the best charcoal grill to buy Dollar Tree's (DLTR) CEO Bob Sasser on Q1 2017 Results - Earnings Call Transcript

Dollar Tree(Nasdaq: DLTR) First Quarter 2017 Results Earnings Conference Call May 25, 2017 zero o'clock A.M.Bob Sasser, Vice President of Investor Relations-Kevin wappell, chief executivePhilbin, chief financial officer-Enterprise PresidentAnalystsAlan Rifkin-Heather BTIGMichael-UBSStephen Tanal-Goldman Sachs svincent Sinisi-Morgan Stanley Joseph FeldmanConcepcion-McKiver-MKM PartnersOperatorGood and welcome tree first quarter earnings call.Today's meeting is being recorded.At this time, I want to hand over the meeting to Sir.Randy gouler, vice president of investor relations.Sir, please proceed.Randy GuilerThank, Christine.Good morning, welcome to our conference call to discuss Dollar Tree's performance in the first fiscal quarter of 2017.Bob Sasser, our CEO, will attend today's conference call;Chief financial officer, Kevin Wampler, and Gary Philbin, president of the business.Before we start, I would like to remind you that all the comments we will make about the company's future expectations, plans and prospects are moving forward --According to the statement of the Private Securities Litigation Reform Act of 1995 looking for safe harbor provisions.The actual results may differ significantly from the results shown by these forwardsDue to the influence of various important factors,Included in our most recent press release, the most recent 8-K, last 10-Q and annual report for Form 10K filed with SEC.We have no obligation to update our forwarding.You should not expect us to do so.At the end of the first quarter, the balance of the US dollar express delivery receivable related to the [technical difficulty] store transition service agreement was US $50.9 million.As discussed in our press release and in the financial statement, the company has received the full amount of accounts receivable.Dollar Express delivery is expected to increase by $2 million or more in the second quarter, and we expect this to be affected as well.The company plans to take all appropriate actions and we want to include litigation to enforce our rights.We are therefore unable to provide further details and to raise any questions regarding this matter.All SG & A, operating income, net income and income comparisons submitted today do not include the impact of $50 unless otherwise stated.Impairment charges receivable for the first quarter of 2017 were 9 million per cent.Please refer to the form in today's press release for reconciliation of GAAP financial measures with non-accounting standardsGAAP Financial indicators excluding impairment costs.At the end of our prepared speech, we will open the phone for your question.Please limit your question to one by oneQuestions can be asked if needed.Now, I will transfer the call to Bob Sasser, CEO of Dollar Tree.Thank you, Randy.Good Morning, everyone.This morning, we released our first quarter results for fiscal 2017.Combined sales in the first quarter rose 4% to $5.29 billion.Same-Store sales increased by 0.5%.Divided by segment, same-Store sales for Dollar Tree banners increased by 2.The same $ 5% and family banner-Store sales fell by 1.2%.Our gross profit margin increased by 20 basis points to 30 basis points.8%;Consolidated operating income rose 5% to $439.7 million;and our year-over-Annual comprehensive operating profit margin from 8.2% to 8.3%.Net income for the quarter totaled $232.1 million and our adjusted earnings per share are $0.98 is in line with the high end of our range of guidance.Not including-$0 time tax planning offer.Earnings per share rose 10 in the first quarter of last year.Adjusted $ 1%.89 a year ago.I am very pleased with the performance of our dollar tree banner in the first quarter and the continued progress in rebuilding the home dollar business.Total sales close to medium term for combined bannersThe scope of our guidance.Same-Our store sales for 37 consecutive quarters are positive;Increase of gross profit margin and operating profit margin;SG & A charges on both banners are well managed;It is important that we adjust the EPSOur guidance range ends at $0.98 per share after dilution.The performance of the Dollar Tree banner continues to be strong and consistent.Same-Store Sales Growth 2.5%;Sales price reduction including freight has improved;With trade falling, our industry's leading operating profit margin has grown by 50 basis points to 12 basis points.3%.Our Dollar Tree merchants and operators continue to improve their sales and profitability.At Family Dollar, our customers see cleaner stores, better product portfolios, greater value, more consistent interiorsImprove the level of stock and customer service.I believe that each of these elements helps to win duplicate access and wallet share over time.But this is just the beginning.Many of our key initiatives are in the early stages and are expected to bring about continuous improvement.As we move into the second quarter, our re-sales and renovation plans are just beginning, and we believe that as these programs get traction, our customers will be excited about the synergy and excitement of the goods in our store.Our strategy is consistent and increasingly relevant, providing great value and convenience to our shoppers on a daily basis.With over $6,400 trees and over $8,000 home-based stores, we have unique opportunities and value retail to serve more customers through a variety of markets.I believe we are the most attractive industry in the retail industry.Today's shoppers pay more attention to value and convenience than ever before, which is exactly the value and convenience provided by the Dollar Tree and the home dollar store.Looking forward to the future, our banner is designed to improve relevance, sustained growth and profitability to our customers.We have more opportunities to continue to develop and improve our business.Our real estate and finance team recently completed a rigorous analysis that assessed current store opportunities for each of our banners.Thanks to their efforts and analysis, we are now confident of the opportunity to operate over $10,000 of trees and over $15,000 of family dollars in the United States.Currently, the total number of stores in the United States is about 14,200S.We still have many years to grow.In addition to opening more stores, we are also very concerned about improving the productivity of all our stores by leveraging our buying and operating synergies on banners, and