Dollar Tree (DLTR, Financial) operates a network of approximately 14,400 discount variety stores under the Dollar Tree, Dollar Tree Canada and Family Dollar brands. The legacy Dollar Tree concept is the last remaining true dollar store, where every item is a dollar. Its balanced offering of consumables (food and toilet paper) and more discretionary items (toys, stationery and party supplies) has generated consistently attractive financial results, with same store sales rising 22 of the past 23 years. Family Dollar, acquired for $8.8 billion in 2015, focuses more heavily on basic necessities such as diapers, food and paper products at prices between $1 and $10. Dollar Tree is early in the process of improving Family Dollar’s operating results, executing what we believe is a credible plan toward closing the gap in financial performance that exists with its nearest competitor Dollar General. Dollar stores’ unique combination of low prices and convenience continues to resonate with low- and middle-class consumers, providing attractive future store growth opportunities and durable excess cash flow. Portfolio Manager Dave Perkins profiles Dollar Tree in more detail in this quarter’s Analyst Corner.
From Weitz Value Fund first quarter 2017 commentary.
