a material effect on our results of operations for the period or year in which they are reserved or resolved. Based
on the information available, including the amount of time remaining before trial, the results of discovery and the judgment of internal
and external counsel, we may be unable to express an opinion as to the outcome of those matters which are not close to being resolved
and may be unable to estimate a loss or potential range of loss.
Item 4. Mine Safety Disclosures
None.
23
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is traded on The Nasdaq Global Select Market® under the symbol “DLTR.” As of March 10, 2021, we had
2,288 shareholders of record.
Issuer Purchases of Equity Securities
The following table presents our share repurchase activity during the fourth quarter of 2020:
Fiscal Period
Total number
of shares
purchased
Average price
paid per share
Total number of
shares purchased as
part of publicly
announced plans or
programs
Approximate dollar
value of shares that may
yet be purchased under
the plans or programs
(in millions)
November 1, 2020 - November 28, 2020
— $
November 29, 2020 - January 2, 2021
January 3, 2021 - January 30, 2021
Total
896,698
931,476
1,828,174 $
—
109.23
109.56
109.40
— $
896,698
931,476
1,828,174 $
600.0
502.1
400.0
400.0
During fiscal 2020 and 2019, we repurchased 3,982,478 and 1,967,355 shares of common stock, respectively, on the open market
at a total cost of $400.0 million and $200.0 million, respectively. We did not repurchase any shares of common stock in fiscal 2018.
As of January 30, 2021, we had $400.0 million remaining under the Board repurchase authorization. Subsequently, on March 2,
2021, the Board increased the share repurchase authorization by $2.0 billion resulting in a total share repurchase authorization of $2.4
billion. The repurchase authorization does not have an expiration date.
Stockholder Matters
We anticipate that substantially all of our cash flow from operations in the foreseeable future will be retained for the development
and expansion of our business, the repayment of indebtedness and, as authorized by our Board of Directors, the repurchase of stock.
We do not anticipate paying cash dividends on our common stock in the foreseeable future.
24
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Stock Performance Graph
The following graph sets forth the yearly percentage change in the cumulative total shareholder return on our common stock
during the five fiscal years ended January 30, 2021, compared with the cumulative total returns of the S&P 500 Index and the S&P
Retailing Index. The comparison assumes that $100 was invested in our common stock on January 30, 2016, and, in each of the
foregoing indices on January 30, 2016, and that dividends were reinvested. The stock price performance shown in the graph is not
necessarily indicative of future price performance.
COMPARISON OF 5 YEAR CU MULATIVE TOTAL RETURN*
Among Dollar Tree, Inc., the S&P 500 Index,
and S&P Retailing Index
* $100 invested on 1/30/16 in stock or 1/31/ 16 index, including reinvestment of dividends.
Indexes calculated on month-end basis.
Copyright© 2021 Standard & Po or's, a division of S.&P Global. All rights reserved.
January 30,
2016
January 28,
2017
February 3,
2018
February 2,
2019
February 1,
2020
January 30,
2021
Dollar Tree, Inc.
S&P 500 Index
S&P Retailing Index
$
100.00 $
100.00
100.00
91.06 $
120.04
120.09
133.83 $
151.74
174.49
118.90 $
148.23
186.29
107.07 $
180.37
219.46
125.01
211.48
316.05
Year Ended
25
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Item 6. Selected Financial Data
The following table presents a summary of our selected financial data for the fiscal years ended January 30, 2021, February 1,
2020, February 2, 2019, February 3, 2018, and January 28, 2017. Fiscal 2017 included 53 weeks, commensurate with the retail
calendar, while all other fiscal years reported in the table contain 52 weeks. The selected statement of operations and balance sheet
data have been derived from our consolidated financial statements that have been audited by our independent registered public
accounting firm. This information should be read in conjunction with the consolidated financial statements and related notes,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial information found
elsewhere in this report.
Our net sales are derived from the sale of merchandise. Two major factors tend to affect our net sales trends. First is our success at
opening new stores. Second is the performance of stores once they are open. Sales vary at our existing stores from one year to the
next. We refer to this as a change in comparable store net sales, because we include only those stores that are open throughout both of
the periods being compared, beginning after the first fifteen months of operation. We include sales from stores expanded or remodeled
during the year in the calculation of comparable store net sales, which has the effect of increasing our comparable store net sales. The
term ‘expanded’ also includes stores that are relocated. Stores that have been re-bannered are considered to be new stores and are not
included in the calculation of the comparable store net sales change until after the first fifteen months of operation under the new
brand. We report our comparable store net sales on a constant currency basis. Constant currency basis refers to the calculation
excluding the impact of currency exchange rate fluctuations. We calculated the constant currency basis increase by translating the
current year’s comparable store net sales in Canada using the prior year’s currency exchange rates. We believe that the constant
currency basis provides a more accurate measure of comparable store net sales performance.
Both our Dollar Tree stores and our acquired Family Dollar stores are included in the comparable store net sales calculation for
the years ended February 3, 2018 and forward. For all prior years, only our Dollar Tree stores are included in the comparable store net
sales calculation.
Net sales per selling square foot is calculated based on total net sales for the reporting period divided by the average selling square
footage during the period. Selling square footage excludes the storage, receiving and office space that generally occupies
approximately 20% of the total square footage of our stores. We believe that net sales per selling square foot more accurately depicts
the productivity and operating performance of our stores as it isolates that portion of our footprint that is dedicated to selling
merchandise. Net sales per store and net sales per selling square foot are calculated for stores open throughout the period presented.
In the fourth quarter of 2019 and 2018, we recorded non-cash pre-tax and after-tax goodwill impairment charges related to our
Family Dollar reporting unit of $313.0 million and $2.73 billion, respectively. These impairment charges are reflected in “Selling,
general and administrative expenses” in the accompanying consolidated statements of operations for the years ended February 1, 2020
and February 2, 2019. As a result of these goodwill impairment charges, diluted earnings per share decreased by $1.31 and $11.46 per
share for the years ended February 1, 2020 and February 2, 2019, respectively. For additional information regarding the impairment of
the Family Dollar goodwill, refer to Note 3 to our consolidated financial statements.
As a result of the enactment of the Tax Cuts and Jobs Act (“TCJA”) in 2017, net income and diluted net income per share for the
year ended February 3, 2018 increased by $583.7 million and $2.45 per share, respectively.
Amounts in the following tables are in millions, except per share data, number of stores data, net sales per selling square foot data
and inventory turns.
Statement of Operations Data:
Net sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Net income (loss)
Margin Data (as a percentage of net sales):
Gross profit
Selling, general and administrative expenses
Operating income (loss)
January 30,
2021
February 1,
2020
Year Ended
February 2,
2019
February 3,
2018
January 28,
2017
$ 25,509.3
$ 23,610.8
$ 22,823.3
$ 22,245.5
$ 20,719.2
7,788.3
5,900.4
1,887.9
1,341.9
7,040.7
5,778.5
1,262.2
827.0
6,947.5
7,887.0
(939.5)
(1,590.8)
7,021.9
5,022.8
1,999.1
1,714.3
6,394.7
4,689.9
1,704.8
896.2
30.5 %
23.1 %
7.4 %
29.8 %
24.5 %
5.3 %
30.4 %
34.5 %
(4.1)%
31.6 %
22.6 %
9.0 %
30.8 %
22.6 %
8.2 %
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Net income (loss)
Per Share Data:
Diluted net income (loss) per share
Diluted net income (loss) per share increase
(decrease)
Balance Sheet Data:
Cash and cash equivalents and short-term
investments
Working capital
Total assets
Total debt
Total operating lease liabilities
Shareholders’ equity
January 30,
2021
February 1,
2020
Year Ended
February 2,
2019
February 3,
2018
January 28,
2017
5.3 %
3.5 %
(7.0)%
7.7 %
4.3 %
$
5.65
$
3.47
$
(6.69)
$
7.21
$
3.78
62.8 %
151.9 %
(192.8)%
90.7 %
200.0 %
January 30,
2021
February 1,
2020
As of
February 2,
2019
February 3,
2018
January 28,
2017
$
1,416.7 $
539.2 $
422.1 $
1,097.8 $
870.4
1,320.5
20,696.0
3,250.0
6,413.7
7,285.3
722.9
19,574.6
3,800.0
6,258.8
6,254.8
2,197.6
13,501.2
4,300.0
—
1,717.2
16,332.8
5,732.7
—
1,832.1
15,701.6
6,391.8
—
5,642.9
7,182.3
5,389.5
January 30,
2021
February 1,
2020
Year Ended
February 2,
2019
February 3,
2018
January 28,
2017
Selected Operating Data:
Number of stores open at end of period
15,685
15,288
15,237
14,835
14,334
Dollar Tree
Family Dollar
Gross square footage at end of period
Dollar Tree
Family Dollar
Selling square footage at end of period
Dollar Tree
Family Dollar
Selling square footage annual growth
Net sales annual growth1
Comparable store net sales increase1
Net sales per selling square foot
Net sales per store
Selected Financial Ratios:
Return on assets
Return on equity
Inventory turns
______________
7,805
7,880
154.5
84.0
70.5
125.1
67.4
57.7
7,505
7,783
149.8
80.6
69.2
121.3
64.6
56.7
7,001
8,236
148.3
75.4
72.9
120.1
60.3
59.8
6,650
8,185
143.9
71.6
72.3
116.6
57.3
59.3
6,360
7,974
138.8
68.5
70.3
112.4
54.7
57.7
3.1 %
8.0 %
6.1 %
1.0 %
3.5 %
1.8 %
3.0 %
2.6 %
1.7 %
3.7 %
7.4 %
1.9 %
3.7 %
8.6 %
1.8 %
$
$
207
1.6
$
$
196
1.5
$
$
193
1.5
$
$
194
1.5
$
$
188
1.5
6.7 %
19.8 %
4.4
5.0 %
13.9 %
4.0
(10.7)%
(24.8)%
4.1
10.7 %
27.3 %
4.4
5.7 %
18.3 %
4.1
1 Family Dollar was included in the determination of these items for the years ended February 3, 2018 and forward.
27
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This section of Form 10-K generally discusses 2020 and 2019 events and results and year-to-year comparisons between 2020 and
2019. Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this Form 10-K can be
found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual
Report on Form 10-K for the fiscal year ended February 1, 2020.
In Management’s Discussion and Analysis, we explain the general financial condition and the results of operations for our
company, including, factors that affect our business, analysis of annual changes in certain line items in the consolidated financial
statements, performance of each of our operating segments, expenditures incurred for capital projects and sources of funding for future
expenditures. As you read Management’s Discussion and Analysis, please refer to our consolidated financial statements and related
notes, included in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
Key Events and Recent Developments
Several key events have had or are expected to have a significant effect on our operations. They are listed below:
•
Impact of COVID-19
The COVID-19 pandemic has materially affected, and likely will continue to affect, our financial condition and
results of operations for the foreseeable future. As you review the Management’s Discussion and Analysis of Financial
Condition and Results of Operations, please keep in mind the following.
As an essential business, our stores and distribution centers have remained open during the pandemic; however, our
business trends and financial results are materially different than what we expected. We estimate that our increased costs
related to COVID-19 for premium pay including bonuses, supplies, protective equipment, and similar items in fiscal
2020 was $279.0 million. Although we believe that the pandemic has resulted in higher sales at Family Dollar, we also
believe it has resulted in significantly lower sales at Dollar Tree during the Easter season in 2020 and in our party
departments. In addition, as a result of fewer customer trips, sales in certain consumable departments such as snacks and
candy have been lower. We have experienced fewer customer visits and higher average ticket. The mix and profit margin
of products being purchased by our customers has been different and has changed during 2020. As demand for essential
goods, including cleaning supplies and sanitizer, household products, paper goods, food and over-the-counter medicine,
increased to unprecedented levels, both our domestic suppliers and distribution centers were stressed to keep up with the
demand. We expect this disruption with certain vendors and SKUs to continue into 2021. The effect of COVID-19-
related stimulus purchases for some other non-essential items may create additional disruptions.
We have implemented several changes to support our associates in adhering to CDC recommendations. We have:
◦
Activated our Business Response Team to communicate, assess and address potential exposure throughout the
organization;
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
Provided personal protective equipment including masks, gloves and sanitizers for our store and distribution
center associates;
Deployed plexiglass sneeze guards for all registers at all stores;
Deployed hand sanitizer stands in each of our stores;
Equipped stores, distribution centers and the store support center with necessary supplies for enhanced cleaning
protocol;
Provided wage premiums for all store and distribution center hourly associates, excluding hourly-paid store
managers;
Provided minimum guaranteed sales bonuses for each store manager as well as “Thank You” bonuses and
bonuses for certain salaried associates in our field operations and distribution centers;
Provided pay continuation for associates who test positive or who are Group 1 associates who have to self-
quarantine;
Created a “store” within each distribution center to allow our associates to shop for needed supplies at work
when supplies were scarce in retail locations;
Eliminated all non-essential air travel;
Utilized technology options for all large group meetings;
Prohibited external visitors’ access to the store support center;
Enabled the majority of our store support center teams to work remotely;
Enabled contactless payments to our POS systems for our customers;
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◦
◦
◦
◦
Followed local municipality, county, and state guidelines and regulations needed to be open as an essential
business;
Encouraged safe social distancing protocols for our customers with signing, graphics and communications;
Enabled health prescreening questionnaire for all store and distribution associates before entering work; and
Established temperature check protocols for our associates at all distribution centers and the store support
center.
Given the level of volatility and uncertainty surrounding the future impact of COVID-19 on our customers, suppliers
and the broader economies in the locations that we operate as well as uncertainty around the future impact on our supply
chain, it is challenging to predict our future operations and financial results. Following is a discussion of the impacts that
we have seen and the factors which could influence our future performance.
During March 2020, our Dollar Tree and Family Dollar stores began to experience a significant increase in customer
demand and sales related to essential products and comparable store net sales increased significantly. However,
beginning the last week of March 2020 and continuing into April during the peak of the Easter selling season,
comparable store net sales at our Dollar Tree stores decreased. Beginning in mid-April, comparable store net sales at our
Dollar Tree stores increased as the comparable Easter period from 2019 had passed. For fiscal 2020, enterprise
comparable store net sales increased 6.1% resulting from an increase in average ticket of 20.0%, partially offset by
decreased traffic of 11.6%. After the Easter selling season, in both banners, we saw an increase in demand for and sales
of discretionary products and our seasonal business for the other holidays throughout the year was strong.
The future impact of COVID-19 on our customers and our business is difficult to predict. The course of the
pandemic, the effectiveness of health measures such as vaccines, and the impact of ongoing economic stabilization
efforts is uncertain and government assistance payments may not provide enough funding to support current spending.
The American Rescue Plan Act of 2021 (“Rescue Act”), which was enacted on March 11, 2021, provides U.S.
government funding to address the continuing impact of COVID-19 on the economy, public health, individuals and
businesses. Among other things, the Rescue Act provides for $1,400 direct payments to individuals, continues
supplemental unemployment benefits until September 2021, extends a prior increase in food stamp benefits, expands the
child tax credit and earned income tax credit, provides for rent and utility assistance, and funds COVID-19 vaccinations,
testing, treatment and prevention. An increase in the federal minimum wage was not included in the Rescue Act as
enacted.
The demand for essential supplies has increased and we are dependent on our suppliers to replenish the goods in our
stores. Disruptions in our supply chain or sources of supply could adversely impact our sales.
Our new store openings in fiscal 2020 were affected by construction delays due to challenges with the permitting
process during COVID-19. During 2020, we opened 341 new Dollar Tree stores and 156 new Family Dollar stores
compared to an original plan of 350 new Dollar Tree stores and 200 new Family Dollar stores.
With the increase in customer activity in our Family Dollar stores and COVID-19-related travel restrictions, we
paused the roll-out of our H2 stores during the first quarter of 2020. We resumed the roll-out during the second quarter of
2020 and renovated approximately 770 stores to this format in fiscal 2020 compared with our original plan of 1,250
renovations. Also, as a result of COVID-19-related delays in obtaining permits, we added adult beverage product to
approximately 570 stores in fiscal 2020 compared with our original plan of 1,000.
For further discussion of the impacts that COVID-19 had on our financial condition and results of operations during
fiscal 2020, refer to “Results of Operations” in this Item 7. below.
•
Family Dollar
◦
◦
In 2018, based on our strategic and operational reassessment of the Family Dollar segment following challenges
that the business experienced that impacted our ability to grow the business at the originally estimated rate when
we acquired Family Dollar in 2015, management determined there were indicators that the goodwill of the
business may be impaired. Accordingly, a goodwill impairment test was performed in the fourth quarter of
fiscal 2018 and we recorded a $2.73 billion non-cash pre-tax and after-tax goodwill impairment charge. The
results of our 2019 annual impairment test showed that the fair value of the Family Dollar reporting unit was
lower than its carrying value resulting in a $313.0 million non-cash pre-tax and after-tax goodwill impairment
charge.
In March 2019, we announced plans for a store optimization program for Family Dollar. For fiscal 2019, this
program included rolling out a new model for both new and renovated Family Dollar stores, internally known as
H2, re-bannering selected stores to the Dollar Tree brand, closing under-performing stores, and installing adult
beverages and expanding freezers and coolers in selected stores. In fiscal 2020, we continued to roll out the H2
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◦
◦
concept to more stores, increased the number of stores with adult beverages and expanded freezers and coolers
in selected stores and plan to continue these initiatives in fiscal 2021.
In fiscal 2019, we substantially completed our consolidation of our store support centers in Matthews, North
Carolina and Chesapeake, Virginia to our Summit Pointe development in Chesapeake, Virginia.
Building on the success of the H2 format, we have developed a Combination Store which leverages both the
Dollar Tree and Family Dollar brands to serve small towns across the country. We are taking Family Dollar’s
great value and assortment and blending in select Dollar Tree merchandise categories, creating a new store
format targeted for small towns and rural communities with populations of 3,000 to 4,000 residents.
•
Supply Chain
◦
◦
In the third quarter of 2019, we opened a new 1.2 million square foot distribution center in Morrow County,
Ohio.
In the third quarter of 2020, we opened a new 1.2 million square foot distribution center in Rosenberg, Texas
and opened the first phase of our new Ocala, Florida distribution center.