we continue to have the opportunity to increase sales, increase profits and manage expenses.Our goal is to maintain the relevance of the market, provide extreme commodity value and convenience, while operating a store full of fun and friendly shopping experience.We plan to operate and develop these two banners.In the Dollar Tree, everything is a dollar.Family Dollar is a discount store near you.Based on market and customer demographics, we have the opportunity to provide one or two banners for our customers.Our US Dollar Tree Canada business continues to perform very well.Our merchant and store team in Canada did a fantastic job managing their business.Their efforts to serve Canadian customers bring about improvements and store productivity every year.Due to the increase in the average number of tickets and customers, Comp sales in our Canadian store exceeded our company's average in the first quarter.Taking advantage of the size and scale of the Dollar Tree, our merchants continue to get higher value products, and our customers are finding a wider, more exciting variety and better value in the Dollar Tree Canada store.We want to be recognized by our customers as Canada's leading retailer at the single price point of cad1.25, just like our price in the US is $1.We now run 225 stores in Canada and believe we have the opportunity to run 1,000 over time.In addition to Dollar Tree, Family Dollar and Dollar Tree Canada, our online business in Dollar Tree Direct is growing in size and performance.Doll Tree Direct provides an opportunity to expand our customer base, drive incremental sales, increase brand awareness and attract more customers to our stores.While Dollar Tree Direct is a relatively small component compared to our overall business, I am still very happy with this year --over-We see annual trends in both traffic and sales.We see a significant increase in the number of visits to mobile devices.We strive to run the world.Provide first class stores and interactions to our customers through traditional and digital marketing channels such as email Facebook, Pinterest, craft video, Twitter, etc.I invite you to visit us at the Dollar Tree.com.On April, we announced the location of the distribution center of Dollar Tree 12;It will be located in Warrensburg, Missouri, less than 60 miles southeast of Kansas City.We plan to break ground in the near future.The 2 million square foot plant will operate from 2018 in the second quarter and will support us to continue our storage growth in the Midwest.The $0.11 billion project will create about 375 jobs for Johnson County, Missouri, and surrounding communities in three years.Now, I will transfer the call to Gary to provide more details on our performance and priorities.Thank you, Bob.Good Morning, everyone.We were happy with our overall performance in the first quarter as we reached the top of the EPS guidance range.But we know we can do better.The retail environment is dynamic and we see many factors that affect our business.This includes a delay in tax refunds and a shift in Easter time.We continue to work towards continuous improvement and drive key business initiatives that align with it to deliver better in-house servicesTop store shopping experienceImprove sales margin and effective cost management.In this quarter, our company's same-store sales increased by 0 year on year.5%.For the Dollar Tree banner, total sales increased by 7 in the first quarter.9% to $2.57 billion, the same store sales increased by 2.5%.This is achieved by increasing the number of comp transactions and the average ticket.Gross profit margin increased by 50 basis points from the first quarter of last year, and operating profit margin in the first quarter was 12 basis points.3%, an increase of 50 basis points over 11 last year.8%.Dollar Tree highlights for the quarter include sales in the best performing category;Snack drinks, candy, toys, seasonal products and health products;Sales performance is led by our consumables business unit, and consumables and discretionary compensation for the quarter are positive;As we expected, April, which benefited from the Easter shift, was also the strongest --Store sales this quarter.Geographically, Dollar Tree same store sales grew the strongest in the Midwest, Northeast and Southwest, and each of our operating areas achieved positive growth of more than 1%.The US Dollar Tree business continues to be robust, stable and growing.This represents our positive growth for 37 consecutive quarters.In the value structure, our store sales and operating profit continue to lead.Our first quarter performance continues to validate the relevance of the Dollar Tree brand.Customers continue shopping for value and convenience.For the Family Dollar banner, total sales increased by 0.5% to $2.Same 72 billion-Store sales fell by 1.2%.The first quarter was the toughest contrast we faced in 2017.In the first quarter, comps took a positive attitude towards the Family Dollar flag on a two-year basis.Gross margin fell by 30 basis points to 26 basis points.9%, the operating profit margin is 4.6%.For Home dollars, the highlights of the quarter include sales in the category we performed best;Catering, health and beauty, men's clothing, etc.Our comp performance is driven by consumables, with a slight increase in consumables during the first quarter.Sales time for the first quarter was affected by various factors, including major delays and timing of tax rate funds, late Easter holidays, and a cycle of reduced employee benefits from 2016.Therefore, our comps are single-month-by-month from the middle-The number from February to the middle is negative-The figure for April is positive.Geographically, Family dollars are the same.Store sales growth in the quarter was relatively balanced with Western and CentralThe Atlantic and western mountains are the strongest.In less than two years of integration, we continue to make meaningful progress on home dollar around key fundamentals driving performance.Our store desktop bets are focused on the integration of commodity value and shared services.Our efforts focus on our customer-facing initiatives, shoppers continue to provide us with credit, and we are working to improve and expand these initiatives across all 8,000 stores.Our customers saw that a better merchandise store was cleaned up, providing a more attractive final price cut for everyday essential goods and holiday needs.While we still have more work to do in terms of home dollar, our