•
Long-term Debt
◦
◦
◦
◦
◦
◦
◦
During the first quarter of 2018, we redeemed our $750.0 million acquisition notes and accelerated the
amortization of debt-issuance costs associated with the notes of $6.1 million.
During the first quarter of 2018, we refinanced our long-term debt obligations as follows:
▪
We completed the registered offering of $750.0 million of Senior Floating Rate Notes due 2020, $1.0
billion of 3.70% Senior Notes due 2023, $1.0 billion of 4.00% Senior Notes due 2025 and $1.25 billion
of 4.20% Senior Notes due 2028;
▪
We entered into a credit agreement for a $782.0 million term loan facility and a $1.25 billion revolving
credit facility;
▪
We used the proceeds of the above offerings to repay the $2,182.7 million outstanding under our senior
secured credit facilities and redeem the remaining $2.5 billion outstanding under our acquisition debt,
resulting in the acceleration of the expensing of $41.2 million of deferred financing costs and our
incurring $114.3 million in prepayment penalties.
During the fourth quarter of 2018, we prepaid the $782.0 million outstanding under the term loan facility and
accelerated the expensing of $1.5 million of deferred financing costs.
During the fourth quarter of 2019, we prepaid $500.0 million of the $750.0 million Senior Floating Rate Notes
due 2020 and accelerated the expensing of $0.3 million of deferred financing costs.
During the first quarter of 2020, we repaid the remaining $250.0 million outstanding under the Senior Floating
Rate Notes.
During the first quarter of 2020, we preemptively drew $750.0 million on our revolving credit facility to reduce
our exposure to potential short-term liquidity risk in the banking system as a result of the COVID-19 pandemic,
all of which was repaid by the end of the third quarter of 2020.
During the fourth quarter of 2020, we repaid the $300.0 million 5.00% Senior Notes that we assumed upon the
acquisition of Family Dollar.
Overview
We are a leading operator of more than 15,600 retail discount stores and we conduct our operations in two reporting segments.
Our Dollar Tree segment is the leading operator of discount variety stores offering merchandise predominantly at the fixed price of
$1.00. Our Family Dollar segment operates general merchandise retail discount stores providing consumers with a selection of
competitively-priced merchandise in convenient neighborhood stores.
Our net sales are derived from the sale of merchandise. Two major factors tend to affect our net sales trends. First is our success at
opening new stores. Second is the performance of stores once they are open. Sales vary at our existing stores from one year to the
next. We refer to this as a change in comparable store net sales, because we include only those stores that are open throughout both of
the periods being compared, beginning after the first fifteen months of operation. We include sales from stores expanded or remodeled
during the year in the calculation of comparable store net sales, which has the effect of increasing our comparable store net sales. The
term ‘expanded’ also includes stores that are relocated. Stores that have been re-bannered are considered to be new stores and are not
included in the calculation of the comparable store net sales change until after the first fifteen months of operation under the new
brand.
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At January 30, 2021, we operated stores in 48 states and the District of Columbia, as well as stores in five Canadian provinces. A
breakdown of store counts and square footage by segment for the years ended January 30, 2021 and February 1, 2020 is as follows:
Store Count:
Beginning
New stores
Re-bannered stores
Closings
Ending
Relocations
Selling Square Feet (in millions):
Beginning
New stores
Re-bannered stores
Closings
Relocations
Ending
Dollar Tree
January 30, 2021
Family Dollar
Total
Dollar Tree
February 1, 2020
Family Dollar
Total
Year Ended
7,505
341
(4)
(37)
7,805
49
64.6
3.1
(0.1)
(0.3)
0.1
67.4
7,783
156
5
(64)
7,880
39
56.7
1.3
0.1
(0.5)
0.1
57.7
15,288
497
1
(101)
15,685
88
121.3
4.4
—
(0.8)
0.2
125.1
7,001
348
200
(44)
7,505
47
60.3
3.0
1.5
(0.4)
0.2
64.6
8,236
170
(200)
(423)
7,783
15
59.8
1.3
(1.5)
(2.9)
—
56.7
15,237
518
—
(467)
15,288
62
120.1
4.3
—
(3.3)
0.2
121.3
Stores are included as re-banners when they close or open, respectively. Comparable store net sales for Dollar Tree may be
negatively affected when a Family Dollar store is re-bannered near an existing Dollar Tree store.
The average size of stores opened in 2020 was approximately 8,640 selling square feet (or about 10,800 gross square feet) for the
Dollar Tree segment and 8,460 selling square feet (or about 10,360 gross square feet) for the Family Dollar segment. For 2021, we
continue to plan to open stores that are 8,000 - 10,000 selling square feet (or about 10,000 - 12,000 gross square feet) for the Dollar
Tree segment and 7,000 - 10,000 selling square feet (or about 9,000 - 12,000 gross square feet) for the Family Dollar segment. We
believe that these size stores are in the ranges of our optimal sizes operationally and give our customers a shopping environment which
invites them to shop longer, buy more and make return visits.
Fiscal 2020, fiscal 2019 and fiscal 2018 each included 52 weeks.
The percentage change in comparable store net sales on a constant currency basis for the fiscal year ended January 30, 2021, as
compared with the preceding year, is as follows:
Year Ended January 30, 2021
Sales Growth
Change in Customer Traffic Change in Average Ticket
Consolidated
Dollar Tree Segment
Family Dollar Segment
6.1 %
2.2 %
10.5 %
(11.6)%
(13.3)%
(9.1)%
20.0 %
17.9 %
21.5 %
Constant currency basis refers to the calculation excluding the impact of currency exchange rate fluctuations. We calculated the
constant currency basis change by translating the current year’s comparable store net sales in Canada using the prior year’s currency
exchange rates. We believe that the constant currency basis provides a more accurate measure of comparable store net sales
performance. Comparable store net sales are positively affected by our expanded and relocated stores, which we include in the
calculation, and are negatively affected when we open new stores, re-banner stores or expand stores near existing stores.
Dollar Tree Initiatives
We believe that our Dollar Tree initiatives continue to positively affect our comparable store net sales. In fiscal 2019, we
introduced our Crafter’s Square initiative in more than 650 stores. This offering includes a new expanded assortment of arts and crafts
supplies. During fiscal 2020, we expanded this program, completing the roll-out to all of our Dollar Tree stores. The Crafter’s Square
assortment carries mark-ups which are higher than our average mark-up. Additionally, for more than a year, we have tested a multi-
price initiative referred to as Dollar Tree Plus! Beginning in fiscal 2019, we began testing multi-price assortments in more than 100
stores in southwestern markets. Based on learnings from the test, we made modifications to: the mix of products offered to include
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primarily discretionary items; the displays and signage to drive awareness and excitement to the stores; the price points to focus on the
$1, $3 and $5 price points; and increase the number of offerings above the $1 price point. We plan to expand this initiative into a total
of 500 stores beginning in the first quarter of fiscal 2021. We believe these initiatives have and will continue to enable us to increase
sales and earnings.
Family Dollar Initiatives
We are executing several initiatives in our Family Dollar stores to increase sales. During 2020, we entered into a partnership with
Instacart to enable our customers to shop online and receive merchandise without having to visit a store. In fiscal 2019, we executed a
store optimization program for our Family Dollar stores to improve performance. Included in that program was a roll-out of a new
model for both new and renovated Family Dollar stores internally known as H2. The H2 model has significantly improved
merchandise offerings, including approximately 20 Dollar Tree $1.00 merchandise sections and establishing a minimum number of
freezer and cooler doors, throughout the store. H2 stores have higher customer traffic and provide an average comparable store net
sales lift in excess of 10%, when compared to non-renovated stores, in the first year following renovation. H2 stores perform well in a
variety of locations and especially in locations where our Family Dollar stores have been most challenged in the past. As of
January 30, 2021, we have approximately 2,385 H2 stores. We plan to renovate at least 1,250 stores to this format in fiscal 2021 and
also plan to build new stores in this format. In addition, we installed adult beverage product in approximately 570 stores in fiscal 2020
and plan to add it to approximately 1,000 stores in fiscal 2021. We believe the addition of adult beverage to our assortment will drive
traffic to our stores.
Building on the success of the H2 format, we have developed a Combination Store which leverages both the Dollar Tree and
Family Dollar brands to serve small towns across the country. We are taking Family Dollar’s great value and assortment and blending
in select Dollar Tree merchandise categories, creating a new store format targeted for small towns and rural communities with
populations of 3,000 to 4,000 residents.
Other Items
Additionally, the following items have already impacted or could impact our business or results of operations during 2021 or in
the future:
•
We are experiencing delays in receiving import merchandise as a result of worldwide container and other equipment
shortages and issues with port congestion. In the United States, the port congestion is resulting in ships not returning to
Asia in a timely manner as well as impacting equipment availability. This is resulting in delays in product being loaded and
shipped from overseas locations. Although this has not yet impacted our sales and we believe we are adequately stocked
with merchandise for Easter, the delays could potentially have a material adverse impact on our sales after Easter,
especially at Dollar Tree, if the delays do not improve. In addition to creating business uncertainty, this disruption in the
import transportation process is also resulting in higher costs. We are also seeing increases in the cost to ship domestic
freight from our suppliers to our distribution centers. We are currently projecting approximately $80.0 to $100.0 million of
additional costs in fiscal 2021 as a result of higher shipping and domestic freight costs.
•
•
In 2021, the minimum wage has increased in certain States and localities and may increase nationally depending on the
outcome of future legislation proposed in Congress. The currently scheduled minimum wage increases are estimated to
increase store payroll by $45.0 million to $50.0 million in 2021, which is less than the COVID-19-related payroll increases
in 2020. Additional minimum wage increases and other wage and hour law changes in the future could materially impact
our results of operations.
The amount of COVID-19-related costs for premium pay including bonuses, supplies, protective equipment, and similar
items was $279.0 million in fiscal 2020; the amount of these costs for 2021 is highly uncertain. Among other things, the
duration and severity of the pandemic is uncertain, and a number of States and localities are considering legislation that
could require premium pay for certain essential workers during certain government mandated restricted work periods.
We must continue to control our merchandise costs, inventory levels and our general and administrative expenses as increases in
these items could negatively impact our operating results.
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Results of Operations
Our results of operations as a percentage of net sales and year-over-year changes are discussed in the following section.
Net Sales
(dollars in millions)
Net sales
Comparable store net sales change,
on a constant currency basis
Year Ended
Percentage Change
January 30,
February 1,
February 2,
2021
2020
2019
Fiscal 2020 vs.
Fiscal 2019
$ 25,509.3
$ 23,610.8
$ 22,823.3
8.0 %
6.1 %
1.8 %
1.7 %
The increase in net sales from 2019 to 2020 was a result of comparable store net sales increases in the Family Dollar and Dollar
Tree segments and sales of $852.4 million at new stores. These sales increases were partially offset by lost sales resulting from store
closures during fiscal 2019 in connection with our Family Dollar segment store optimization program.
Enterprise comparable store net sales increased 6.1% on a constant currency basis in 2020, as a result of a 20.0% increase in
average ticket and an 11.6% decrease in customer traffic. Comparable store net sales increased 6.0% when including the impact of
Canadian currency fluctuations. On a constant currency basis, comparable store net sales increased 10.5% in the Family Dollar
segment and 2.2% in the Dollar Tree segment. Lower traffic resulting from the COVID-19 pandemic negatively affected Easter sales
in the Dollar Tree segment in the first quarter of fiscal 2020.
Gross Profit
(dollars in millions)
Gross profit
Gross profit margin
Year Ended
Percentage Change
January 30,
February 1,
February 2,
2021
2020
2019
Fiscal 2020 vs.
Fiscal 2019
$
7,788.3
$
7,040.7
$
6,947.5
30.5 %
29.8 %
30.4 %
10.6 %
0.7 %
The increase in gross profit margin from 2019 to 2020 was a result of the net of the following:
•
•
Occupancy costs decreased 40 basis points as a result of the leverage from the increase in comparable store net sales.
Markdown costs decreased 25 basis points resulting primarily from the prior year including markdowns related to Family
Dollar store closures and clearance sales as well as lower promotional activity in the current year on the Family Dollar
segment as a result of the increase in sales of discretionary product. Both segments also had higher sell-through of both
Christmas and Halloween merchandise. These decreases were partially offset by $10.4 million of uninsured markdown
costs for stores affected by civil unrest during 2020 and higher seasonal markdowns in the Dollar Tree segment in the first
quarter of 2020 due to the lower than planned sell-through on Easter merchandise as a result of the COVID-19 pandemic.
•
Merchandise cost, including freight, decreased 20 basis points in 2020 compared to 2019 resulting from higher sales of
higher margin discretionary merchandise and improved initial mark-on, partially offset by incremental tariff costs of $30.7
million.
•
•
Shrink costs decreased 15 basis points resulting from favorable inventory reconciliations on the Family Dollar segment in
the current year, partially offset by unfavorable physical inventory results in relation to accruals on the Dollar Tree
segment.
Distribution costs increased 30 basis points resulting primarily from higher distribution center payroll and depreciation
costs. We paid our hourly distribution center associates a wage premium for all hours worked from March 8, 2020 through
January 2, 2021. Total distribution center COVID-19-related expenses were $36.3 million, or 15 basis points of this
increase.
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Selling, General and Administrative Expenses
(dollars in millions)
Selling, general and administrative
expenses
Year Ended
Percentage Change
January 30,
February 1,
February 2,
2021
2020
2019
Fiscal 2020 vs.
Fiscal 2019
As a percentage of Net sales
23.1 %
24.5 %
34.5 %
$
5,900.4
$
5,778.5
$
7,887.0
2.1 %
(1.4)%
We recorded non-cash goodwill impairment charges of $313.0 million and $2,727.0 million in fiscal 2019 and fiscal 2018,
respectively. The goodwill impairments are discussed further in Note 3 to our consolidated financial statements. Excluding the
goodwill impairment charges in 2019 and 2018, selling, general and administrative expenses were 23.2% and 22.6%, as a percentage
of net sales, in 2019 and 2018, respectively. The decrease in selling, general and administrative expenses, as a percentage of net sales,
from 2019 to 2020, excluding the goodwill impairment charge from 2019, was the result of the net of the following:
•
•
•
•
Other selling, general and administrative expenses decreased 40 basis points as a result of the leverage from the
comparable store net sales increase, higher costs in the prior year related to the disposal of fixed assets in connection with
the store optimization program on the Family Dollar segment, lower promotional advertising on the Family Dollar
segment, decreases in travel due to the COVID-19 pandemic, lower legal expenses and higher costs in the prior year for the
store support center consolidation. These improvements were partially offset by an increase in store supplies expenses due
to the COVID-19 pandemic. Fiscal 2020 included $26.5 million, or 10 basis points, of costs for the installation of
plexiglass sneeze guards at all registers in our stores as well as incremental costs for masks, gloves and cleaning supplies
due to the COVID-19 pandemic and $2.7 million of uninsured costs associated with stores damaged in civil unrest.
Store facility costs decreased 20 basis points due to leverage from the comparable store net sales increase and lower
electricity costs. Fiscal 2020 included $1.3 million of COVID-19-related expenses and $4.5 million of expenses for stores
damaged in civil unrest.
Depreciation costs decreased 5 basis points due primarily to the leverage from the comparable store net sales increase.
Payroll expenses increased 65 basis points primarily due to incremental costs associated with the COVID-19 pandemic and
increases in incentive compensation, store sales bonuses and stock compensation expenses resulting from improved
operating performance in the Family Dollar segment. These increases were partially offset by leverage from the
comparable store net sales increase, lower benefits costs and lower temporary help expenses as a result of the prior year
including higher expenses to support store-level initiatives. Office payroll costs also decreased resulting from the store
support center consolidation in the prior year and other leadership changes made in the fourth quarter of fiscal 2019.
Incremental payroll costs associated with the COVID-19 pandemic, including a wage premium paid to all store hourly
associates for all hours worked March 8, 2020 through September 26, 2020, bonuses for certain field management
associates, guaranteed bonus payouts and “Thank You” bonuses for store managers, quarantine pay and sick pay as well as
the related payroll taxes, totaled $212.6 million, or 85 basis points.
Operating Income (Loss)
January 30,
February 1,
February 2,
(dollars in millions)
2021
2020
2019
Operating income (loss)
$
1,887.9
$
1,262.2
$
(939.5)
Operating income margin
7.4 %
5.3 %
(4.1)%
Fiscal 2020 vs.
Fiscal 2019
49.6 %
2.1 %
Year Ended
Percentage Change
Excluding the non-cash goodwill impairment charges in 2019 and 2018, operating income margin was 6.7% in 2019 and 7.8% in
2018. Operating income margin increased to 7.4% in fiscal 2020 compared to 6.7% in fiscal 2019, excluding the goodwill impairment
charge, as operating income margin in the Family Dollar segment increased 330 basis points, partially offset by a 140 basis point
decrease in the Dollar Tree segment operating income margin. Operating income in fiscal 2020 includes $279.0 million of COVID-19-
related expenses and $18.2 million of uninsured expenses related to civil unrest.
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Interest Expense, Net
(dollars in millions)
Interest expense, net
Year Ended
Percentage Change
January 30,
February 1,
February 2,
2021
2020
2019
Fiscal 2020 vs.
Fiscal 2019
$
147.3 $
162.1 $
370.0
(9.1)%
Interest expense, net decreased $14.8 million in fiscal 2020 compared to the prior year, resulting from lower average debt
outstanding in the current year, partially offset by lower interest income.
In fiscal 2018, we refinanced our debt, resulting in the acceleration of the expensing of $41.2 million of amortizable non-cash
deferred financing costs and prepayment penalties totaling $114.3 million.
Provision for Income taxes
January 30,
February 1,
February 2,
(dollars in millions)
2021
2020
2019
Provision for income taxes
$
397.9
$
271.7
$
281.8
Effective tax rate
22.9 %
24.7 %
21.5 %
Fiscal 2020 vs.
Fiscal 2019
46.4 %
(1.8)%
Year Ended
Percentage Change
The effective tax rate for 2020 was 22.9% compared to 24.7% for 2019. The 2020 effective rate decreased compared to the prior
year rate as the $313.0 million goodwill impairment charge in 2019 was not tax deductible. Partially offsetting that decrease, the 2020
rate reflects higher state tax rates, higher income amounts taxed at the statutory rate and additional tax expense for restricted stock
vestings due to the stock price for certain grants being lower at the vest date than the grant date. The 2019 effective tax rate also
includes the benefit of the reversal of a valuation allowance of $24.6 million.
Segment Information
We operate a chain of more than 15,600 retail discount stores in 48 states and five Canadian provinces. Our operations are
conducted in two reporting business segments: Dollar Tree and Family Dollar. We define our segments as those operations whose
results our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources.
We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating
income. The CODM reviews these metrics for each of our reporting segments. We may revise the measurement of each segment’s
operating income, as determined by the information regularly reviewed by the CODM. If the measurement of a segment changes, prior
period amounts and balances are reclassified to be comparable to the current period’s presentation. Corporate, support and Other
consists primarily of store support center costs that are considered shared services and therefore these selling, general and
administrative costs are excluded from our two reporting business segments. These costs include operating expenses for our store
support centers in Chesapeake, Virginia and Matthews, North Carolina. During fiscal 2019, we consolidated our Matthews, North
Carolina store support center with our store support center in Chesapeake, Virginia. Corporate, support and Other also includes the
results of operations for our Summit Pointe property in Chesapeake, Virginia. Prior year amounts have been reclassified to be
comparable to the current year presentation.
Dollar Tree
The following table summarizes the operating results of the Dollar Tree segment:
(in millions)
Net sales
Gross profit
Operating income
January 30, 2021
% of
Net Sales
$
Year Ended
February 1, 2020
% of
Net Sales
$
Percentage Change
February 2, 2019
% of
Net Sales
$
Fiscal 2020 vs.
Fiscal 2019
$ 13,265.0
4,543.8
1,598.0
$ 12,507.9
$ 11,712.1
34.3 %
12.0 %
4,342.9
1,670.2
34.7 %
13.4 %
4,137.5
1,657.4
35.3 %
14.2 %
(0.4)%
(1.4)%
Net sales for the Dollar Tree segment increased 6.1%, or $757.1 million, in 2020 compared to 2019 due to sales from new stores
of $591.0 million and a 2.2% increase in comparable store net sales. Average ticket increased 17.9% and customer traffic declined
13.3% in 2020.
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Gross profit margin for the Dollar Tree segment decreased to 34.3% in 2020 from 34.7% in 2019. The decrease is due to the net
of the following:
•
•
•
•
Distribution costs increased 50 basis points resulting primarily from higher distribution center payroll and depreciation
costs. We paid our hourly distribution center associates a wage premium for all hours worked from March 8, 2020 through
January 2, 2021. Total distribution center COVID-19-related expenses were $21.3 million, or 15 basis points of this
increase.
Shrink costs increased 5 basis points resulting from unfavorable physical inventory results in relation to accruals in the
current year and an increase in the shrink accrual rate.
Markdown costs were flat as a percentage of net sales compared to the prior year as lower markdowns from higher seasonal
merchandise sell-through in the third and fourth quarters of 2020 were offset by higher markdowns from the lower sell-
through of Easter merchandise as a result of the COVID-19 pandemic in the first quarter of 2020, and $2.9 million of
uninsured markdown costs for stores affected by civil unrest.
Merchandise cost, including freight, decreased 10 basis points primarily due to increased sales of higher margin
discretionary merchandise and increased initial mark-on, partially offset by incremental tariffs of $23.7 million.
Discretionary merchandise sales were a higher proportion of total sales in the second, third and fourth quarters of 2020
while they were a lower proportion in the first quarter of 2020 as a result of the lower Easter sales due to the COVID-19
pandemic.
Operating income margin for the Dollar Tree segment decreased to 12.0% in 2020 compared to 13.4% in 2019. The decrease in
operating income margin in 2020 was the result of lower gross profit margin as noted above and higher selling, general and
administrative expenses as a percentage of net sales. Selling, general and administrative expenses, as a percentage of net sales,
increased to 22.3% in 2020 compared to 21.3% in 2019 as a result of the net of the following:
•
•
•
Payroll expenses increased 100 basis points primarily due to incremental costs associated with the COVID-19 pandemic
and higher incentive compensation and store sales bonuses. Incremental payroll costs associated with the COVID-19
pandemic included a wage premium paid to all store hourly associates for all hours worked from March 8, 2020 through
September 26, 2020, bonuses for certain field management associates, guaranteed bonus payouts and “Thank You”
bonuses for store managers, quarantine pay and sick pay as well as the related payroll taxes. These costs totaled $124.2
million, or 95 basis points, in fiscal 2020. These increases were partially offset by leverage from the comparable store net
sales increase and lower benefits costs.
Other selling, general and administrative expenses decreased 5 basis points as a result of decreased travel costs due to the
COVID-19 pandemic and lower legal expenses, partially offset by an increase in store supplies costs resulting from the
COVID-19 pandemic. Fiscal 2020 includes $14.9 million, or 10 basis points, of costs for the installation of plexiglass
sneeze guards at all registers in our stores as well as incremental costs for masks, gloves and cleaning supplies due to the
COVID-19 pandemic.
Store facility costs decreased 10 basis points due to leverage from the comparable store net sales increase. Fiscal 2020
includes $1.7 million of expenses for repairs to stores damaged in civil unrest.
Operating income in fiscal 2020 includes $161.1 million of COVID-19-related expenses and $5.4 million of uninsured costs
related to civil unrest.
Family Dollar
The following table summarizes the operating results of the Family Dollar segment:
(in millions)
Net sales
Gross profit
Operating income (loss)
$ 12,243.4
3,243.6
655.6
January 30, 2021
% of
Net Sales
$
Year Ended
February 1, 2020
% of
Net Sales
$
$ 11,102.9
February 2, 2019
% of
Net Sales
$
$ 11,111.2
Percentage Change
Fiscal 2020 vs.
Fiscal 2019
26.5 %
2,697.8
24.3 %
2,810.0
25.3 %
5.4 %
(74.9)
(0.7)%
(2,312.8)
(20.8)%
2.2 %
6.1 %
Net sales for the Family Dollar segment increased $1,140.5 million or 10.3% in 2020 compared to 2019 due to a comparable store
net sales increase of 10.5% and $261.4 million of new store sales, partially offset by lost sales resulting from store closures during
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fiscal 2019 in connection with our store optimization program. Average ticket increased 21.5% and customer traffic declined 9.1% in
2020.
Gross profit margin for the Family Dollar segment increased to 26.5% in 2020 compared to 24.3% in 2019. The increase is due to
the net of the following:
•
•
Occupancy costs decreased 80 basis points as a result of the leverage from the comparable store net sales increase.
Markdowns at cost decreased 55 basis points primarily due to higher store closure and clearance sale markdowns in the
prior year and lower promotional activity in the current year as a result of the increase in sales of discretionary product.
Family Dollar also had higher sell-through of both Christmas and Halloween merchandise. These markdown reductions
were partially offset by $7.5 million of uninsured markdown costs for stores affected by civil unrest.
•
Merchandise cost, including freight, decreased 50 basis points primarily due to increased sales of higher margin
discretionary merchandise and improved initial mark-on, partially offset by incremental tariffs of $7.1 million.
•
•
Shrink expense decreased 45 basis points resulting from favorable physical inventory results in relation to accruals in the
current year and a decrease in the accrual rate compared to an increase in the accrual rate in the prior year.
Distribution costs increased 5 basis points resulting primarily from higher distribution center payroll costs. We paid our
hourly distribution center associates a wage premium for all hours worked from March 8, 2020 through January 2, 2021.
Total distribution center COVID-19-related expenses were $15.0 million, or 10 basis points of this increase.
Excluding the $313.0 million and $2,727.0 million non-cash goodwill impairment charges in 2019 and 2018, respectively,
operating income margin for the Family Dollar segment was 2.1% in 2019 and 3.7% in 2018. Operating income margin increased to
5.4% in fiscal 2020 compared to 2.1% in fiscal 2019, excluding the goodwill impairment charge, resulting from the gross margin
increase noted above and a decrease in selling, general and administrative expenses, as a percentage of net sales. Selling, general and
administrative expenses were 21.1%, as a percentage of net sales, in 2020 compared to 22.2% in 2019, excluding the goodwill
impairment charge. The decrease in selling, general and administrative expenses, as a percentage of net sales, was due to the
following:
•
•
•
•
Other selling, general and administrative expenses decreased 60 basis points primarily due to a decrease in promotional
advertising, less travel during the COVID-19 pandemic, higher costs in the prior year related to the disposal of fixed assets
in connection with the store optimization program, lower legal expenses, and leverage associated with the increase in
comparable store net sales during the period, partially offset by an increase in store supplies expense. Fiscal 2020 included
$11.6 million or 10 basis points of costs for the installation of plexiglass sneeze guards at all registers in our stores as well
as incremental costs for masks, gloves and cleaning supplies due to the COVID-19 pandemic and $2.1 million of expenses
primarily for fixed asset disposals for stores damaged by civil unrest.
Store facility costs decreased 25 basis points primarily due to leverage from the comparable store net sales increase and
lower electricity costs. Fiscal 2020 included $2.8 million of incremental repairs and maintenance expenses for stores
damaged by civil unrest.
Depreciation and amortization expense decreased 15 basis points primarily due to leverage from the comparable store net
sales increase.
Payroll expenses decreased 5 basis points as incremental costs associated with the COVID-19 pandemic and increased
incentive compensation and store sales bonus expenses resulting from the improved Family Dollar operating performance
were more than offset by leverage from the comparable store net sales increase, lower temporary help expenses as a result
of the prior year including higher expenses to support store-level initiatives, a decrease in workers’ compensation expenses
and lower benefits costs. Incremental costs associated with the COVID-19 pandemic, including a wage premium paid to all
store hourly associates for all hours worked from March 8, 2020 to September 26, 2020, bonuses for certain field
management associates, guaranteed bonus payouts and “Thank You” bonuses for store managers, quarantine pay and sick
pay as well as the related payroll taxes totaled $88.4 million or 70 basis points.
Operating income in fiscal 2020 includes $115.5 million for COVID-19-related expenses and $12.8 million of uninsured costs
related to civil unrest.
Liquidity and Capital Resources
Our business requires capital to build and open new stores, expand and renovate existing stores, expand our distribution network
and operate our existing stores. Our working capital requirements for existing stores are seasonal in nature and typically reach their
peak in the months of September and October. Historically, we have satisfied our seasonal working capital requirements for existing
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stores and have funded our store opening and distribution network expansion programs from internally generated funds and
borrowings under our credit facilities.
The following table compares cash-flow related information for the years ended January 30, 2021, February 1, 2020 and
February 2, 2019:
(in millions)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Operating Activities
Year Ended
January 30,
February 1,
February 2,
2021
2020
2019
$
2,716.3 $
1,869.8 $
1,766.0
(889.7)
(949.9)
(1,020.2)
(816.7)
(709.8)
(1,599.9)
Net cash provided by operating activities increased $846.5 million in 2020 compared to 2019 primarily as a result of higher
accounts payable, current liabilities and other liabilities and lower inventory levels at January 30, 2021, and higher earnings before
depreciation and amortization in the current year.
Investing Activities
Net cash used in investing activities decreased $130.5 million in 2020 compared with 2019 primarily due to 2019 including higher
capital expenditures related to the Family Dollar segment store optimization program, including H2 renovations and re-banners. H2
renovations were slowed in the current year due to the COVID-19 pandemic. The decrease was partially offset by increased capital
expenditures related to distribution center projects in the current year and grant funds received from state and local governments for
our Summit Pointe development in the prior year.
Financing Activities
Net cash used in financing activities increased $240.1 million in 2020 compared to 2019 primarily due to $400.0 million of stock
repurchases in 2020 compared to $200.0 million in 2019. In 2020, we also repaid the remaining $250.0 million of our $750.0 million
Floating Rate Notes and the $300.0 million 5% Senior Notes. In fiscal 2019, we prepaid $500.0 million of our $750.0 million Floating
Rate Notes.
At January 30, 2021, our long-term borrowings were $3.25 billion and we had $1.25 billion available under our revolving credit
facility, less amounts outstanding for standby letters of credit totaling $98.7 million. For additional detail on our long-term borrowings
and other commitments, refer to the discussion of Funding Requirements below, as well as Note 5 and Note 6 to our consolidated
financial statements.
Share Repurchases
We repurchased 3,982,478 shares of common stock on the open market for $400.0 million in fiscal 2020 and we repurchased
1,967,355 shares of common stock on the open market for $200.0 million in fiscal 2019. There were no shares repurchased in fiscal
2018. At January 30, 2021, we had $400.0 million remaining under Board repurchase authorization. Subsequently, on March 2, 2021,
the Board increased the share repurchase authorization by $2.0 billion resulting in a total share repurchase authorization of $2.4
billion.
Funding Requirements
Overview
We expect our cash needs for opening new stores and expanding and renovating existing stores in fiscal 2021 to total
approximately $592.7 million, which includes capital expenditures, initial inventory and pre-opening costs.
Our estimated capital expenditures for fiscal 2021 are approximately $1.2 billion, including planned expenditures for our new and
expanded stores, approximately 1,250 planned H2 renovations of Family Dollar segment stores, distribution center expansions and the
development of additional parcels on our Summit Pointe property, located in Chesapeake, Virginia, for mixed-use purposes. We
believe that we can adequately fund our working capital requirements and planned capital expenditures for the foreseeable future from
net cash provided by operations and potential borrowings under our revolving credit facility.
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The following tables summarize our material contractual obligations at January 30, 2021, including both on- and off-balance sheet
arrangements, and our commitments, including interest on long-term borrowings (in millions):
Contractual Obligations
Total
2021
2022
2023
2024
2025
Thereafter
Lease Financing
Operating lease obligations
$ 7,459.5 $ 1,480.1 $ 1,396.4 $ 1,184.1 $
965.0 $
731.2 $
1,702.7
Long-term Borrowings
Principal
Interest
3,250.0
639.2
—
129.1
—
1,000.0
129.1
104.8
—
92.0
1,000.0
1,250.0
64.1
120.1
Total obligations
$ 11,348.7 $ 1,609.2 $ 1,525.5 $ 2,288.9 $ 1,057.0 $ 1,795.3 $
3,072.8
Commitments
Total
Expiring
in 2021
Expiring
in 2022
Expiring
in 2023
Expiring
in 2024
Expiring
in 2025 Thereafter
Letters of credit and surety bonds
$
404.8 $
378.5 $
25.7 $
0.5 $
0.1 $
— $
Purchase obligations
Total commitments
Lease Financing
189.8
68.3
43.2
35.5
27.6
15.2
$
594.6 $
446.8 $
68.9 $
36.0 $
27.7 $
15.2 $
—
—
—
Operating lease obligations. Refer to Note 7 to our consolidated financial statements for information on our operating leases. The
obligation above includes amounts for leases that were signed prior to January 30, 2021 for stores that were not yet open on
January 30, 2021.
Long-term Borrowings
In the first quarter of 2018, we redeemed our $750.0 million acquisition notes and accelerated the amortization of debt-issuance
costs associated with the notes of $6.1 million.
Additionally, in the first quarter of 2018, we completed the registered offering of $750.0 million aggregate principal amount of
Senior Floating Rate Notes due 2020, $1.0 billion aggregate principal amount of 3.70% Senior Notes due 2023, $1.0 billion aggregate
principal amount of 4.00% Senior Notes due 2025 and $1.25 billion aggregate principal amount of 4.20% Senior Notes due 2028. We
also entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, providing for $2.03 billion in senior
credit facilities, consisting of a $1.25 billion revolving credit facility and a $782.0 million term loan facility. We used the proceeds of
these borrowings and cash on hand to repay all of the outstanding loans under our then-existing senior secured credit facilities and
acquisition notes, resulting in the acceleration of the expensing of $41.2 million of deferred financing costs and our incurring $114.3
million in prepayment penalties. In the fourth quarter of 2018, we prepaid in full the $782.0 million term loan facility. In the fourth
quarter of 2019, we prepaid $500.0 million of the $750.0 million Senior Floating Rate Notes and repaid the remaining $250.0 million
outstanding in the first quarter of 2020.
In addition, upon the acquisition of Family Dollar in 2015, we assumed the liability for $300.0 million of 5.00% senior notes,
which we repaid in the fourth quarter of 2020.
The interest on our long-term borrowings represents the interest payments on the foregoing long-term borrowings that were
outstanding at January 30, 2021 using the interest rates for each at January 30, 2021.
For additional information on our long-term borrowings, please refer to Note 6 to our consolidated financial statements.
Commitments
Letters of credit and surety bonds. We have $356.5 million in Letter of Credit Reimbursement and Security Agreements with
various financial institutions, under which $209.6 million was committed to letters of credit issued for routine purchases of imported
merchandise at January 30, 2021.
We also have $98.7 million of letters of credit outstanding that serve as collateral for our large-deductible insurance programs and
$96.5 million of surety bonds outstanding primarily for certain utility payment obligations at some of our stores and self-insured
insurance programs.
Purchase obligations. We have commitments totaling $189.8 million related to agreements for software licenses and support,
telecommunication services and store technology assets and maintenance for our stores.
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Critical Accounting Policies
The preparation of financial statements requires the use of estimates. Certain of our estimates require a high level of judgment and
have the potential to have a material effect on the financial statements if actual results vary significantly from those estimates.
Following is a discussion of the policies that we consider critical.
Inventory Valuation
As discussed in Note 1 to our consolidated financial statements under the caption “Merchandise Inventories,” inventories at the
distribution centers are stated at the lower of cost or net realizable value with cost determined on a weighted-average basis. Cost is
assigned to store inventories using the retail inventory method on a weighted-average basis. Under the retail inventory method, the
valuation of inventories at cost and the resulting gross margins are computed by applying a calculated cost-to-retail ratio to the retail
value of inventories. The retail inventory method is an averaging method that is widely used in the retail industry and results in
valuing inventories at lower of cost or market when markdowns are taken as a reduction of the retail value of inventories on a timely
basis.
Inventory valuation methods require certain management estimates and judgments, including estimates of future merchandise
markdowns and shrink, which significantly affect the ending inventory valuation at cost as well as the resulting gross margins. The
averaging required in applying the retail inventory method and the estimates of shrink and markdowns could, under certain
circumstances, result in costs not being recorded in the proper period.