ongoing investment in the home Dollar Brand base is on the right track;These customer oriented projects are designed to drive and demonstrate the value of the entire store and tend to lead the momentum in an intelligent way that saves us on marketing issues.Our customers continue to respond to the value and savings of all these elements;Provide value to our family dollar customers;The intelligent way we save information reflects the value and execution of our store items.This includes the EDLP pricing of our daily value;Sales projects that reflect the most meaningful value in key projects;The dollar is good, driving the surprise of the whole store and opening the price point;Take out the excellent value of our own brand and save it;The price drops, and the value of the goods that customers buy most often is very high;And smart coupons, which is an easy way to find extra savings.We believe that our customers give credit to our entire store in our wise way of saving, which gives us flexibility and provides value and convenience to our customers.In particular, our customers continue to respond and accept more than 2 smart coupons.Since our Labor Day 5 million, there are 2016 clients registeredoff.For our average shopper, this program offers an easy shopping experience for the exclusive discount of the national and family dollars.We see that in transactions where smart coupons have been applied, the average ticket will have a measurable boost.For us and our suppliers, home dollar is a great way to reach out to customer groups that are uniquely served by home dollar, which enhances the delivery of intelligent ways in which we save information.Over the past 18 months, we have invested a lot of time, testing and learning efforts to improve the layout of our home dollar store.We are satisfied with the results we have seen, and now this is the format we will use in the new store and in the current renovation project.We are confident that as we roll out this format in the coming months, our customers will respond with enthusiasm.Elements of the layout, including;Improved adjacent relationships and more efficient end caps;Expand drinks and snacks, including instant consumption cores near checkout;Extended varieties of food, coolers and freezers;The updated ticket variety expanded drinks in some stores;Efficient power alley promotes dollar goods and impact to customers through the checkout process.Our first renovation has officially started in the second quarter, and we look forward to making progress with the renovation target of 250 or more this year.As performance becomes measurable and predictable, we have the ability and willingness to improve accordingly.Now, most of the new stores will open in our category and adjacent relationships, reflecting our latest thoughts on the report.Another key factor driving the progress of the Family Dollar business is the development of our private brand project.We are getting rid of home brand labels such as home health, home cuisine and home chefs with the aim of driving the relevant brands with new and improved packaging to update our classification.In our store, there are some examples of this every day, and you will see that Homeline replaces the home dollar brand in home products.You can also see that we are transitioning from a private brand candy variety of home cuisine where you can now see the candy company.Over the next few months, we will mainly convert the labels in several other pipes on the consumables category.These private brands are being developed to provide comparable quality and excellent value to national brands, supporting the comparison and savings portion of our smart savings program.Each of our brands will continue with a 100% customer satisfaction guarantee.We look forward to providing you with an update on our progress over the next few quarters on this important project.While we still have more to do, our family dollar team is dynamic, dynamic and offers the best value to our shoppers who are unique in many ways andOur store serves our customers who depend on us and provides responsive and re-value convenience for fast travel in a small form and home dollar shopping experience, which supports our friendly serviceNow look at the real estate in the first quarter;We opened a total of 164 new stores, $89 trees and $75 families;We moved or expanded 51 stores, 35 $ trees, 16 $ families;There were 215 projects in the first quarter;In the first quarter, we also added freezers and coolers to the $131 tree store;Increase our total number of Dollar Tree stores with freezers and coolers to 4,918.We closed 16 stores this quarter, 5 trees worth $5 and 11 family dollars;We had 14,482 stores in the first quarter, 6,444 were dollar trees and 8,038 were family dollars.I will now transfer the call to Kevin to provide more details on our performance in the first quarter and the outlook for the second and full year.Kevin?Thank you, Gary.I would like to remind you that our discussion, as mentioned earlier, does not include the impact of $0.Impairment fees receivable per share unless otherwise stated.Total sales in the first quarter rose 4% to $5.29 billion.Total sales growth in the Dollar Tree Segment 7.9% to $2.57 billion, the total sales of the Family Dollar segment increased by 0.5% to $2.72 billion.Same enterprise-Store sales increased by 0.5%.In this quarter, auxiliary currency fluctuations have the least impact on our company.On the basis of segmentation, the same-Store sales for Dollar Tree banners increased by 2.5% and the flag against the Family Dollar fell by 1.2%.As expected, we have experienced a gradual erosion from the home dollar to the trading store that has been converted to the Dollar Tree store.We estimate the incremental devouring impact on the Dollar Tree banner comp for the quarter to be around 30 basis points.The consolidated organizational Gross profit increased by 4.7% to $1.Compared with the same period last year, the first quarter was 63 billion, 2017.Gross profit margin increased by 20 basis points to 30 basis points.8% versus 30.The quarter of the previous year was 6%.The gross profit margin of the US Dollar Tree plate is 34.The first quarter was 9%, up 50 basis points from the fourth quarter of last year.Factors affecting the sector's quarterly gross profit margin performance include lower commodity costs, favorable freight charges, and lower shrinkage due to good inventory results;Partially offset by higher distribution and occupancy costs, as