We estimate our markdown reserve based on the consideration of a variety of factors, including, but not limited to, quantities of
slow moving or seasonal carryover merchandise on hand, historical markdown statistics and future merchandising plans. The accuracy
of our estimates can be affected by many factors, some of which are outside of our control, including changes in economic conditions
and consumer buying trends. Historically, we have not experienced significant differences in our estimated reserve for markdowns
compared with actual results.
Our accrual for shrink is based on the actual, historical shrink results of our most recent physical inventories adjusted, if
necessary, for current economic conditions and business trends. These estimates are compared to actual results as physical inventory
counts are taken and reconciled to the general ledger. Our physical inventory counts are generally taken between January and October
of each year; therefore, the shrink accrual recorded at January 30, 2021 is based on estimated shrink for most of 2020, including the
fourth quarter. The amounts recorded in the current year reflect the Dollar Tree and Family Dollar segments’ historical results. We
periodically adjust our shrink estimates to reflect our best estimates based on the factors described.
Our management believes that our application of the retail inventory method results in an inventory valuation that reasonably
approximates cost and results in carrying inventory at the lower of cost or market each year on a consistent basis.
Self-Insurance Liabilities
The liabilities related to our self-insurance programs for workers’ compensation and general liability are estimates that require
judgment and the use of assumptions. Semiannually, we obtain third-party actuarial valuations to aid in valuing the liabilities and in
determining the amount to accrue during the year. These actuarial valuations are estimates based on our historical loss development
factors and the related accruals are adjusted as management’s estimates change.
Management’s estimate for self-insurance liabilities could vary from the ultimate loss sustained given the difficulty in predicting
future events; however, historically, the net total of these differences has not had a material effect on our financial condition or results
of operations.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill and indefinite-lived intangible assets are initially recorded at their fair values. These assets are not amortized but are
evaluated annually for impairment. A more frequent evaluation is performed if events or circumstances indicate that impairment could
have occurred. Such events or circumstances could include, but are not limited to, significant negative industry or economic trends,
unanticipated changes in the competitive environment and a significant sustained decline in the market price of our stock.
For purposes of our goodwill impairment evaluation, the reporting units are Family Dollar, Dollar Tree and Dollar Tree Canada.
Goodwill has been assigned to the reporting units based on prior business combinations related to the brands. In the event a qualitative
assessment of the fair value of a reporting unit indicates it is more likely than not that the fair value is less than the carrying amount,
we then estimate the fair value using a combination of a market multiple method and a discounted cash flow method. Under the
market multiple approach, we estimate a fair value based on comparable companies’ market multiples of revenues and earnings before
interest, taxes, depreciation and amortization (“EBITDA”) and adjusted for a control premium. Under the discounted cash flow
approach, we project future cash flows which are discounted using a weighted-average cost of capital analysis that reflects current
market conditions, adjusted for specific reporting unit risks (primarily the uncertainty of achieving projected operating cash flows). If
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the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recognized in an amount equal to that
excess.
The Family Dollar goodwill and trade name comprise a substantial portion of our goodwill and indefinite-lived intangible assets
and management’s judgment utilized in the Family Dollar goodwill and trade name impairment evaluations is critical. The
computations require management to make estimates and assumptions and actual results may differ significantly, particularly if there
are significant adverse changes in the operating environment. Critical assumptions that are used as part of the Family Dollar goodwill
evaluation include:
•
•
The potential future revenue, EBITDA and cash flows of the reporting unit. The projections use management’s assumptions
about economic and market conditions over the projected period as well as our estimates of future performance and
reporting unit revenue, gross margin, expenses and other factors. The resulting revenue, EBITDA and cash flow estimates
are based on our most recent business operating plans, and various growth rates have been assumed for years beyond the
current business plan period. We believe that the assumptions, estimates and rates used in our fiscal 2020 impairment
evaluations are reasonable; however, variations in the assumptions, estimates and rates could result in significantly
different estimates of fair value.
Selection of an appropriate discount rate. Calculating the present value of future cash flows requires the selection of an
appropriate discount rate, which is based on a weighted-average cost of capital analysis. The discount rate is affected by
changes in short-term interest rates and long-term yield as well as variances in the typical capital structure of marketplace
participants. Given current economic conditions, it is possible that the discount rate will fluctuate in the near term. We
engaged third party experts to assist in the determination of the weighted-average cost of capital used to discount the cash
flows for our Family Dollar reporting unit. The weighted-average cost of capital used to discount the cash flows for our
evaluation was 8.25% for our fiscal 2020 analysis.
Indefinite-lived intangible assets, such as the Family Dollar trade name, are not subject to amortization but are reviewed at least
annually for impairment. The indefinite-lived intangible asset impairment evaluations are performed by comparing the fair value of the
indefinite-lived intangible assets to their carrying values. We estimate the fair value of our trade name intangible asset based on an
income approach using the relief-from-royalty method. This approach is dependent upon a number of factors, including estimates of
future growth and trends, royalty rates, discount rates and other variables. We base our fair value estimates on assumptions we believe
to be reasonable, but which are inherently uncertain. The discount rate includes a premium compared to the discount used for the
Family Dollar goodwill impairment evaluation due to the inherently higher risk profile of intangible assets compared to the overall
reporting unit.
Our evaluation of goodwill did not result in an impairment charge being recorded in fiscal 2020. Non-cash impairment charges of
$313.0 million and $2.73 billion were recorded in fiscal 2019 and 2018, respectively, related to the Family Dollar reporting unit. Our
evaluation of the Family Dollar trade name did not result in impairment charges during fiscal 2020, 2019 or 2018. Based on the results
of the 2020 evaluation, the fair value of the Family Dollar reporting unit exceeded its carrying value by a significant margin and the
fair value of the Family Dollar trade name exceeded its carrying value by approximately 7.5%.
For additional information related to goodwill and indefinite-lived intangible assets, including the related impairment evaluations,
refer to Note 3 to our consolidated financial statements. For additional information related to uncertainties associated with the key
assumptions and any potential events and/or circumstances that could have a negative effect on the key assumptions, please refer to
“Item 1A. Risk Factors” and elsewhere within this “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.” If our assumptions and related estimates change in the future, we may be required to record impairment
charges against earnings in future periods. Any impairment charges that we may take in the future could be material to our results of
operations and financial condition.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various types of market risk in the normal course of our business, including the impact of interest rate changes
and diesel fuel cost changes. We may enter into interest rate or diesel fuel swaps to manage exposure to interest rate and diesel fuel
price changes. We do not enter into derivative instruments for any purpose other than cash flow hedging and we do not hold derivative
instruments for trading purposes.
Interest Rate Risk
Our exposure to interest rate risk relates to our revolving credit facility, as borrowings under the revolving credit facility bear
interest at LIBOR, reset periodically, plus 1.00% to 1.50% as determined by our credit ratings and leverage ratio. At January 30, 2021,
there were no borrowings outstanding under the revolving credit facility.
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Item 8. Financial Statements and Supplementary Data
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Balance Sheets
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Note 1 - Summary of Significant Accounting Policies
Note 2 - Supplemental Balance Sheet Information
Note 3 - Goodwill and Nonamortizing Intangible Assets
Note 4 - Income Taxes
Note 5 - Commitments and Contingencies
Note 6 - Long-Term Debt
Note 7 - Leases
Note 8 - Fair Value Measurements
Note 9 - Shareholders’ Equity
Note 10 - Employee Benefit Plans
Note 11 - Stock-Based Compensation Plans
Note 12 - Segments and Disaggregated Revenue
Note 13 - Quarterly Financial Information (Unaudited)
Page
43
45
46
47
48
49
50
50
54
54
55
57
59
61
62
63
63
64
66
68
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Dollar Tree, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Dollar Tree, Inc. and subsidiaries (the Company) as of January 30,
2021 and February 1, 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and
cash flows for each of the years in the three‑year period ended January 30, 2021, and the related notes (collectively, the consolidated
financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position
of the Company as of January 30, 2021 and February 1, 2020, and the results of its operations and its cash flows for each of the years
in the three‑year period ended January 30, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of January 30, 2021, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our
report dated March 16, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial
reporting.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of
February 3, 2019, due to the adoption of Accounting Standards Codification (ASC) Topic 842, Leases.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining,
on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.
Valuation of goodwill and trade name intangible asset in the Family Dollar operating segment
As discussed in Notes 1 and 3 to the consolidated financial statements, the Company performs goodwill and trade name intangible
asset impairment testing on an annual basis and when events and changes in circumstances indicate possible impairment of these
assets. Total recorded goodwill as of January 30, 2021 was $2.0 billion. Of this amount, the goodwill balance for the Family Dollar
reporting unit, which is also the Family Dollar operating segment, was $1.6 billion. The Family Dollar trade name intangible asset
was $3.1 billion as of January 30, 2021.
We identified the assessment of the valuation of goodwill and trade name intangible asset in the Family Dollar operating segment
as a critical audit matter. The assumptions utilized to calculate the fair value of the operating segment, which included revenue
growth rates and discount rate, as well as the assumptions used to calculate the fair value of the trade name intangible asset, which
included revenue growth rates, discount rate, and royalty rate, required subjective auditor judgment. Minor changes to these
assumptions could have a significant effect on the assessment of the carrying value of the goodwill and trade name, which resulted
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in a high degree of subjectivity in performing the associated audit procedures.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls over the Company’s goodwill and trade name impairment assessment process,
including controls related to the determination of the fair value of the assets, the development of the revenue growth rates, discount
rates, and royalty rate. We performed a sensitivity analysis over the revenue growth rate assumptions to assess their impact on the
Company’s determination of the fair values of the Family Dollar reporting unit and the trade name intangible asset. To assess the
Company’s ability to accurately forecast, we compared the Company’s historical forecasts to actual results. We evaluated the
Company’s revenue growth rates reflected in the forecasted revenues for the Family Dollar operating segment by comparing the
store sales growth assumptions to historical results. We also evaluated assumptions related to new store openings and renovations
through comparison to the Company’s forecasted capital expenditures and its known store openings and renovations. We involved
valuation professionals with specialized skills and knowledge who assisted in:
•
•
evaluating the Company’s revenue growth rates based on publicly available market data for comparable entities;
assessing the Company’s discount rates and royalty rate by comparing the Company’s inputs to the discount and royalty rates to
publicly available market data for comparable companies and assessing the resulting rates; and
•
evaluating (1) the Family Dollar operating segment’s fair value using the related cash flow forecast and discount rate, as well as
(2) the trade name’s fair value using the related discount rate and royalty rate, and comparing the results to the Company’s fair
value estimate.
Estimated self-insurance liability
As discussed in Note 1 to the consolidated financial statements, the Company employs an actuary to estimate its self-insurance
liability. As of January 30, 2021, the Company recorded an estimated liability of $319 million.
We identified the evaluation of the estimated self-insurance liability as a critical audit matter. The estimation process involves
auditor judgment and actuarial expertise to evaluate the actuarial methods and assumptions that are used to estimate future claim
payments. Specifically, the evaluation includes the assumptions related to the loss development factors and expected loss rates
which are primarily driven by historical claims paid and incurred data.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls over the Company’s self-insurance liability estimation process. This included
controls related to (1) the selection of the actuarial methods, and the development of the loss development factors and expected loss
rates used to calculate the liability, and (2) the completeness and accuracy of historical claims paid and incurred data. We assessed
the Company’s estimate of the liability by testing a selection of certain data, including claims data, utilized by the Company’s
actuary by comparing it to relevant documentation. We involved actuarial professionals with specialized skills and knowledge,
who assisted in:
•
•
assessing the Company’s actuarial methods by comparing them to generally accepted actuarial methodologies; and
evaluating the Company’s actuarial estimates and assumptions related to the loss development factors and expected loss rates,
by comparing them to generally accepted actuarial methodologies and the Company’s historical data and trends.
/s/ KPMG LLP
We have served as the Company’s auditor since 1987.
Norfolk, Virginia
March 16, 2021
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DOLLAR TREE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses, excluding Goodwill
impairment
Goodwill impairment
Selling, general and administrative expenses
Operating income (loss)
Interest expense, net
Other expense (income), net
Income (loss) before income taxes
Provision for income taxes
Net income (loss)
Basic net income (loss) per share
Diluted net income (loss) per share
January 30,
Year Ended
February 1,
February 2,
2021
2020
2019
$ 25,509.3 $ 23,610.8 $ 22,823.3
17,721.0
7,788.3
16,570.1
7,040.7
15,875.8
6,947.5
5,900.4
—
5,900.4
1,887.9
147.3
0.8
1,739.8
397.9
5,465.5
313.0
5,778.5
1,262.2
162.1
1.4
1,098.7
271.7
5,160.0
2,727.0
7,887.0
(939.5)
370.0
(0.5)
(1,309.0)
281.8
$
$
$
1,341.9 $
827.0 $
(1,590.8)
5.68 $
5.65 $
3.49 $
3.47 $
(6.69)
(6.69)
See accompanying Notes to Consolidated Financial Statements
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DOLLAR TREE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
Net income (loss)
January 30,
Year Ended
February 1,
February 2,
2021
2020
2019
$
1,341.9
$
827.0
$
(1,590.8)
Foreign currency translation adjustments
4.6
(1.5)
(6.0)
Total comprehensive income (loss)
$
1,346.5 $
825.5 $
(1,596.8)
See accompanying Notes to Consolidated Financial Statements
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DOLLAR TREE, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
Merchandise inventories
Other current assets
Total current assets
Property, plant and equipment, net of accumulated depreciation of $4,765.0 and $4,194.1,
respectively
Restricted cash
Operating lease right-of-use assets
Goodwill
Trade name intangible asset
Deferred tax asset
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt
Current portion of operating lease liabilities
Accounts payable
Income taxes payable
Other current liabilities
Total current liabilities
Long-term debt, net, excluding current portion
Operating lease liabilities, long-term
Deferred income taxes, net
Income taxes payable, long-term
Other liabilities
Total liabilities
Commitments and contingencies
Shareholders’ equity:
Common stock, par value $0.01; 600,000,000 shares authorized, 233,383,199 and
236,726,563 shares issued and outstanding at January 30, 2021 and February 1, 2020,
respectively
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total shareholders’ equity
January 30,
2021
February 1,
2020
$
1,416.7 $
539.2
3,427.0
207.1
5,050.8
4,116.3
46.9
6,324.1
1,984.4
3,100.0
23.2
50.3
3,522.0
208.2
4,269.4
3,881.8
46.8
6,225.0
1,983.3
3,100.0
24.4
43.9
$ 20,696.0 $ 19,574.6
$
— $
250.0
1,348.2
1,480.5
86.3
815.3
3,730.3
3,226.2
5,065.5
1,013.5
22.6
352.6
1,279.3
1,336.5
62.7
618.0
3,546.5
3,522.2
4,979.5
984.7
28.9
258.0
13,410.7
13,319.8
2.3
2.4
2,138.5
2,454.4
(35.2)
(39.8)
5,179.7
7,285.3
3,837.8
6,254.8
Total liabilities and shareholders’ equity
$ 20,696.0 $ 19,574.6
See accompanying Notes to Consolidated Financial Statements
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DOLLAR TREE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
YEARS ENDED JANUARY 30, 2021, FEBRUARY 1, 2020, AND FEBRUARY 2, 2019
Common
Stock
Shares
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
(in millions)
Balance at February 3, 2018
Net loss
Total other comprehensive loss
Issuance of stock under Employee Stock
Purchase Plan
Exercise of stock options
Stock-based compensation, net
Balance at February 2, 2019
Cumulative effect of adopted accounting
standards, net
Net income
Total other comprehensive loss
Issuance of stock under Employee Stock
Purchase Plan
Exercise of stock options
Stock-based compensation, net
Repurchase of stock
Balance at February 1, 2020
Net income
Total other comprehensive income
Issuance of stock under Employee Stock
Purchase Plan
Exercise of stock options
Stock-based compensation, net
Repurchase of stock
Balance at January 30, 2021
237.3
—
—
0.2
0.1
0.5
238.1
—
—
—
0.1
—
0.4
(1.9)
236.7
—
—
0.2
0.1
0.4
(4.0)
233.4
$
$
2.4
—
—
—
—
—
2.4
—
—
—
—
—
—
—
2.4
—
—
—
—
—
(0.1)
2.3
$
$
2,545.3
—
—
10.0
7.5
39.9
2,602.7
—
—
—
9.4
5.8
36.5
(200.0)
2,454.4
—
—
10.0
7.0
67.0
(399.9)
2,138.5
$
$
Retained
Earnings
4,666.9
(1,590.8)
—
Shareholders’
Equity
$
7,182.3
(1,590.8)
(6.0)
(32.3) $
—
(6.0)
—
—
—
(38.3)
—
—
(1.5)
—
—
—
—
(39.8)
—
4.6
—
—
—
3,076.1
(65.3)
827.0
—
—
—
—
—
3,837.8
1,341.9
—
—
—
—
—
(35.2) $
—
—
—
—
5,179.7
$
10.0
7.5
39.9
5,642.9
(65.3)
827.0
(1.5)
9.4
5.8
36.5
(200.0)
6,254.8
1,341.9
4.6
10.0
7.0
67.0
(400.0)
7,285.3
See accompanying Notes to Consolidated Financial Statements
48
DOLLAR TREE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Cash flows from operating activities:
January 30,
2021
Year Ended
February 1,
2020
February 2,
2019
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
$
1,341.9 $
827.0 $
(1,590.8)
Goodwill impairment
Depreciation and amortization
Provision for deferred income taxes
Stock-based compensation expense
Amortization of debt discount and debt-issuance costs
Other non-cash adjustments to net income (loss)
Loss on debt extinguishment
Changes in operating assets and liabilities:
Merchandise inventories
Other current assets
Other assets
Accounts payable
Income taxes payable
Other current liabilities
Other liabilities
Operating lease right-of-use assets and liabilities, net
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Proceeds from governmental grant
Proceeds from (payments for) fixed asset disposition
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from long-term debt, net of discount
Principal payments for long-term debt
Debt-issuance and debt extinguishment costs
Proceeds from revolving credit facility
Repayments of revolving credit facility
Proceeds from stock issued pursuant to stock-based compensation plans
Cash paid for taxes on exercises/vesting of stock-based compensation
Payments for repurchase of stock
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
Supplemental disclosure of cash flow information:
Cash paid for:
Interest, net of amounts capitalized
Income taxes
Non-cash transactions:
Accrued capital expenditures
—
686.6
30.7
83.9
4.0
19.0
—
97.1
1.7
(7.0)
142.6
23.6
203.4
88.2
0.6
2,716.3
(898.8)
—
9.1
(889.7)
313.0
645.4
9.1
61.4
6.9
24.5
—
13.6
(8.4)
8.2
(79.8)
2.7
24.3
(14.6)
36.5
1,869.8
(1,034.8)
16.5
(1.9)
(1,020.2)
—
(550.0)
—
750.0
(750.0)
17.0
(16.9)
(400.0)
(949.9)
0.9
877.6
586.0
1,463.6 $
—
(500.0)
—
—
—
15.2
(25.0)
(200.0)
(709.8)
(0.5)
139.3
446.7
586.0 $
2,727.0
621.1
(12.1)
63.1
57.2
7.8
114.7
(369.2)
(21.1)
0.9
242.6
28.5
(105.4)
1.7
—
1,766.0
(817.1)
—
0.4
(816.7)
4,775.8
(6,214.7)
(155.3)
50.0
(50.0)
17.5
(23.2)
—
(1,599.9)
(0.5)
(651.1)
1,097.8
446.7
152.9 $
357.7 $
170.2 $
266.8 $
383.4
277.5
44.9 $
51.1 $
43.2
$
$
$
$
See accompanying Notes to Consolidated Financial Statements
49
Table of Contents
DOLLAR TREE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Description of Business
Unless otherwise stated, references to “we,” “us,” and “our” in this annual report on Form 10-K refer to Dollar Tree, Inc. and its
direct and indirect subsidiaries on a consolidated basis.