a percentage of net sales, mainly due to the opening of our Cherokee County South Carolina DC in the second quarter of last year.The gross profit margin for the Family Dollar segment is 26.Compared with 27, the first quarter was 9%.2% per cent during the comparable previous year.The decline of 30 basis points was mainly due to the higher price reduction in the quarter and the reduced cost, which was partially offset by the increase in commodity costs.Consolidated sales, general and administrative expenses increased to 22 as a percentage of quarterly net sales.5% from 22.The same period last year was 3%.Q1 SG & compared to 22 in the same period last year, the sales cost of the Dollar Tree segment is consistent with the percentage of sales.6%.Higher store wage costs and inventory compensation are offset by lower health insurance costs, lower store supply and professional costs as a percentage of sales.SG & A charges for the US dollar portion of the household as A percentage of sales are 22.3% compared to 22.The quarter of the previous year was 1%.The increase is due to the increase in wage costs, which is due to leverage losses caused by reduced comp sales and increased advertising costs, partially offset by lower depreciation costs and lower store maintenance and maintenance costs.The company's operating income increased to $439.$7 million, compared to $418.The same period last year was 7 million.Operating income margin increased to 8.3% quarter from 8.The first quarter of last year was 2%.The operating income margin of the Dollar Tree segment increased by 50 basis points to 12 basis points.Compared with the previous quarter, 3%.The family's operating income in the dollar segment fell by $13.$7 million to $124.3 million, sales fell by 50 basis points compared to the previous year quarter.Non-Operating expenses for the quarter totaled $75 million, consisting primarily of net interest payments.Our actual tax rate for the first quarter was 36.1% compared to 29.8% last quarter.The quarter of the previous year includedTime interest related to the national tax plan.Net income for the first quarter was $232.$1 million or $0.$89 per share, while net income reported was $232.$7 million or $0.98 per share after dilution in the previous quarter.The previous year included $0.09 one-As mentioned earlier, the time benefit of EPS and the tax rate below expectations.$0 is not included.09 one-Time Earnings per Diluted earnings per share increased by 10 in the previous quarter.The adjusted $0 is 1%.89.Cash and cash equivalents at the end of the quarter totaled $1.$15 billion, compared to $866.4 million at the end of the 2016 fiscal year.We are great.Regular debt is about $6.3 billion.At the end of the quarter, the inventory of the Dollar Tree was basically the same as the same period last year, while the sales area increased by 6.5%.Reduce inventory by 6 per sales square foot.1%.We believe that the current inventory level is appropriate to support the opening of the scheduled new store in our sales plan for the second quarter.At the end of the quarter, the inventory of the Family Dollar segment fell 3% from the same period last year, down 4.Sales are based on 2% square feet.We continue to be satisfied with the progress we have made at the inventory level of key projects.We continue to review the assortment of goods and consider our current inventory level appropriate for the second quarter.Capital expenditure was $110.The first quarter of 2017 was $3 million, compared with $175 in the same period.9 million in the first quarter of last year.In fiscal 2017, we plan to combine capital expenditures from $0.76 billion to $0.78 billion.Capital expenditures will focus on new stores and renovations, including the development of the store for charge;Renovation of 250 Family Dollar stores in 2017;Added further refrigeration capacity for a total of 400 new and existing Dollar Tree stores;Frozen and refrigerated expansion of 300 home dollar store IT system enhancement and integration projects;Start building our new Dollar Tree banner distribution center in Fort Warren, Missouri;Continue construction-The new office building in the store support center in Chesapeake, Virginia.The total amount of depreciation and amortization is $153.First quarter 9 million.Depreciation and amortization costs $162.The first quarter of last year was 3 million.For fiscal 2017, we expect combined Depreciation and amortization to range from $0.61 billion to $0.63 billion.Our latest fiscal 2017 outlook includes the following assumptions:Fiscal 2017 is expected to be 53 weeks, and an additional week in the fourth quarter is expected to increase sales by $0.4 billion and $0 by $0.43 billion.19 to $0.Earnings after dilution of 22 to per share, both of which are included in the guide.We expect that shop salaries will continue to be under pressure due to national increases in minimum wage and average hourly wages.Starting in the second quarter, we had a higher import freight budget a year ago and higher diesel costs this year.Net interest expenditure for the second and third quarters was approximately $75 million per quarter, and for the additional week, the fourth quarter was approximately $81 million.Our guidance does not include any Share Repurchase of 2017, and we are not able to predict future currency fluctuations without our guidance on adjusting exchange rate changes.Our guidance also assumes a tax rate of 36% for the second and 36 quarters.Fiscal 5% was 2017.The number of weighted average diluted shares is assumed to be 237.There were 7 million shares in the second quarter and throughout the year.In the second quarter, we expect total sales to range from $5.$18 billion to $5.Diluted earnings of $28 billion per share.80 to $0.88.That's 11% to 22% more than $0.72 EPS were reported in the second quarter of last year.These estimates are based on a slightly positive, low orderdigit same-Store sales increased year on yearover-Growth of 3.4%.For fiscal 2017, we now forecast total sales between $21.$95 billion and $22.Compared with the company's previously expected $21 range, the figure is 25 billion.$94 billion to $22.33 billion.The company now expects diluted earnings per share in fiscal 2017 to be between $4.17 and $4.43, including $0.Impairment fees receivable.$0 is not included.13 impairment charges, the top of the guidance range is consistent with our previous guidance.These estimates are based on single digits that are slightly positive to low.Store sales increased by 3.Growth of 9% square feet, including earnings for 53 weeks in the fourth quarter of fiscal 2017.I will transfer the phone to Bob now.Thank you, Kevin.Again, I am very happy with the first quarter performance of the Dollar Tree and I am equally enthusiastic about the future of the Family Dollar.These teams work very hard to rebuild the foundation for a very successful and profitable business.I believe that we are well positioned in the most attractive retail sector to provide sustained growth and value added to our long-term developmentLong-term shareholders.Dollar Tree is now a diversified combination of 6,000 chain stores and 8,000 chain stores, each with unique capabilities to effectively serve more customers through a variety of markets.With the combination of these two great brands, we have a lot of flexibility in how to choose growth while expanding growth opportunities.We will continue to focus on providing greater value to our customers while providing higher returns to our long-term customersLong-term shareholders.The business model of USD tree continues to grow and improve;It is stronger, more flexible, and more relevant than ever before, providing customers with extreme value while recording sales and revenue levels.While our prices have remained at $1 for the past 30 years, our operating margins continue to grow and lead the discount industry.As always, we will continue to adopt a well-thought-out approach to discipline by improving communication, analysis, collaboration and incentives to drive key strategic initiatives for Consolidated businesses.Most importantly, we will maintain our laser attention to our customers, remain relevant to their needs, and most importantly provide value, convenience and a fun-filled and friendly shopping experience.Our fundamentals have passed the test of time and have been verified by the results. we believe that continuing to emphasize these areas can be improved through sales and profits, significantly increase the cost of operating performance control in the home dollar and improve customer satisfaction.During good times and difficult times in all retail cycles, consumers are looking for value and convenience regardless of the economic situation.Dollar Tree and Family Dollar, we all have.It all started with our colleagues, our sales team, our on-site management and leadership team, and we were talented, experienced, dynamic and incredibly motivated.This is a good time to be a Dollar Tree.Operator, we are ready to ask questions now.Question-And-Thank you for the operation instructions ].We will answer the first question from Alan Rifkin and BTIG.Alan RifkinBob, can you please provide an update on the synergies you expect after nearly two years of acquisition.I remember your initial guidance was 0.3 billion and even in the last quarter you said you were happy with the figure.Can you give us an update?Bob sasser we are full of confidence in 0.3 billion of our guidance.We feel very --We feel that we are in the place we need to go at this time.As you can recall, by the end of the third year, there was a 0.3 billion run-rate synergy, with an investment of 0.3 billion to achieve those synergies.So I can tell you that we are right to achieve the goal of 0.3 billion.Alan RifkinAnd can you tell us about the Missouri special zone that will be added?Will simulate the holy.Both banners are full, George DC, and now you have time to take a look and evaluate the HolyGeorge.What is the forecast for DC that supports both banners, and I'm sure this will bring you significant supply chain savings?Thank you.This is another good question.Missouri, DC-We will use catalyst, which is the WMS we use in the home dollar DC, and the WMS we modified in St.To ship the two flags, George Utah.So we will adopt the modified version of St.George WMS and we will open the new Missouri special zone with WMS.This will be our way to WMS as we open up and as we move forward we will continue to expand or convert distribution centers.We will answer the next question from Michael Lasser of UBS.Michael LasserAs you put all the hard work in your home dollars, there are cleaner stores, there are stocks, and customer service levels improve.Of course, you didn't expect comp to drop by 1%, which is your experience in the industry.Why don't you think it's better than this?Gary PhilbinI believes that Q1 sales do account for what's going on in the market, especially in terms of tax rebates.Just give you some color.It is clear that the tax refund has been delayed.In particular, the income tax credit that has been obtained has been postponed to a week on the 27 th.In fact, you can see when it actually hits.So when we look at the quarterly period of the month of February, our customers are not only affected by the discretion of our customers to weigh the business, because tax rebates and consumption have actually become their capital investment delayed until the last week;Although we saw pop music compared to a year ago, it could be two-A week shift, two years ago, was really the whole month of February.When we go through the parade, even if there is a change in Easter, we think where the sale of the parade will be.I think the Family Dollar Easter is also in the target area.So if you go back to the normal rhythm, we can see a response from our customers.So obviously, when we see negative compensation, we will never be happy.But what we can measure is qualified and see both at the topAs you enter a business line, our customers experienced a delay in the income tax credit in February.I don't think it's any different from the structure of the business.I think we continue to invest in the right things in our business, invest in clear stores, get exciting merchandise sales at the front end of terminals and stores, give our employees a reason to drive sales in the comp store.In the long run, these are the things we are going to build that will drive the business.So when we get into the second quarter business, we're very focused on what's going to happen in the summer, and that means growth for the home dollar.For the Dollar Tree, this means that we are at the moment of Mother's Day graduation or blooming, and Memorial Day is coming.We have the right product to drive the business for the second quarter and we focus on doing so on both banners.Thank you, Gary.My follow-up question is, first of all, do you think the Easter shift, do you energise the contribution of the Easter shift to the medium termThe single digit