We are a leading operator of discount retail stores in the United States and Canada. Below are those accounting policies that we
consider to be significant.
Principles of Consolidation
The consolidated financial statements include the financial statements of Dollar Tree, Inc., and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in consolidation.
Segment Information
At January 30, 2021, we operate more than 15,600 retail discount stores in 48 states and five Canadian provinces. Our operations
are conducted in two reporting business segments: Dollar Tree and Family Dollar. We define our segments as those operations whose
results our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources.
The Dollar Tree segment is the leading operator of discount variety stores offering merchandise predominantly at the fixed price
point of $1.00. The Dollar Tree segment includes our operations under the “Dollar Tree” and “Dollar Tree Canada” brands, 15
distribution centers in the United States and two distribution centers in Canada.
The Family Dollar segment operates a chain of general merchandise retail discount stores providing consumers with a selection of
competitively-priced merchandise in convenient neighborhood stores. The Family Dollar segment consists of our operations under the
“Family Dollar” brand and 11 distribution centers.
Refer to Note 12 for additional information regarding our operating segments.
Foreign Currency
The functional currencies of certain of our international subsidiaries are the local currencies of the countries in which the
subsidiaries are located. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in
effect at the consolidated balance sheet date. Results of operations and cash flows are translated using the average exchange rates
throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a component of
shareholders’ equity in accumulated other comprehensive loss. Gains and losses from foreign currency transactions, which are
included in “Other expense (income), net” have not been significant.
Fiscal Year
Our fiscal year is a 52-week or 53-week period ending on the Saturday closest to January 31. References to “2020” or “fiscal
2020,” “2019” or “fiscal 2019,” and “2018” or “fiscal 2018” relate to the 52-week fiscal years ended January 30, 2021, February 1,
2020, and February 2, 2019, respectively.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents at January 30, 2021 and February 1, 2020 includes $1,135.0 million and $287.6 million, respectively,
of investments primarily in money market securities which are valued at cost, which approximates fair value. We consider all highly-
liquid debt instruments with original maturities of three months or less to be cash equivalents. The majority of payments due from
financial institutions for the settlement of debit card and credit card transactions process within three business days, and therefore are
classified as cash and cash equivalents.
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Merchandise Inventories
Merchandise inventories at our distribution centers are stated at the lower of cost or net realizable value, determined on a
weighted-average cost basis. Cost is assigned to store inventories using the retail inventory method on a weighted-average basis.
Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are computed by applying a
calculated cost-to-retail ratio to the retail value of inventories.
Costs directly associated with warehousing and distribution are capitalized as merchandise inventories. Total warehousing and
distribution costs capitalized into inventory amounted to $172.7 million and $169.7 million at January 30, 2021 and February 1, 2020,
respectively.
Property, Plant and Equipment
Property, plant and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of
the respective assets as follows:
Buildings
Furniture, fixtures and equipment
39 to 40 years
3 to 15 years
Leasehold improvements are amortized over the shorter of the estimated useful lives of the respective assets or the related lease
terms. Amortization is included in “Selling, general and administrative expenses” in the accompanying consolidated statements of
operations.
Costs incurred related to software developed for internal use are capitalized and amortized, generally over three years.
Capitalized Interest
We capitalize interest on borrowed funds during the construction of certain property and equipment. We capitalized $3.2 million,
$2.4 million and $4.2 million of interest costs in the years ended January 30, 2021, February 1, 2020 and February 2, 2019,
respectively.
Insurance Reserves and Restricted Cash
We utilize a combination of insurance and self-insurance programs, including a wholly-owned captive insurance entity, to provide
for the potential liabilities for certain risks, including workers’ compensation, general liability and automobile liability. Liabilities
associated with the risks that are retained by us are not discounted and are estimated, in part, by considering claims experience,
exposure and severity factors and other actuarial assumptions.
Dollar Tree Insurance, Inc., a South Carolina-based wholly-owned captive insurance subsidiary of ours, charges the operating
subsidiary companies premiums to insure the retained workers’ compensation, general liability and automobile liability exposures.
Pursuant to South Carolina insurance regulations, Dollar Tree Insurance, Inc. maintains certain levels of cash and cash equivalents
related to its self-insured exposures.
We also maintain certain cash balances related to our insurance programs, which are held in trust and restricted as to withdrawal
or use.
Lease Accounting
In the first quarter of fiscal 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” and
subsequent amendments, using the optional effective date transition method provided by accounting pronouncement, ASU No.
2018-11, “Leases (Topic 842): Targeted Improvements” and recorded a cumulative effect adjustment to beginning retained earnings.
Our reporting for the fiscal 2018 comparative period presented in the consolidated financial statements continues to be in accordance
with Accounting Standards Codification (“ASC”) Topic 840, “Leases.” Adoption of the standard resulted in the recognition of
Operating lease right-of-use assets and Operating lease liabilities of $6.2 billion and $6.1 billion, respectively, and a reduction to
Retained earnings of $65.3 million, net of tax, as of February 3, 2019. For fiscal 2019, the adoption of the standard did not have a
material impact on our consolidated statements of operations or consolidated statements of cash flows.
Our lease portfolio primarily consists of leases for our retail store locations and we also lease vehicles and trailers, as well as
distribution center space and equipment. We determine if an arrangement is a lease at inception by evaluating whether the arrangement
conveys the right to use an identified asset and whether we obtain substantially all of the economic benefits from and have the ability
to direct the use of the asset. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. We
recognize expense for these leases on a straight-line basis over the lease term. For leases with an initial term in excess of 12 months,
operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments
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over the committed lease term at the lease commencement date.
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of
future lease payments. Inputs to the calculation of our incremental borrowing rate include the valuations and yields of our outstanding
senior notes and their credit spreads over comparable U.S. Treasury rates, adjusted to a collateralized basis by estimating the credit
spread improvement that would result from an upgrade of one ratings classification. Most leases include one or more options to renew
and the exercise of renewal options is at our sole discretion. We do not include renewal options in our determination of the lease term
unless the renewals are deemed to be reasonably certain. Operating lease expense for lease payments not yet paid is recognized on a
straight-line basis over the lease term. The operating lease right-of-use asset is reduced by lease incentives, which has the effect of
lowering the operating lease expense. Operating lease right-of-use assets are periodically reviewed for impairment losses. We use the
long-lived assets impairment guidance in ASC Subtopic 360-10, “Property, Plant, and Equipment - Overall,” to determine whether a
right-of-use asset is impaired, and if so, the amount of the impairment loss to recognize.
We have real estate leases that typically include payments related to non-lease components, such as common area maintenance, as
well as payments for real estate taxes and insurance which are not considered components of the lease. These payments are generally
variable and based on actual costs incurred by the lessor. These costs are expensed as incurred as variable lease costs and excluded for
the purpose of calculating the right-of-use asset and lease liability. A smaller number of real estate leases contain fixed payments for
common area maintenance, real estate taxes and insurance. These fixed payments are considered part of the lease payment and
included in the right-of-use asset and lease liability. In addition, certain of our lease agreements include rental payments based on a
percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. These payments
are expensed as incurred as variable lease costs. Our lease agreements do not contain any material residual value guarantees or
material restrictive financial covenants.
Purchased leases with terms which were either favorable or unfavorable as compared to prevailing market rates at the date of
acquisition are amortized over the remaining lease terms, including, in some cases, an assumed renewal. Amortization expense, net of
$48.1 million, $52.9 million and $65.4 million was recognized in “Selling, general and administrative expenses” in 2020, 2019 and
2018, respectively, related to these lease rights.
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of
We review our long-lived assets and certain identifiable intangible assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by comparing the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount
of the assets exceeds the fair value of the assets based on discounted cash flows or other readily available evidence of fair value, if
any. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. In fiscal 2020, 2019 and
2018, we recorded charges of $4.6 million, $9.1 million and $13.0 million, respectively, to write down certain assets, including
$3.8 million and $8.5 million in fiscal 2020 and fiscal 2019, respectively, to write down Operating lease right-of-use assets. These
charges are recorded as a component of “Selling, general and administrative expenses” in the accompanying consolidated statements
of operations.
Goodwill and Nonamortizing Intangible Assets
Goodwill and nonamortizing intangible assets, including the Family Dollar trade name, are not amortized, but rather tested for
impairment at least annually. In addition, goodwill and nonamortizing intangible assets will be tested on an interim basis if an event or
circumstance indicates that it is more likely than not that an impairment loss has been incurred.
We perform a qualitative assessment to determine whether it is more likely than not that the Family Dollar trade name is
impaired. If we determine that it is more likely than not that an impairment exists, we evaluate the Family Dollar trade name for
impairment by comparing its fair value, based on an income approach using the relief-from-royalty method, to its carrying value. If the
carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized in an amount equal to that excess.
Subsequent to the evaluation of the Family Dollar trade name for impairment, we perform a goodwill impairment evaluation. In
the event that a qualitative assessment of the fair value of a reporting unit indicates it is more likely than not that the fair value is less
than the carrying amount, we then estimate the fair value of the reporting unit using a combination of a market multiple method and a
discounted cash flow method. We recognize goodwill impairment for the amount by which the reporting unit’s carrying amount
exceeds its estimated fair value, not to exceed the total carrying amount of goodwill allocated to the reporting unit.
Our reporting units are determined in accordance with the provisions of ASC Topic 350, “Intangibles - Goodwill and Other.” We
perform our annual impairment testing of goodwill and nonamortizing intangible assets during the fourth quarter of each year. Refer to
Note 3 for additional information on the results of the impairment tests.
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Revenue Recognition
We recognize sales revenue, net of estimated returns and sales tax, at the time the customer tenders payment for and takes control
of the merchandise.
Taxes Collected
We report taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions (i.e., sales tax)
on a net (excluded from revenue) basis.
Cost of Sales
We include the cost of merchandise, warehousing and distribution costs, and certain occupancy costs in cost of sales.
Vendor Allowances
We receive vendor support in the form of cash payments or allowances through a variety of reimbursements such as purchase
discounts, cooperative advertising, markdowns, scandowns and volume rebates. We have agreements with vendors setting forth the
specific conditions for each allowance or payment. We either recognize the allowance as a reduction of current costs or defer the
payment over the period the related merchandise is sold. If the payment is a reimbursement for costs incurred, it is offset against those
related costs; otherwise, it is treated as a reduction to the cost of merchandise.
Pre-Opening Costs
We expense pre-opening costs for new, expanded, relocated and re-bannered stores and for distribution centers, as incurred.
Advertising Costs
We expense advertising costs as they are incurred and they are included in “Selling, general and administrative expenses” within
the accompanying consolidated statements of operations. Advertising costs, net of co-op recoveries from vendors, were $80.8 million,
$102.9 million and $99.9 million in fiscal 2020, 2019 and 2018, respectively.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of such change.
We recognize a financial statement benefit for a tax position if we determine that it is more likely than not that the position will be
sustained upon examination.
We include interest and penalties in the provision for income tax expense and income taxes payable. We do not provide for any
penalties associated with tax contingencies unless they are considered probable of assessment.
Stock-Based Compensation
We recognize expense for all share-based payments to employees and non-employee directors based on their fair values. Total
stock-based compensation expense for 2020, 2019 and 2018 was $83.9 million, $61.4 million and $63.3 million, respectively.
We recognize expense related to the fair value of restricted stock units (RSUs) and stock options over the requisite service period
on a straight-line basis or a shorter period based on the retirement eligibility of the grantee. The fair value of RSUs is determined using
the closing price of our common stock on the date of grant. The fair value of stock option grants is estimated on the date of grant using
the Black-Scholes option pricing model. We account for forfeitures when they occur.
Net Income (Loss) Per Share
Basic net income (loss) per share has been computed by dividing net income (loss) by the weighted average number of shares
outstanding. Diluted net income (loss) per share reflects the potential dilution that could occur assuming the inclusion of dilutive
potential shares and has been computed by dividing net income (loss) by the weighted average number of shares and dilutive potential
shares outstanding. Dilutive potential shares include all outstanding stock options and unvested RSUs after applying the treasury stock
method.
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Note 2 - Supplemental Balance Sheet Information
Property, Plant and Equipment, Net
Property, plant and equipment, net, as of January 30, 2021 and February 1, 2020 consists of the following:
(in millions)
Land
Buildings
Leasehold improvements
Furniture, fixtures and equipment
Construction in progress
Total property, plant and equipment
Less: accumulated depreciation
Total property, plant and equipment, net
January 30,
2021
February 1,
2020
$
238.7 $
1,524.0
2,631.7
4,229.4
257.5
8,881.3
4,765.0
4,116.3 $
$
233.5
1,395.5
2,335.1
3,813.2
298.6
8,075.9
4,194.1
3,881.8
Depreciation expense was $631.1 million, $581.9 million, and $555.7 million for the years ended January 30, 2021, February 1,
2020, and February 2, 2019, respectively.
Other Current Liabilities
Other current liabilities as of January 30, 2021 and February 1, 2020 consist of the following:
(in millions)
Taxes (other than income taxes)
Compensation and benefits
Insurance
Accrued construction costs
Accrued utilities
Other
Total other current liabilities
January 30,
2021
February 1,
2020
$
$
305.0 $
162.8
115.4
44.9
27.8
159.4
815.3 $
183.3
102.8
112.0
51.1
22.0
146.8
618.0
Note 3 - Goodwill and Nonamortizing Intangible Assets
Goodwill allocated to our reportable segments and changes in the net carrying amount of goodwill for the years ended January 30,
2021 and February 1, 2020 are as follows:
(in millions)
Dollar Tree
Family Dollar
Total
Balance at February 2, 2019
$
376.5 $
1,920.1 $
2,296.6
Foreign currency translation adjustments
Goodwill reassignment for re-bannered stores
Goodwill impairment
Balance at February 1, 2020
Foreign currency translation adjustments
(0.3)
47.6
—
423.8
1.1
—
(47.6)
(313.0)
1,559.5
—
Balance at January 30, 2021
$
424.9 $
1,559.5 $
(0.3)
—
(313.0)
1,983.3
1.1
1,984.4
Goodwill is reassigned between segments when previously acquired stores are re-bannered between segments. The goodwill
related to previously acquired re-bannered stores in 2020 was not material. In 2019, we reassigned $47.6 million of goodwill from
Family Dollar to Dollar Tree as a result of re-bannering. Re-bannered stores are treated as new stores.
Goodwill and other indefinite-lived intangible assets must be evaluated for impairment annually and may also be tested on an
interim basis upon the occurrence of a triggering event or a change in circumstances that would more likely than not reduce the fair
value of a reporting unit below its carrying amount. The annual goodwill impairment evaluation in 2020 did not result in impairment.
The 2019 and 2018 goodwill impairment evaluations indicated that the fair value of the Family Dollar reporting unit was lower than
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its carrying value resulting in $313.0 million and $2.73 billion non-cash pre-tax and after-tax goodwill impairment charges in the
fourth quarters of fiscal 2019 and 2018, respectively, which were recorded as a component of “Selling, general and administrative
expenses” in the accompanying consolidated statements of operations.
Our annual impairment evaluation of the Family Dollar trade name did not result in impairment charges during fiscal 2020, 2019
or 2018.
Note 4 - Income Taxes
The provision for income taxes consists of the following:
(in millions)
Current taxes:
Federal
State
Foreign
Total current taxes
Deferred taxes:
Federal
State
Foreign
Total deferred taxes
Provision for income taxes
Year Ended
January 30,
February 1,
February 2,
2021
2020
2019
$
279.5 $
210.1 $
245.6
87.4
0.2
367.1
32.6
(3.8)
2.0
30.8
52.5
0.1
262.7
39.2
(5.6)
(24.6)
9.0
$
397.9 $
271.7 $
47.8
0.4
293.8
0.3
(12.3)
—
(12.0)
281.8
A reconciliation of the statutory U.S. federal income tax (benefit) rate and the effective tax rate follows:
Statutory U.S. federal income tax (benefit) rate
Effect of:
State and local income taxes, net of federal income tax benefit
Non-deductible executive compensation
Incremental tax expense (benefit) of exercises/vesting of equity-based
compensation
State tax reserve release
Work Opportunity Tax Credit
Goodwill impairment
Deferred tax rate change
Change in valuation allowance
Tax Cuts and Jobs Act
Other, net
Effective tax rate
Goodwill Impairment
January 30,
2021
Year Ended
February 1,
2020
February 2,
2019
21.0 %
21.0 %
(21.0)%
3.2
0.4
0.2
(0.5)
(1.6)
—
—
—
—
0.2
3.7
—
(0.4)
—
(2.7)
6.0
0.1
(2.2)
—
(0.8)
3.0
—
0.1
—
(2.0)
43.7
—
0.3
(1.3)
(1.3)
22.9 %
24.7 %
21.5 %
In the fourth quarters of 2019 and 2018, we recorded goodwill impairment charges of $313.0 million and $2.73 billion,
respectively, related to the Family Dollar goodwill, as further discussed in Note 3. As the purchase of Family Dollar was a stock
acquisition, carryover basis applied for tax purposes. The impairment charges are not deductible for federal or state tax purposes and
therefore there is no tax benefit related to the impairments.