comp you experienced on the home dollar in April.Now we--Now, the snapshot drag from last year is already the anniversary.Do you think this will lead to improvements in business revenue in the second quarter and beyond?Gary fillbin Michael, I missed the second part of the question.What's the second one, [multiple speakers], thank you.So I think part one-Look, our later Easter helped the Dollar Tree and the Family Dollar a lot, not only the Easter holiday, but it really became the beginning of spring.So while we don't qualify for the business, the Easter for both banners is better than last year, because the spring weather is warm and the Family Dollar also means that we have some other categories besides the Easter costume, the health and beauty response is correct.Secondly, regarding employee benefits, I told you before on Family Dollar that I think it's a kind of Canary and the axis of thinking, listen, it's a small part of our business.For me, it makes us have a good first month of each month.While we know the benefits of the home dollar banner market, we 've seen it all last year.Dollar Tree penetration has dropped a bit, but I think that speaks to what the Dollar Tree did in the first month and is ready for us.On the Family Dollar, this is indeed the focus of our attention now.So I think it's in our employee benefits.This gives us confidence that we will be ready in our store in a better way in the first month.They have --Its state distribution is different, but the first 10 days are still very important for our home dollar customers to be ready for inventory and to have our staff ready for quality service.The next question comes from Stephen Tanar Goldman Sachs.Stephen TanalI, I think the biggest concern is the Family Dollar profit margin.I would love to know how you see the level of the first quarter and the level of the yearon-Should this year's trend exceed this year's balance?Then any comments on the long term level that can be achieved in that business can help.I started with Stephen first.Q1 was --In addition to affecting our merchandise sales a year ago, we are cleaning up our inventory.We got the benefit of these two facts, that we started with great power in early 2016, and we just cleaned up a lot of bits and pieces that were accumulated in the store.We also came out from the winter and basically got a good clean-up on the clothes.So once you sell some margin, maybe back to the normal rhythm, we can only do better, but our strength in q1 and the normal rhythm of price reduction.But, in the first phase, one thing that is very different due to the late arrival of the tax refund is the mixed transfer, and the impact on the products purchased by our customers.Our consumables increased slightly this quarter.They bought what they needed.The difference in what they want to buy in the discretionary sector, which is really what we feel in the first phase, and we can measure to a large extent the factors that affect profit margins for this quarter.So this is a story of q1.But Kevin, I would like to comment on the forecast, but it is clear that we have incorporated everything we know so far into the forecast for the rest of the year.Kevin WamplerSo I think is consistent with what we said last quarter;If you want to see a series of guidanceOur operating income is basically 88 or 89 points.The same is true compared to what I thought was H2 last year.We also look forward to the overall improvement.As part of this, we do hope that the dollar business will improve during q1 this year.So I think in general, as we move forward, there is an expectation that the business will improve.So had some --Gary mentioned that some of the various schedules that affect Q1 are a bit more than expected, but we are looking for something better.And then there's Stephen TanalAnd, I think you said Synergy, maybe-Time costs flowing through operating expenses.Can you give us an update on net income or net dragon-How will this develop in a year?Kevin WamplerWell, I don't know how to talk to it from delays or benefits.I think it is clear that the cost of expenditure we are aware of is just as present in our projections as we expected this year in the related synergies.So it's no different from other times.Overall, we say $0.3 billion to achieve more front-end load.If you remember right, that's true.Basically 300 stores, 300 Family Dollar stores, we re-The $200 Deal store was announced to Dollar Tree.So, in the first year and a half, a large part of the cost of capital expenditure is related to this, so this is a large part.As I said before, when we started the process, we said that our best guess was the $0.3 billion of OpEx's semi-capital expenditure.As I said when I went through all this, the final capital expenditure may increase a bit and the operating expenditure will decrease a bit.But from the point of view of achievement, it is still the range of goals we expected from the beginning and the cost of achieving.[Operator's note] your next question is from Vincent Sines, Morgan Stanley.Vincent sinisiyu said earlier on the phone that you felt you had mastered the basic format of the home dollar and now you are using it.Can you tell us what you think in terms of pricing and competition, that you feel you have taken the majority behind you and that you are in good shape there;Of course, the adjustment and what is not, but probably just around pricing?Also, in terms of buying synergies, what is the point between the two banners, how much overlap, and how much is possible to achieve?Gary PhilbinLet asked me to comment on the price and I think they are in the retail industry and we will focus on it once a week.Obviously, while we are happy with the role of this format, because I think this allows our customers to buy home dollars for customers who show value in a more efficient and easy way.In terms of pricing, we will still emphasize the smart way to save, and our customers will respond to all the elements we have been talking about.We have to show the daily price on the shelves.We have lower prices and sell items that resonate with them on what they buy most often.Compare save.But we are excited about the redo of this private brand because we have a very good private brand project, however, the value we can show our customers, and now we are updating the label, because we think it will help a lot.But the pricing section will continue to be something that we are focusing on and going through right now, and that's just the nature of the beast, because we make sure there's the right retail on the shelves, and provide us with a flexible way to save whether the electronic products of smart coupons are on the shelf.Synergy, I'll tell you that merchants work together on several different elements.We basically consider it from two aspects, one is our domestic supplier.So we may have about 10% overlap between skews, which is larger than when we consider some of the similar items we buy;So the aluminum foil could be the kid on the poster, and for the family dollar we are most likely a 5 square foot Dollar Tree.But I would like to tell you that in terms of imports, we also have the opportunity to buy travel in a loop four times a year.So we have four opportunities for our integration to continue and for merchants to talk about what to buy in the next few years.So, when you look at some of the imported side, keep in mind that the lead time that appears in the synergies is longer, which requires us to spend a lot of time reviewing our portfolio, buying, shipping, go through the holidays, and then we will do a makeover and redo next season.We will have more.We certainly have more opportunities to continue to move beyond our goal of promoting synergies.I would say and review categories as much as inspire excitement in categories.Vincent siniesan may be a quick follow-up personOK, the Family Dollar format was fully in place just now.In any qualitative or quantitative way, should we consider the annual lens growth by posting more posts there this year?Thank you very much.Gary PhilbinWe hasn't really talked about this yet, and I just want to tell you that what excites us from the customer's point of view is the way they shop in the category we invest in.I mentioned immediate consumption.Our front-Finally, you can get together, toys and gift cards are now in a similar neighborhood, and the fact that mom who enters the store can buy new babies will be more productive, toddler clothing next to diapers.So maybe retail.o-I think there is an item that can drive a better business and make it easier for our customers to shop.The next question comes from Joseph Feldman of Telsey Group.Joseph FeldmanSo also wants to go back to the home dollar business.Are you --I think, can you help us understand when to start seeing an increase in operating margins?I think there must be some people, including myself, who will think that our profit margin will increase, not necessarily gross margin, but at this time, the overall operating profit margin of the Family Dollar business will increase.I just want you to know the schedule?Bob SasserI thinks there are several combinations.I think you have heard us talk about the basis of what we are putting;We say we are in the long run.We have done something that we think is on the right path to running better stores, better classification, better shelf value;I think what we are describing, what is the current renovation plan, which may be more obvious for our customers, and it will also be one of the engines that will help us drive overall profit margin growth;So when we do 250 renovations this year, the new store will appear in a new form.Now, our customers are going to see something financially in a cleaner, Fuller store, fresher, and it's really another part of the puzzle that we 've been focusing on, let's change the color of the store fleet and that's what you will be in the second half of the yearI am eager to get these things out because I think these elements are combined with everything we have been talking about;Table bets, merchandise sales Energy in store classification.But we also have to link the fiscal plan to these facilities to make sure our customers see a nice new store when deciding where to go for shopping.So its hand-in-We have to do both.At this point, you have heard that we talked and talked about the renovation of the new store project in the first part, which is really the next project.Joseph Feldman and then as a followerup.Regarding some clearance activities, I think it's not clearance, it's a brand rebranding of private labels.I'm curious how this will affect the cleanup of old inventory and how will this fit into your point of view?Bob SasserI would say that, in most cases, we just flow up high, whether it's candy or garbage bags;Most of these consumables will turn soon.While we may have some, it's all included in our forecast.Most of them will be mobile and the existing SKUs on the shelves will be replaced with new packages.Our next questions come from OperatorAnd Alvin Concepción and Citibank.Alvin ConcepcionLast, I think you mentioned that you haven't seen much change in the competitive promotional environment in the past year and a half.Do you see that the stability continues to 1Q and continues to the second quarter?I think competition is part of our life.I and the field operators are watching as closely as our merchants, and from a few perspectives what competitors are doing, what they are doing with the portfolio of goods and the business they are driving, except for the price, the pricing statement they are making.So we continue shopping.We saw a lot.-There are many new competitors outside, especially in the grocery industry.We are not a grocery store, but we still sell some food, drinks and snacks and such products.So we are watching closely.But at the same time, we still focus on our customers, what are the needs of our customers, and how we build value equations for our customers.Gary takes a piece of Family Dollar and saves all the different ways with our additional price and our daily price and price drop, which is an amazing price value for our customers.So we will continue to focus on this.We need to see what the game does;We will buy prices on key items, naming branded items as we have been working hard;The market is different;We focus all over the country.We are developing our business according to the needs of our customers.This new renovation project has just started in the second quarter, and we are very excited about it because the components we talk about and test in different stores really need a lot and put some components together.So our new store is starting to roll out new adjacent products, new store designs, and go back and renovate.Now, we see that the 250 stores are clearly based on our performance on the accelerator, and more than expected, we will definitely skip all of them.Then, the other thing is to introduce the decoration completely.What we find is very attractive to our customers and we still have the ability to split parts into existing fleets, which we know will be a home run.Retail is competition. retail is competition.I respect them very much.We will continue to focus on them and we will focus specifically on the customers and how they respond to the services we provide at the store.Simple follow-up by Alvin ConcepcionAndIn the game.It sounds like you saw a more normalized trend in the second quarter, which is enough to give you confidence in the annual figures.Just wondering if you could give us more color on what you saw in the second quarter because you asked a lot of questions in 1Q?I wish I could tell you exactly, but it's still too early.Yes, we are satisfied with our guidance and we have everything we know in our guidance for the second quarter.We have a lot.