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Foreign Taxes
United States income taxes have not been provided on accumulated but undistributed earnings of our foreign subsidiaries as we
intend to permanently reinvest earnings. We do not consider the tax on the mandatory deemed repatriation of undistributed foreign
earnings and profits to be material.
Deferred Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
Significant components of our net deferred tax assets (liabilities) follow:
(in millions)
Deferred tax assets:
Operating lease liabilities
Accrued expenses
Net operating losses, interest expense and credit carryforwards
Accrued compensation expense
State tax election
Other
Total deferred tax assets
Valuation allowance
Deferred tax assets, net
Deferred tax liabilities:
Property and equipment
Operating lease right-of-use assets
Other intangibles
Inventory
Prepaids
Total deferred tax liabilities
Deferred income taxes, net
January 30,
2021
February 1,
2020
$
1,658.4 $
1,621.8
72.9
95.5
47.2
17.4
3.2
26.0
102.2
31.6
19.3
2.4
1,894.6
1,803.3
(16.8)
(18.5)
1,877.8
1,784.8
(410.5)
(304.3)
(1,587.2)
(1,550.1)
(840.4)
(4.8)
(25.2)
(852.2)
(14.4)
(24.1)
(2,868.1)
(2,745.1)
$
(990.3) $
(960.3)
At January 30, 2021, we had certain state tax credit carryforwards, net operating loss carryforwards and capital loss carryforwards
totaling $95.5 million. Some of these carryforwards will expire, if not utilized, beginning in 2021 through 2040.
A valuation allowance of $16.8 million, net of federal tax benefits, has been provided principally for certain state credit
carryforwards and net operating loss carryforwards. Since February 1, 2020, the valuation allowance has been decreased to reflect
capital loss carryforwards, state credits and net operating losses expected to be utilized over the carryforward period. In assessing the
realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred taxes will not
be realized. Based upon the availability of carrybacks of future deductible amounts and our projections for future taxable income over
the periods in which the deferred tax assets are deductible, we believe it is more likely than not the remaining existing deductible
temporary differences will reverse during periods in which carrybacks are available or in which we generate net taxable income.
Uncertain Tax Positions
We are participating in the IRS Compliance Assurance Program (“CAP”) for fiscal 2020 and we have been accepted into the
program for fiscal 2021. This program accelerates the examination of key transactions with the goal of resolving any issues before the
tax return is filed. Our federal tax returns have been examined and all issues have been settled through the fiscal 2019 tax year. Several
states completed their examinations during fiscal 2020. In general, fiscal 2017 and forward are within the statute of limitations for
state tax purposes. The statute of limitations is still open prior to fiscal 2017 for some states. For fiscal 2020, we are participating in
the CAP under the IRS’s bridge year program and as a result, the IRS will not be completing an audit on the 2020 tax return.
The balance for unrecognized tax benefits at January 30, 2021 was $22.6 million. The total amount of unrecognized tax benefits at
January 30, 2021 that, if recognized, would affect the effective tax rate was $17.9 million (net of the federal tax benefit).
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The following is a reconciliation of our total gross unrecognized tax benefits:
(in millions)
Beginning Balance
Additions, based on tax positions related to current year
Additions for tax positions of prior years
Lapses in statutes of limitation
Ending balance
January 30,
2021
February 1,
2020
$
28.9 $
1.2
3.4
(10.9)
$
22.6 $
35.4
0.9
4.8
(12.2)
28.9
We believe it is reasonably possible that $6.0 million to $7.0 million of the reserve for uncertain tax positions may be reduced
during the next 12 months principally as a result of the effective settlement of outstanding issues. It is also possible that state tax
reserves will be reduced for audit settlements and statute expirations within the next 12 months. At this point it is not possible to
estimate a range associated with the resolution of these audits. We do not expect any change to have a material impact to our
consolidated financial statements.
As of January 30, 2021, we have recorded a liability for potential interest and penalties of $2.6 million.
Note 5 – Commitments and Contingencies
Purchase Obligations
We have commitments totaling $189.8 million related to agreements for software licenses and support, telecommunication
services and store technology assets and maintenance for its stores.
Letters of Credit
We have $356.5 million in Letter of Credit Reimbursement and Security Agreements with various financial institutions, under
which $209.6 million was committed to these letters of credit issued for routine purchases of imported merchandise at January 30,
2021.
At January 30, 2021, we also have $98.7 million in standby letters of credit that serve as collateral for our large-deductible
insurance programs and expire in fiscal 2021.
Surety Bonds
We have issued various surety bonds that primarily serve as collateral for utility payments at our stores and self-insured insurance
programs. These bonds total $96.5 million and are committed through various dates through fiscal 2024.
Contingencies
We are defendants in legal proceedings including the class, collective, representative and large cases described below as well as
individual claims in arbitration. We will vigorously defend ourselves in these matters. We do not believe that any of these matters will,
individually or in the aggregate, have a material effect on our business or financial condition. We cannot give assurance, however, that
one or more of these matters will not have a material effect on our results of operations for the quarter or year in which they are
resolved.
We assess our legal proceedings monthly and reserves are established if a loss is probable and the amount of such loss can be
reasonably estimated. For matters that have settled, we reserve the estimated settlement amount even if the settlement has not been
approved by the court. Many, if not substantially all, of our legal proceedings are subject to significant uncertainties and, therefore,
determining the likelihood of a loss and the measurement of any loss can be complex and subject to judgment. With respect to legal
proceedings where we have determined that a loss is reasonably possible but not probable, we are unable to estimate the amount or
range of the reasonably possible loss due to the inherent difficulty of predicting the outcome of and uncertainties regarding legal
proceedings. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but that
may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those
estimates and assumptions. Management’s assessment of legal proceedings could change because of future determinations or the
discovery of facts which are not presently known. Accordingly, the ultimate costs of resolving these proceedings may be substantially
higher or lower than currently estimated.
Dollar Tree Active Matters
The Food and Drug Administration (“FDA”) has alleged that we improperly sold certain topically applied, over the counter
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(“OTC”) products manufactured by certain Chinese factories that were on an import “alert” restriction issued by the FDA. We
responded to the FDA by proposing enhanced procedures and processes for any OTC products we import from China.
In December 2020, a former store manager brought a class action in California state court alleging we failed to reimburse
employees for business expenses and in so failing, engaged in unfair competition.
Actual or threatened California state court lawsuits have been filed against Dollar Tree and Family Dollar for similar
employment-related claims brought under Private Attorney General Act (“PAGA”). These cases may allege violations such as failure
to provide employees with compliant rest and meal breaks, suitable seating and overtime pay, reimburse business expenses, pay
minimum wages for all time worked, provide accurate wage statements, and timely pay wages as well as other potential labor code
violations.
Lawsuits have been filed against Dollar Tree, Family Dollar and our vendors alleging that personal talc powder products caused
cancer. We do not believe the products we sold caused the illnesses. We believe these lawsuits are insured and we are being
indemnified by our third party vendors.
Dollar Tree Resolved Matters
In April 2015, a distribution center employee filed a class action in California state court with allegations concerning wages, meal
and rest breaks, recovery periods, wage statements and timely termination pay. We have reached an agreement and received final
approval from the court.
In August 2018, a former employee brought suit in California state court as a class action and as a PAGA representative suit
alleging we failed to provide all non-exempt California store employees with compliant rest and meal breaks, accrued vacation,
accurate wage statements and final pay upon termination of employment. We have reached an agreement to settle the matter and have
received the court’s approval.
In June 2020, a current employee filed a class action in California state court on behalf of herself and other non-exempt store
employees in California alleging we failed to provide an effective illness and injury prevention program in our California stores and
failed to provide personal protective equipment to our store employees thereby engaging in unfair business practices and creating a
public nuisance. The court granted our request to compel arbitration which resolves the class action matter.
The consumer dismissed the January 2020 class action that was filed against us in New York relating to Almond Milk sold by us.
Family Dollar Active Matters
In August 2020, a consumer class action was filed against us in New York alleging Smoked Almonds sold by us are mislabeled
because the almonds do not go through a smoking process but rather acquire their smoky taste through the use of smoked flavoring.
The legal claims include New York consumer protection laws, negligent misrepresentations, breach of warranties, fraud and unjust
enrichment.
In late 2019 and early 2020, personal injury and consumer class actions were filed alleging that we sold Zantac containing N-
Nitrosodimethylamine, which is classified by the FDA as a probable carcinogen. Although all the suits were dismissed in December,
2020, on February 8, 2021, an Amended Master Personal Injury Complaint was filed against us and other retailers, manufacturers, and
distributors alleging unjust enrichment, physical harm, loss of consortium, and death.
In January 2021, a consumer class action was filed against us in Georgia for breach of warranty based on the allegation that the
coffee we sold was mislabeled because the canister did not contain enough coffee to make the number of cups of coffee stated on the
label.
Please see the description above for talc and PAGA lawsuits against Family Dollar.
Family Dollar Resolved Matters
The court dismissed a January 2017 lawsuit filed as a class action in federal court in Illinois alleging we violated various state
consumer fraud laws as well as express and implied warranties by selling a product that purported to contain aloe when it did not.
We have reached a tentative settlement, which will have to be approved by the court, of multiple class actions that were brought
under the Americans with Disabilities Act.
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Note 6 - Long-Term Debt
Long-term debt at January 30, 2021 and February 1, 2020 consists of the following:
(in millions)
Principal
Unamortized
Debt Discount
and Issuance
Costs
Unamortized
Debt Discount,
Premium and
Issuance Costs
Principal
5.00% Senior Notes, due 2021
$
— $
— $
300.0 $
(2.4)
January 30, 2021
February 1, 2020
$1.25 billion Revolving Credit Facility, interest
payable at LIBOR, reset periodically, plus
1.125%, which was 1.24% at January 30, 2021
Senior Floating Rate Notes, due 2020
3.70% Senior Notes, due 2023
4.00% Senior Notes, due 2025
4.20% Senior Notes, due 2028
Total
Maturities of long-term debt are as follows (in millions):
—
—
1,000.0
1,000.0
1,250.0
5.3
—
4.2
5.1
9.2
—
250.0
1,000.0
1,000.0
1,250.0
$ 3,250.0 $
23.8 $ 3,800.0 $
7.7
0.2
5.9
6.2
10.2
27.8
$
— $
— $
1,000.0 $
— $
Senior Credit Facilities
2021
2022
2023
2024
2025
Thereafter
1,250.0
1,000.0 $
On April 19, 2018, we entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as
administrative agent, providing for $2.03 billion in senior credit facilities (the “Senior Credit Facilities”), consisting of a $1.25 billion
revolving credit facility (the “Revolving Credit Facility”), of which up to $350.0 million is available for letters of credit, and a $782.0
million term loan facility (the “Term Loan Facility”), which was scheduled to mature on April 19, 2020. The loans under the Term
Loan Facility bore interest at an initial interest rate of LIBOR, reset periodically, plus 1.00%, subject to adjustment based on (i) our
credit ratings and (ii) our leverage ratio. We borrowed the entire $782.0 million Term Loan Facility on April 19, 2018 and repaid the
entire amount in January 2019.
The Revolving Credit Facility matures on April 19, 2023, subject to extensions permitted under the Credit Agreement. The loans
under the Revolving Credit Facility bore interest at an initial interest rate of LIBOR, reset periodically, plus 1.25%, subject to
adjustment based on (i) our credit ratings and (ii) our leverage ratio. Based on these factors, interest on the loans under the Revolving
Credit Facility may range from LIBOR plus 1.00% to 1.50%. At January 30, 2021, the Revolving Credit Facility bore interest at
LIBOR plus 1.125%. We pay certain commitment fees in connection with the Revolving Credit Facility. The Senior Credit Facilities
allow voluntary repayment of outstanding loans at any time without premium or penalty, other than customary breakage costs with
respect to LIBOR loans.
The Senior Credit Facilities contain a number of affirmative and negative covenants that, among other things, and subject to
certain significant baskets and exceptions, restrict our ability to incur subsidiary indebtedness, incur liens, sell all or substantially all of
our (including our subsidiaries’) assets and consummate certain fundamental changes. The Senior Credit Facilities also contain a
maximum rent-adjusted leverage ratio covenant and a minimum fixed charge coverage ratio covenant. The Credit Agreement provides
for certain events of default which, if any of them occurs, would permit or require the loans under the Senior Credit Facilities to be
declared due and payable and the commitments thereunder to be terminated.
In the first quarter of fiscal 2020, we preemptively drew $750.0 million on our Revolving Credit Facility to reduce our exposure
to potential short-term liquidity risk in the banking system as a result of the COVID-19 pandemic, all of which was repaid by the end
of the third quarter of fiscal 2020.
Senior Notes
On April 19, 2018, we completed the registered offering of $750.0 million aggregate principal amount of Senior Floating Rate
Notes due 2020 (the “Floating Rate Notes”), $1.0 billion aggregate principal amount of 3.70% Senior Notes due 2023 (the “2023
Notes”), $1.0 billion aggregate principal amount of 4.00% Senior Notes due 2025 (the “2025 Notes”) and $1.25 billion aggregate
principal amount of 4.20% Senior Notes due 2028 (the “2028 Notes” and together with the 2023 Notes and the 2025 Notes, the “Fixed
Rate Notes”; and the Fixed Rate Notes together with the Floating Rate Notes, the “Notes”).
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The Notes were issued pursuant to an indenture, dated as of April 2, 2018, between us and U.S. Bank National Association, as
trustee, as supplemented by the First Supplemental Indenture dated as of April 19, 2018 (the “First Supplemental Indenture”).
The Notes are unsecured, unsubordinated obligations of ours and rank equal in right of payment to all of our existing and future
debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the Notes.
The 2023 Notes mature on May 15, 2023 and bear interest at the rate of 3.70% annually. The 2025 Notes mature on May 15, 2025
and bear interest at the rate of 4.00% annually. The 2028 Notes mature on May 15, 2028 and bear interest at the rate of 4.20%
annually. We are required to pay interest on the Fixed Rate Notes semiannually, in arrears, on May 15 and November 15 of each year,
beginning on November 15, 2018, to holders of record on the preceding May 1 and November 1, respectively. The Floating Rate
Notes matured on April 17, 2020 and bore interest at a floating rate, reset quarterly, equal to LIBOR plus 70 basis points. We were
required to pay interest on the Floating Rate Notes quarterly, in arrears, on January 17, April 17, July 17 and October 17 of each year,
beginning on July 17, 2018, to holders of record on the preceding January 3, April 3, July 3 and October 3, respectively.
We may redeem the Fixed Rate Notes of each series in whole or in part, at our option, at any time and from time to time prior to
(i) in the case of the 2023 Notes, April 15, 2023, (ii) in the case of the 2025 Notes, March 15, 2025 and (iii) in the case of the 2028
Notes, February 15, 2028 (each such date with respect to the applicable series, the “Applicable Par Call Date”), in each case, at a
“make-whole” price described in the First Supplemental Indenture plus accrued and unpaid interest to, but excluding, the date of
redemption. In addition, on or after the Applicable Par Call Date, we may redeem the Fixed Rate Notes of the applicable series, at any
time in whole or from time to time in part, at a redemption price equal to 100% of the principal amount thereof.
In the event of a Change of Control Triggering Event, as defined in the indenture, with respect to any series, the holders of the
Notes of such series may require us to purchase for cash all or a portion of their Notes of such series at a purchase price equal to 101%
of the principal amount of such Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The indenture
limits our ability and that of our subsidiaries, subject to significant baskets and exceptions, to incur certain secured debt. The First
Supplemental Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and
accrued interest on the Notes to become or to be declared due and payable, as applicable.
Upon the acquisition of Family Dollar in 2015, we assumed the liability for $300.0 million of 5.00% Senior Notes that were due
February 1, 2021.
Repayments of Long-term Debt
During the first quarter of 2018, we redeemed our $750.0 million acquisition notes and accelerated the amortization of debt-
issuance costs associated with the notes of $6.1 million, which is included in “Interest expense, net” within the accompanying
consolidated statements of operations for the year ended February 2, 2019.
In connection with entry into the Credit Agreement and the offering of the Notes discussed above, we used the proceeds of
borrowings under the Senior Credit Facilities, together with the net proceeds from the offering of the Notes and cash on hand to repay
the $2.2 billion then outstanding under our existing senior secured credit facilities and to redeem the remaining $2.5 billion then
outstanding under our acquisition debt. This resulted in the acceleration of the expensing of $41.2 million of amortizable non-cash
deferred financing costs and our incurring $114.3 million in prepayment penalties, which are reflected in “Interest expense, net”
within the accompanying consolidated statements of operations for the year ended February 2, 2019.
In the fourth quarter of 2019, we prepaid $500.0 million of our $750.0 million Floating Rate Notes and we repaid the remaining
$250.0 million outstanding in the first quarter of 2020.
In the fourth quarter of 2020, we repaid the $300.0 million 5.00% Senior Notes.
Debt Covenants
As of January 30, 2021, we were in compliance with our debt covenants.
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Note 7 - Leases
The lease cost for operating leases that was recognized in the accompanying consolidated statements of operations was as follows:
(in millions)
Operating lease cost
Variable lease cost
Short-term lease cost
Total lease cost*
Year Ended
January 30, 2021
February 1, 2020
$
$
1,551.2 $
391.4
9.7
1,952.3 $
1,520.5
375.9
14.8
1,911.2
*Excludes sublease income, which is immaterial
As previously disclosed in our Annual Report on Form 10-K for the year ended February 2, 2019 and in accordance with ASC
840, rental expense for the year ended February 2, 2019 was $1,411.3 million.