-Still, it was early in the quarter;Mother's Day is beautifulThis weekend is Memorial Day.We look forward to getting good things out of it.Of course, a graduation ceremony based on our dollar tree business is a good idea;Father's Day and the days to come.At Family Dollar, all of these things add a bigger seasonal summer product because we sell fans in Family Dollar.So when the weather gets hot, we can sell more fans, beach supplies, coolers, charcoal grills and everything we're cooking.For this, it should be an important weekend and a weekend for the Family Dollar apparel industry.As the weather gets warmer, when we see the sunny sky, we see the clothing business take off;So there are many highlights.In order to take a step back, I will tell you that the biggest problem with home dollar sales in the first quarter is the delay in tax refund checks.They were late and the business in February was tricky.But you can see it when you check itby-You can see an improvement in sales.Then we came to the parade and in the very good parade we lost Easter and met our expectations.We had a wonderful Easter but we couldn't make up for what we lost in February.This is the story you see.What our consumers are suffering from is our discretion.-What they need even if there are bad things-Get the check like they bring what they need.As a result, our consumer goods business grew slightly in the quarter, but our discretionary business was a drop in comp.So it's really a story, but what's happening on the Family Dollar is that it's structured and related to our new classification, it's more about low-income customers with these tax checks, especially for us who have a lot of family dollars.Tax check on those customers who are waiting for their lowest income, they rely on them, that's when they buy clothes and things like that, that's when they buy what they want, but they can't afford the time of the year.We still have time to answer a question.Our questions come from Patrick McKeever with MKM Partners.Patrick McKeeverI will first ask a few big questions about the border adjustment tax.Just wondering, I know it's pretty uncertain what's going on there, but, if that's what you're thinking about, is there any contingency plan if it becomes a reality?The second question is Bob, and I know that in the last few phone calls, you have been somewhat cautious about the state of the economy.-Your core client.I know that in the first quarter, the tax refund later was a big problem.But think about your core client, do you still feel a little cautious, or do you feel the situation is getting better and better there?First, the border adjustment tax is still there, and Congress is still debating it.Last night, the night before, I watched the replay on C-Span of the House fundraising committee, when they talk to some retailers about border adjustment taxes and try to get more taxes and determine their position in this regard.It is still pending until we know what it is and we really know how to organize around it.I think we're doing what we should do, focusing on it, trying to understand it, and what's going on, talking to our members of Congress, talking to our senators, work with RILA and other groups that support retail and put forward our position.So that's what we're doing, we're doing it actively, and we're going to see how it's going.I don't want to sit here and predict in one way or another what Congress will do.But I think at the end of the day, hopefully they will do well and we will have good results.So what is the plan they are working on now and what is it;There are too many assumptions and too many open issues to make anything meaningful now.So I want to do what we need to do now, Patrick.In terms of consumer health, we serve the lowest consumer population through middle-income consumers.So we serve the vast number of consumers, and I believe what I have said in the past is that consumers are under pressure and worry.I still think so, I think some-Whether it's the economic issues of health care, health care reform and tax reform, or all the issues we work in Congress.I think as long as there is uncertainty, there is uncertainty in all of this, then the American consumer is ---They focus on becoming the light Act;They focus on paying rent, room and care;all the things;Employment, there will be jobs, do I have a job before you have confidence in their position, they do have jobs, they can't afford to pay the bill?There will be ongoing uncertainty.At Dollar Tree and Family Dollar, when they try to balance the budget, we think it's one of the answers to their questions every day, when they try to take their salary, and in a month, a week, regardless of the salary cycle, to spread it out.We want to be part of solving their problems.We want to help them balance their budget with what they want, the price is high and the value is amazing.In the Dollar Tree, you can slander because everything is still a dollar.Yes, you can afford it at Dollar Tree, you can go in and have a big party birthday party for kids and family, buy your seasonal products, but still pay only one Dollar.This is the end of today's problem.and-answer session.Mr.Guiler, at this point, I will transfer the meeting back to you to hear any additions or closing remarks from you.Randy GuilerGreat, thank you, Christine.Thank you for attending our conference call today and for your continued attention to the Dollar Tree.We are scheduled to hold our next quarterly earnings call on Thursday, August 24, 2017 to discuss the results of the second quarter.Thank you and wish you a wonderful day.This is the end of today's call.Thank you for your participation.You can disconnect now.