As of January 30, 2021, maturities of lease liabilities were as follows:
$
2021
2022
2023
2024
2025
Thereafter
Total undiscounted lease payments
Less interest
Present value of lease liabilities
$
(in millions)
1,467.5
1,372.0
1,159.0
939.9
706.3
1,578.0
7,222.7
809.0
6,413.7
The future lease payments above exclude $236.8 million of legally binding minimum lease payments for leases signed but not yet
commenced as of January 30, 2021.
Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases is
as follows:
Weighted-average remaining lease term (years)
January 30, 2021 February 1, 2020
6.4
6.1
Weighted-average discount rate
3.9 %
4.3 %
The following represents supplemental information pertaining to our operating lease arrangements:
(in millions)
Year Ended
January 30, 2021
February 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for new operating lease liabilities
$
1,519.4 $
1,440.2
1,433.4
1,286.1
Distribution Center Lease and Related Bonds
In May 2017, we entered into a long-term property lease (“Missouri Lease”) which includes land and the construction of a 1.2
million square foot distribution center in Warrensburg, Missouri (“Distribution Center Project”). The Distribution Center Project was
completed in 2018 and our investment in the project of $96.9 million as of January 30, 2021 is reflected in “Property, plant and
equipment, net.” The Missouri Lease commenced upon its execution in May 2017 and expires on December 1, 2032. We have two
options to extend the Missouri Lease term for up to a combined additional ten years. Following the expiration of the lease, the property
reverts back to us.
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In addition to being a party to the Missouri Lease, we are also the owner of bonds which were issued in May 2017, are secured by
the Missouri Lease and expire December 1, 2032 (“Missouri Bonds”). The Missouri Bonds are debt issued by the lessor in the
Missouri Lease. Therefore, we hold the debt instrument pertaining to our Missouri Lease obligation. Because a legal right of offset
exists, we are accounting for the Missouri Bonds as a reduction of our Missouri Lease obligation in the accompanying consolidated
balance sheets.
Note 8 - Fair Value Measurements
Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined
based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a
fair value hierarchy has been established that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to
unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets
that are not active; and
Level 3 - Unobservable inputs in which there is little or no market data which require the reporting entity to develop its own
assumptions.
As required, financial assets and liabilities are classified in the fair value hierarchy in their entirety based on the lowest level of
input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value
measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair
value hierarchy levels.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not
measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is
evidence of impairment). We review certain store assets for evidence of impairment. The fair values are determined based on the
income approach, in which we utilize internal cash flow projections over the life of the underlying lease agreements discounted based
on our risk-adjusted rate. These measures of fair value, and related inputs, are considered a Level 3 approach under the fair value
hierarchy. Refer to Note 1 under the caption “Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of” for
information regarding the impairment charges recorded in fiscal 2020, 2019 and 2018.
Our indefinite-lived intangible assets are recorded at carrying value, and, if impaired, are adjusted to fair value using Level 3
inputs. See Note 3 for further information regarding the process of determining the fair value of these assets.
Fair Value of Financial Instruments
The carrying amounts of Cash and cash equivalents, Restricted cash and Accounts payable as reported in the accompanying
consolidated balance sheets approximate fair value due to their short-term maturities.
The aggregate fair values and carrying values of our long-term borrowings were as follows:
(in millions)
Level 1
Senior Notes
January 30, 2021
Fair
Value
Carrying
Value
February 1, 2020
Fair
Value
Carrying
Value
$ 3,654.4 $ 3,231.5 $ 4,064.5 $ 3,779.9
The fair values of our Senior Notes were determined using Level 1 inputs as quoted prices in active markets for identical assets or
liabilities are available. The carrying value of our Revolving Credit Facility approximates its fair value because the interest rates vary
with market interest rates.
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Note 9 - Shareholders’ Equity
Preferred Stock
We are authorized to issue 10,000,000 shares of Preferred Stock, $0.01 par value per share. No preferred shares are issued and
outstanding at January 30, 2021 and February 1, 2020.
Net Income (Loss) Per Share
The following table sets forth the calculations of basic and diluted net income (loss) per share:
(in millions, except per share data)
Basic net income (loss) per share:
Net income (loss)
Weighted average number of shares outstanding
Basic net income (loss) per share
Diluted net income (loss) per share:
Net income (loss)
Weighted average number of shares outstanding
Dilutive effect of stock options and restricted stock (as determined by
applying the treasury stock method)
Weighted average number of shares and dilutive potential shares
outstanding
Diluted net income (loss) per share
January 30,
2021
Year Ended
February 1,
2020
February 2,
2019
$
$
$
1,341.9 $
236.4
5.68 $
827.0 $
237.2
3.49 $
(1,590.8)
237.9
(6.69)
1,341.9 $
236.4
827.0 $
237.2
(1,590.8)
237.9
0.9
1.1
—
237.3
238.3
$
5.65 $
3.47 $
237.9
(6.69)
At January 30, 2021 and February 1, 2020, substantially all of the stock options outstanding were included in the calculation of
the weighted average number of shares and dilutive potential shares outstanding. As a result of the net loss for the year ended February
2, 2019, diluted net income (loss) per share excludes the impact of stock options and restricted stock (as determined by applying the
treasury stock method) because the effect would be anti-dilutive.
Share Repurchase Programs
We repurchased 3,982,478 shares of common stock on the open market for $400.0 million in fiscal 2020 and we repurchased
1,967,355 shares of common stock on the open market for $200.0 million in fiscal 2019. We did not repurchase any shares of common
stock in fiscal 2018. At January 30, 2021, we had $400.0 million remaining under Board repurchase authorization.
Subsequently, on March 2, 2021, the Board increased the share repurchase authorization by $2.0 billion resulting in a total share
repurchase authorization of $2.4 billion.
Note 10 – Employee Benefit Plans
Dollar Tree Retirement Savings Plan
We maintain a defined contribution profit sharing and 401(k) plan which is available to all full-time, United States-based
employees over 21 years of age. Eligible employees may make elective salary deferrals. We may make contributions, at our discretion,
to eligible employees who have completed one year of service in which they have worked at least 1,000 hours.
Contributions to and reimbursements by us of expenses of the plan were recorded in the accompanying consolidated statements of
operations as follows:
(in millions)
Cost of sales
Selling, general and administrative expenses
Total
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Year Ended
January 30,
February 1,
February 2,
2021
2020
2019
$
$
7.4 $
8.1 $
19.0
17.0
26.4 $
25.1 $
8.7
32.7
41.4
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Eligible employees vest in our profit sharing contributions based on the following schedule:
• 20% after two years of service
• 40% after three years of service
• 60% after four years of service
• 100% after five years of service
All eligible employees are immediately vested in any company match contributions under the 401(k) portion of the plan.
Note 11 - Stock-Based Compensation Plans
Fixed Stock-Based Compensation Plans
Under our 2011 Omnibus Incentive Plan (“Omnibus Plan”), we may grant to our employees, including executive officers and
independent contractors, up to 4.0 million shares of our Common Stock plus any shares available under former plans which were
previously approved by the shareholders. The Omnibus Plan permits us to grant equity awards in the form of incentive stock options,
non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance bonuses,
performance share units (“PSUs”), non-employee director stock options and other equity-related awards. These awards generally vest
over a three-year period with a maximum term of 10 years. No awards may be granted under the Omnibus Plan after March 16, 2021.
Stock appreciation rights may be awarded alone or in tandem with stock options. When the stock appreciation rights are
exercisable, the holder may surrender all or a portion of the unexercised stock appreciation right and receive in exchange an amount
equal to the excess of the fair market value at the date of exercise over the fair market value at the date of the grant. No stock
appreciation rights have been granted to date.
Any restricted stock, RSUs or PSUs awarded are subject to certain general restrictions. The restricted stock shares or units may
not be sold, transferred, pledged or disposed of until the restrictions on the shares or units have lapsed or have been removed under the
provisions of the plan. In addition, if a holder of restricted shares or units ceases to be employed by us, any shares or units in which the
restrictions have not lapsed will be forfeited.
The 2013 Director Deferred Compensation Plan permits any of our directors who receive a retainer or other fees for Board or
Board committee service to defer all or a portion of such fees until a future date, at which time they may be paid in cash or shares of
our common stock, or receive all or a portion of such fees in non-statutory stock options. Deferred fees that are paid out in cash will
earn interest at the 30-year Treasury Bond Rate. If a director elects to be paid in common stock, the number of shares will be
determined by dividing the deferred fee amount by the closing market price of a share of our common stock on the date of deferral.
The number of options issued to a director will equal the deferred fee amount divided by 33% of the price of a share of our common
stock. The exercise price will equal the fair market value of our common stock at the date the option is issued. The options are fully
vested when issued and have a term of 10 years.
In conjunction with the acquisition of Family Dollar in 2015, we assumed the Family Dollar Stores, Inc. 2006 Incentive Plan (the
“2006 Plan”). The 2006 Plan permitted the granting of a variety of compensatory award types, including stock options and
performance share rights.
Total stock-based compensation expense was recorded in the accompanying consolidated statements of operations as follows:
(in millions)
Cost of sales
Selling, general and administrative expenses
Total stock-based compensation expense
Excess tax benefit (deficit) on stock-based compensation
recognized in the Provision for income taxes
Restricted Stock
Year Ended
January 30,
February 1,
February 2,
2021
2020
2019
$
$
$
15.4 $
12.9 $
68.5
48.5
83.9 $
61.4 $
12.1
51.2
63.3
(2.8) $
3.8 $
(1.3)
We issue service-based RSUs to employees and officers and issue PSUs to certain of our officers. We recognize expense based on
the estimated fair value of the RSUs or PSUs granted over the requisite service period, which is generally three years, on a straight-
line basis or a shorter period based on the retirement eligibility of the grantee. The fair value of RSUs and PSUs is determined using
our closing stock price on the date of grant.
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Service-Based RSUs
The following table summarizes the status of service-based RSUs as of January 30, 2021 and changes during the year then ended:
Nonvested at February 1, 2020
Granted
Vested
Forfeited
Nonvested at January 30, 2021
Number of Shares
Weighted Average
Grant Date Fair
Value
1,049,081 $
850,132
(533,032)
(100,965)
1,265,216 $
95.17
73.24
91.05
82.78
83.16
The total fair value of the service-based restricted shares vested during the years ended January 30, 2021, February 1, 2020 and
February 2, 2019 was $48.5 million, $55.5 million and $50.2 million, respectively. The weighted average grant date fair value of the
RSUs granted in 2020, 2019 and 2018 was $73.24, $103.55 and $94.30, respectively. As of January 30, 2021, there was $53.5 million
of total unrecognized compensation expense related to these RSUs which is expected to be recognized over a weighted-average period
of 1.4 years.
PSUs
The following table summarizes the status of PSUs as of January 30, 2021 and changes during the year then ended:
Nonvested at February 1, 2020
Granted
Vested
Forfeited
Nonvested at January 30, 2021
Number of Shares
Weighted Average
Grant Date Fair
Value
320,500 $
428,377
(221,876)
(103,729)
423,272 $
99.29
74.46
88.12
85.84
82.67
The total fair value of the PSUs vested during the years ended January 30, 2021, February 1, 2020 and February 2, 2019 was
$19.6 million, $3.3 million and $4.2 million, respectively. The weighted average grant date fair value of the PSUs granted in 2020,
2019 and 2018 was $74.46, $103.71 and $94.90, respectively. As of January 30, 2021, there was $17.2 million of total unrecognized
compensation expense related to these RSUs which is expected to be recognized over a weighted-average period of one year.
Stock Options
Stock options are valued using the Black-Scholes option-pricing model and compensation expense is recognized on a straight-line
basis over the requisite service period. Options granted in 2020, 2019 and 2018 are immaterial.
Certain of our directors elected to defer their compensation into stock options under the 2013 Director Deferred Compensation
Plan. These options vest immediately and are expensed on the grant date.
The following tables summarize information about options outstanding at January 30, 2021 and changes during the year then
ended:
Number of
Shares
Weighted
Average Per
Share Exercise
Price
Weighted
Average
Remaining
Term (Years)
Aggregate
Intrinsic Value
(in millions)
Outstanding, beginning of period
Granted
Exercised
Forfeited
Outstanding, end of period
Options vested and exercisable at January 30, 2021
205,893 $
6,412
(94,890)
(358)
117,057 $
117,057 $
65
76.87
89.77
74.19
76.97
79.75
79.75
4.4 $
4.4 $
2.6
2.6
Table of Contents
The intrinsic value of options exercised during 2020, 2019 and 2018 was $0.9 million, $1.6 million and $12.3 million,
respectively.
Note 12 – Segments and Disaggregated Revenue
We operate a chain of more than 15,600 retail discount stores in 48 states and five Canadian provinces. Our operations are
conducted in two reporting business segments: Dollar Tree and Family Dollar. We define our segments as those operations whose
results our CODM regularly reviews to analyze performance and allocate resources.
We measure the results of our segments using, among other measures, each segment’s net sales, gross profit and operating
income. The CODM reviews these metrics for each of our reporting segments. We may revise the measurement of each segment’s
operating income, as determined by the information regularly reviewed by the CODM. If the measurement of a segment changes, prior
period amounts and balances are reclassified to be comparable to the current period’s presentation. Corporate, support and Other
consists primarily of store support center costs that are considered shared services and therefore these selling, general and
administrative costs are excluded from our two reporting business segments. These costs include operating expenses for our store
support centers in Chesapeake, Virginia and Matthews, North Carolina. During fiscal 2019, we consolidated our Matthews, North
Carolina store support center with our store support center in Chesapeake, Virginia. Corporate, support and Other also includes the
results of operations for our Summit Pointe property in Chesapeake, Virginia. Amounts for the years ended February 1, 2020 and
February 2, 2019 have been reclassified to be comparable to the current year presentation.
Information for our segments, as well as for Corporate, support and Other, including the reconciliation to Income (loss) before
income taxes, is as follows:
(in millions)
Consolidated Statements of Operations Data:
Net sales:
Dollar Tree
Family Dollar
Corporate, support and Other
Consolidated Net sales
Gross profit:
Dollar Tree
Family Dollar
Corporate, support and Other
Consolidated Gross profit
Operating income (loss):
Dollar Tree
Family Dollar
Corporate, support and Other
Consolidated Operating income (loss)
Interest expense, net
Other expense (income), net
Year Ended
January 30,
February 1,
February 2,
2021
2020
2019
$ 13,265.0 $ 12,507.9 $ 11,712.1
12,243.4
11,102.9
11,111.2
0.9
—
—
$ 25,509.3 $ 23,610.8 $ 22,823.3
$
4,543.8 $
4,342.9 $
4,137.5
3,243.6
2,697.8
2,810.0
0.9
—
—
$
7,788.3 $
7,040.7 $
6,947.5
$
1,598.0
$
1,670.2
$
1,657.4
655.6
(365.7)
(74.9)
(333.1)
1,887.9
1,262.2
147.3
0.8
162.1
1.4
(2,312.8)
(284.1)
(939.5)
370.0
(0.5)
Income (loss) before income taxes
$
1,739.8
$
1,098.7
$
(1,309.0)
Depreciation and amortization expense:
Dollar Tree
Family Dollar
Corporate, support and Other
$
302.3
$
277.7
$
352.6
31.8
337.9
30.1
Consolidated depreciation and amortization expense
$
686.7
$
645.7
$
254.0
345.3
22.1
621.4
66
Table of Contents
(in millions)
Consolidated Balance Sheet Data:
Goodwill:
Dollar Tree
Family Dollar
Consolidated Goodwill
Total assets:
Dollar Tree
Family Dollar
Corporate, support and Other
Consolidated Total assets
Additions to property, plant and equipment:
Dollar Tree
Family Dollar
Corporate, support and Other
As of
January 30,
February 1,
2021
2020
$
424.9 $
423.8
1,559.5
1,559.5
$
1,984.4 $
1,983.3
$
8,669.3 $
7,694.0
11,562.2
11,484.9
464.5
395.7
$ 20,696.0 $ 19,574.6
$
470.4 $
362.1
66.3
547.5
425.2
62.1
Consolidated additions to property, plant and equipment
$
898.8 $
1,034.8
Goodwill is reassigned between segments when previously acquired stores are re-bannered
between segments. The goodwill related to previously acquired re-bannered stores in 2020
was not material. In 2019, we reassigned $47.6 million of goodwill from Family Dollar to
Dollar Tree as a result of re-bannering. In addition, in the fourth quarters of 2019 and 2018,
we recorded goodwill impairment charges of $313.0 million and $2.73 billion, respectively,
to write down the Family Dollar goodwill. Refer to Note 3 for additional detail regarding
impairment of the Family Dollar goodwill.
Disaggregated Revenue
The following table summarizes net sales by merchandise category for our segments:
(in millions)
Dollar Tree segment net sales by
merchandise category:
Consumable
Variety
Seasonal
January 30,
2021
Year Ended
February 1,
2020
February 2,
2019
$
6,407.0
48.3 %
$
6,155.3
49.2 %
$
5,703.8
6,194.8
46.7 %
5,732.1
45.8 %
5,457.8
663.2
5.0 %
620.5
5.0 %
550.5
48.7 %
46.6 %
4.7 %
Total Dollar Tree segment net sales
$
13,265.0
100.0 %
$
12,507.9
100.0 %
$
11,712.1
100.0 %
Family Dollar segment net sales by
merchandise category:
Consumable
Home products
Apparel and accessories
Seasonal and electronics
$
9,367.8
1,078.1
690.1
1,107.4
$
76.5 %
8.8 %
8,604.7
866.0
$
77.5 %
7.8 %
5.6 %
9.1 %
644.0
988.2
5.8 %
8.9 %
8,466.7
911.1
700.0
1,033.4
76.2 %
8.2 %
6.3 %
9.3 %
Total Family Dollar segment net sales
$
12,243.4
100.0 %
$
11,102.9
100.0 %
$
11,111.2
100.0 %
67
Table of Contents
Note 13 - Quarterly Financial Information (Unaudited)
The following table sets forth certain items from our unaudited consolidated statements of operations for each quarter of fiscal
year 2020 and 2019. The unaudited information has been prepared on the same basis as the audited consolidated financial
statements appearing elsewhere in this report and includes all adjustments, consisting only of normal recurring adjustments, which
management considers necessary for a fair presentation of the financial data shown. The operating results for any quarter are not
necessarily indicative of results for a full year or for any future period.
(dollars in millions, except diluted net income per share data)
First
Quarter1
Second
Quarter
Third
Quarter
Fourth
Quarter
Fiscal 2020:
Net sales
Gross profit
Operating income
Net income
Diluted net income per share
Stores open at end of quarter
Comparable store net sales change2
Fiscal 2019:
Net sales
Gross profit
Operating income3,4
Net income3,4,5
Diluted net income per share3,4,5
Stores open at end of quarter
Comparable store net sales change2
______________
$ 6,286.8
$ 6,277.6
$ 6,177.0
$ 6,767.9
$ 1,794.9
$ 1,916.2
$ 1,924.4
$ 2,152.8
$
$
$
365.9
247.6
1.04
$
$
$
374.9
261.5
1.10
$
$
$
465.5
330.0
1.39
$
$
$
681.6
502.8
2.13
15,370
15,479
15,606
15,685
7.0 %
7.2 %
5.1 %
4.9 %
$ 5,808.7
$ 5,740.6
$ 5,746.2
$ 6,315.3
$ 1,727.2
$ 1,648.5
$ 1,704.5
$ 1,960.5
$
$
$
385.5
267.9
1.12
$
$
$
268.9
180.3
0.76
$
$
$
358.4
255.8
1.08
$
$
$
249.4
123.0
0.52
15,264
15,115
15,262
15,288
2.2 %
2.4 %
2.5 %
0.4 %
1 Easter was observed on April 12, 2020 and April 21, 2019.
2 The comparable store net sales change calculation includes only those stores that are open throughout both of the periods being compared,
beginning after the first fifteen months of operation.
3 In 2019, the results of the annual goodwill impairment test showed that the fair value of the Family Dollar reporting unit was lower than its
carrying value, resulting in a $313.0 million non-cash pre-tax and after-tax goodwill impairment charge in the fourth quarter of fiscal 2019. This
goodwill impairment charge reduced diluted net income per share by $1.32 per share in the fourth quarter of 2019.
4 In the fourth quarter of 2019, we recorded an $18.0 million charge to our litigation reserve. The recognition of this liability reduced diluted net
income per share in the fourth quarter of 2019 by $0.06.
5 In the fourth quarter of 2019, we evaluated our foreign net operating loss carryforwards and determined that we expect to utilize the
carryforwards for which we previously had provided a valuation allowance. The reduction of the valuation allowance increased net income and
diluted net income per share in the fourth quarter of 2019 by $24.6 million and $0.10 per share, respectively.
68
Table of Contents
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our
reports under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any
controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, and management necessarily is required to apply our judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
Our management has carried out, with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation
of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act as of the end of
the period covered by this report. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded
that, as of January 30, 2021, our disclosure controls and procedures were designed and functioning effectively to provide reasonable
assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded,
processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii)
accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate
to allow timely decisions regarding disclosure.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Exchange Act Rule 13a-15(f). Our management conducted an assessment of our internal control over financial reporting based on the
framework established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated
Framework (2013). Based on this assessment, our management has concluded that, as of January 30, 2021, our internal control over
financial reporting is effective.
Our independent registered public accounting firm, KPMG LLP, has audited our consolidated financial statements and has issued
an attestation report on the effectiveness of our internal control over financial reporting. Their report appears below.
Changes in Internal Controls
There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal
quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
69
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Dollar Tree, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Dollar Tree, Inc.’s and subsidiaries (the Company) internal control over financial reporting as of January 30, 2021,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of January 30, 2021, based on criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of January 30, 2021 and February 1, 2020, the related consolidated
statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year
period ended January 30, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated March
16, 2021 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Norfolk, Virginia
March 16, 2021
70
Table of Contents
Item 9B. Other Information
None.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information concerning our Directors and Executive Officers required by this Item is incorporated by reference to Dollar
Tree, Inc.’s Proxy Statement relating to our 2021 Annual Meeting (“Proxy Statement”), under the captions “Director Biographies” and
“Executive Officers.”
To the extent disclosure of any delinquent report under Section 16(a) of the Securities Exchange Act of 1934 is made by us, such
disclosure will be set forth under the caption “Delinquent Section 16(a) Reports” in our Proxy Statement, which is incorporated herein
by reference.
The information concerning our audit committee and audit committee financial experts required by this Item is incorporated
herein by reference to the Proxy Statement, under the caption “The Board and Its Committees.”
The information concerning our code of ethics required by this Item is incorporated by reference to the Proxy Statement, under
the caption “Code of Ethics.”
Item 11. Executive Compensation
Information set forth in the Proxy Statement under the caption “Compensation of Executive Officers,” “Compensation Discussion
and Analysis” and “Pay Ratio Disclosure” with respect to executive compensation, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Equity Compensation Plans
The following table summarizes information regarding shares issuable as of January 30, 2021, under our equity compensation
plans, including the number of shares of common stock subject to options, restricted stock units, deferred shares and other rights
granted to employees, consultants and members of our Board of Directors; the weighted-average exercise price of outstanding options;
and the number of shares remaining available for future award grants under these plans. Additional information regarding our equity
compensation plans can be found in Note 11 to our consolidated financial statements.
(a)
(b)
Number of securities Weighted-average
exercise price of
outstanding
options, warrants
and rights
to be issued upon
exercise of
outstanding options,
warrants and rights
(c)
Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
column (a))
1,854,600 $
—
97.47
—
19,062,707
—
Equity compensation plan category
Plans approved by security holders1
Plans not approved by security holders2
______________
(a)
Amounts represent outstanding options, restricted stock units and deferred (“phantom”) shares as of January 30, 2021.
(b) Not included in the calculation of weighted-average exercise price are (i) 1,688,488 restricted stock units and (ii) 150,197 director
deferred shares.
(c)
Amounts represent shares remaining available for future awards under all of our equity-based plans, including shares remaining
under our 2011 Omnibus Incentive Plan, our 2015 Employee Stock Purchase Plan and our 2013 Director Deferred Compensation
Plan. Out of the 19,062,707 shares remaining available for future issuance, 2,707,188 represent the number of shares remaining
available for future issuance under our Employee Stock Purchase Plan as of January 30, 2021. No awards may be granted under
the Omnibus Plan after March 16, 2021.
1
2
Equity-based plans approved by our shareholders include: the 2013 Director Deferred Compensation Plan, the 2015 Employee
Stock Purchase Plan (which replaced a predecessor plan), and the 2011 Omnibus Incentive Plan (which replaced the 2003 Equity
Incentive Plan and the 2004 Executive Officer Equity Plan).
Does not include 101,142 shares to be issued upon the exercise of options with a weighted-average exercise price of $76.97 that
were granted under the Family Dollar 2006 Incentive Plan and assumed by us in connection with our merger with Family Dollar.
71
Table of Contents
Information set forth in the Proxy Statement under the caption “Ownership of Common Stock,” with respect to security ownership
of certain beneficial owners and management, is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information set forth in the Proxy Statement under the caption “Certain Relationships and Related Transactions,” is incorporated
herein by reference.
The information concerning the independence of our directors required by this Item is incorporated by reference to the Proxy
Statement under the caption “Board Governance - Independence.”
Item 14. Principal Accountant Fees and Services
Information set forth in the Proxy Statement under the caption “Ratification of Appointment of Independent Auditors,” is
incorporated herein by reference.
Item 15. Exhibit and Financial Statement Schedules
1.
Documents filed as part of this report:
PART IV
1.
Financial Statements. Reference is made to the Index to the Consolidated Financial Statements set forth under Part II,
Item 8 of this Form 10-K.
2.
Financial Statement Schedules. All schedules for which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission are not required under the related instructions, are not applicable, or the
information is included in the Consolidated Financial Statements, and therefore have been omitted.
3.
Exhibits. The following exhibits are filed as part of, or incorporated by reference into, this report.
Exhibit
3.1
3.2
4.1
4.2.1
4.2.2
4.3
Exhibit Description
Form Exhibit
Filing
Date
Filed
Herewith
Incorporated by Reference
Amended Articles of Incorporation of Dollar Tree, Inc., effective
June 20, 2013
Amended By-Laws of Dollar Tree, Inc., effective December 3, 2020
Form of Common Stock Certificate
Indenture, dated as of April 2, 2018, between Dollar Tree, Inc., as
issuer, and U.S. Bank National Association, as trustee
First Supplemental Indenture, dated as of April 19, 2018, between
Dollar Tree, Inc. and U.S. Bank National Association, as trustee
Description of Securities Registered under Section 12 of the
Securities Exchange Act of 1934
8-K
8-K
8-K
S-3
ASR
3.1
3.1
4.1
4.1
6/21/2013
12/3/2020
3/13/2008
4/2/2018
8-K
4.1
4/20/2018
10-K
4.3
3/20/2020
10.1
* Form of Change in Control Retention Agreement, to be executed
between Dollar Tree Stores, Inc. and the Chief Executive Officer;
Chief Financial Officer; Sr. Vice President, Stores; Chief
Merchandising Officer; Chief Logistics Officer; Chief People
Officer; and Chief Information Officer
10.2 * Policy for director compensation (as described under the caption
“Director Compensation”)
10.3.1 * Change in Control Retention Agreement between Dollar Tree, Inc.
and Kevin Wampler, Chief Financial Officer
10.3.2 * Amendment to Change in Control Retention Agreement between
Dollar Tree, Inc. and Kevin Wampler, Chief Financial Officer
10.4
* Description of Dollar Tree, Inc. Management Incentive
Compensation Plan
8-K
10.1
3/20/2007
DEF
14A
N/A
4/24/2020
8-K
10.1
12/5/2008
8-K
10.1
10/11/2011
10-Q
10.1
5/19/2011
10.5.1 * 2011 Omnibus Incentive Plan effective as of March 17, 2011
8-K
10.1
6/22/2011
10.5.2 * First Amendment to the 2011 Omnibus Incentive Plan dated June
16, 2016
10-Q
10.1
9/2/2016
72
Table of Contents
Exhibit
10.5.3 * 2011 Omnibus Incentive Plan, as amended and restated effective
Exhibit Description
June 12, 2019
10.6
* Form of Non-employee Director Option Agreement under the 2011
Omnibus Incentive Plan
10.7
* Form of Restricted Stock Unit Agreement under the 2011 Omnibus
Incentive Plan
10.8 * Form of Long-Term Performance Plan Award Agreement under the
2011 Omnibus Incentive Plan
10.9 * Form of Performance Stock Unit Agreement under the 2011
Omnibus Incentive Plan
10.10 * Form of Restricted Stock Unit Agreement under the 2011 Omnibus
Incentive Plan
10.11 * Change in Control Retention Agreement between Dollar Tree, Inc.
and David Jacobs, Chief Strategy Officer
10.12 * Change in Control Retention Agreement between Dollar Tree, Inc.
and William A. Old, Jr, Chief Legal Officer
10.13 * Dollar Tree, Inc. 2015 Employee Stock Purchase Plan, effective
September 1, 2015
Incorporated by Reference
Form Exhibit
Filing
Date
Filed
Herewith
10-Q
10.1
8/29/2019
8-K
10.4
6/22/2011
8-K
10.2
3/21/2012
10-K
10.32
3/27/2019
10-K
10.33
3/27/2019
10-K
10.34
3/27/2019
10-Q
10.2
8/16/2012
10-Q
10.2
8/22/2013
S-8
4.0
10/28/2015
10.14 * Form of Executive Officer Nonstatutory Stock Option Agreement
under the 2011 Omnibus Incentive Plan
10-K
10.54
3/28/2017
10.15 * Dollar Tree and Family Dollar Supplemental Deferred
Compensation Plan
10.16 * 2013 Director Deferred Compensation Plan, as amended and
10.17
restated effective December 31, 2016
Credit Agreement, dated as of April 19, 2018, among Dollar Tree,
Inc., JPMorgan Chase Bank, N.A., as administrative agent and the
lenders and other parties thereto
10.18 * Form of Change in Control Retention Agreement for Executive
Officers (portions of the exhibit have been omitted pursuant to a
request for confidential treatment)
10.19 * Form of Executive Agreement (portions of the exhibit have been
omitted pursuant to a request for confidential treatment)
10.20 * Form of Long-Term Performance Plan Award Agreement under the
21.1
23.1
31.1
31.2
32.1
32.2
101
104
2011 Omnibus Incentive Plan
Subsidiaries of the Registrant
Consent of Independent Registered Public Accounting Firm
Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
The following fi nancial statements from
fiscal year e nded Ja nuary 30, 2021, form
Consolidated St
rations, (i
Statements of C
Balance Sheets, (i v) C onsolidated St
Equity, (v) C
onsolidated St
to C onsolidated Fi nancial Statements
The cover pa ge from our Form
January 30, 2021, form
Exhibit 101
atements of Ope
omprehensive Income (Loss), (i
he fiscal year e nded
ine XBRL and c ontained i n
our Form
atted i n Inl
i) C onsolidated
atements of Sha
ash Fl
reholders’
) Not
ii) C onsolidated
atements of C
ine XBRL: (i)
ows a nd (vi
atted i n Inl
10-K for t
10-K for t
he
es
10-Q
10.1
8/24/2017
10-K
10.35
3/16/2018
8-K
10.1
4/20/2018
10-Q
10.1
11/29/2018
10-Q
10.2
11/29/2018
10-Q
10.1
5/28/2020
X
X
X
X
X
X
X
X
*Management contract or compensatory plan or arrangement
73
Table of Contents
Item 16. Form 10-K Summary
None.
74
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
DATE: March 16, 2021
DOLLAR TREE, INC.
By:
/s/ Michael A. Witynski
Michael A. Witynski
President and Chief Executive Officer
75
Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Michael A. Witynski
Michael A. Witynski
/s/ Bob Sasser
Bob Sasser
/s/ Gregory M. Bridgeford
Gregory M. Bridgeford
/s/ Arnold S. Barron
Arnold S. Barron
/s/ Thomas W. Dickson
Thomas W. Dickson
/s/ Lemuel E. Lewis
Lemuel E. Lewis
/s/ Kathleen E. Mallas
Kathleen E. Mallas
/s/ Jeffrey Naylor
Jeffrey Naylor
/s/ Winnie Park
Winnie Park
/s/ Thomas A. Saunders III
Thomas A. Saunders III
/s/ Stephanie Stahl
Stephanie Stahl
/s/ Kevin S. Wampler
Kevin S. Wampler
/s/ Carrie A. Wheeler
Carrie A. Wheeler
/s/ Thomas E. Whiddon
Thomas E. Whiddon
/s/ Dr. Carl P. Zeithaml
Dr. Carl P. Zeithaml
President and Chief Executive Officer; Director
March 16, 2021
(principal executive officer)
Executive Chairman; Director
March 16, 2021
Lead Independent Director
March 16, 2021
Director
Director
Director
March 16, 2021
March 16, 2021
March 16, 2021
Senior Vice President - Principal Accounting Officer
March 16, 2021
(principal accounting officer)
Director
Director
Director
Director
Chief Financial Officer
(principal financial officer)
Director
Director
Director
76
March 16, 2021
March 16, 2021
March 16, 2021
March 16, 2021
March 16, 2021
March 16, 2021
March 16, 2021
March 16, 2021
Corporate Information
Legal Counsel
Williams Mullen
1666 K Street, N.W. Suite 1200
Washington, DC 20006
Independent Registered
Public Accounting Firm
KPMG LLP
440 Monticello Avenue
Suite 1900
Norfolk, VA 23510
Stock Listing
Dollar Tree’s common stock is traded on the NASDAQ
Global Select Market. The Company’s common stock has
been traded on NASDAQ under the symbol “DLTR” since
our initial public offering on March 6, 1995.
Annual Meeting
Shareholders are cordially invited to our virtual
Annual Meeting of Shareholders, which will be held
at 8:00 a.m. on Thursday, June 10, 2021. Shareholders
can access the virtual meeting online through
www.virtualshareholdermeeting.com/DLTR2021
at the scheduled time.
Fiscal 2021 Earnings Release Calendar*
First Quarter: Thursday, May 27
Second Quarter: Thursday, August 26
Third Quarter: Tuesday, November 23
Fourth Quarter: Wednesday, March 2, 2022
*Dates are subject to change.
Investor Inquiries
Requests for interim and annual reports, Forms 10-K,
or more information should be directed to:
Randy Guiler
VP, Investor Relations
Dollar Tree, Inc.
500 Volvo Parkway
Chesapeake, VA 23320
(757) 321-5284
Or the Investor Relations section of our Company
website: www.DollarTreeinfo.com.
Board of Directors
Arnold S. Barron
Gregory M. Bridgeford, Lead Independent Director
Thomas W. Dickson
Lemuel E. Lewis
Jeffrey G. Naylor
Winnie Y. Park
Bob Sasser, Executive Chairman
Thomas A. Saunders III
Stephanie P. Stahl
Carrie A. Wheeler
Thomas E. Whiddon
Michael A. Witynski
Carl P. Zeithaml
Officers
Michael A. Witynski,
President and Chief Executive Officer
Kevin S. Wampler,
Chief Financial Officer
Alasdair James,
Executive Vice President,
Merchandising and Supply Chain
Richard L. McNeely,
Chief Merchandising Officer
Thomas R. O’Boyle, Jr.,
Chief Operating Officer
Neil A. Curran,
President and Chief Operating Officer,
Dollar Tree Stores Canada, Inc.
Betty J. Click,
Chief Human Resources Officer
David A. Jacobs,
Chief Strategy Officer
Michael Lech,
Chief Logistics Officer
William A. Old, Jr.,
Chief Legal Officer and Corporate Secretary
James A Paisley,
Chief Information Officer
Bruce A. Walters,
Chief Development Officer
Transfer Agent
Computershare
462 South 4th Street
Suite 1600
Louisville, KY 40202
(800) 622-6757 (U.S., Canada, Puerto Rico)
(781) 575-2879 (Outside the U.S., Canada, Puerto Rico)
www.computershare.com/investor
500 Volvo Parkway
Chesapeake, Virginia 23320
Phone (757) 321-5000
www.DollarTree.com