Tye Bousada & Geoff MacDonald

00:00:11:15 - 00:00:14:16 Dollar Tree is a traditional dollar store retailer 00:00:14:16 - 00:00:17:24 based in the United States with over 8000 stores. 00:00:17:24 - 00:00:22:23 Up until a couple of years ago they sold everything in their store for $1. 00:00:22:23 - 00:00:26:06 At the beginning of this year over 80% of the store 00:00:26:06 - 00:00:28:22 was priced at approximately $1.25. 00:00:28:22 - 00:00:32:06 They have a balanced offering of consumables. 00:00:32:06 - 00:00:37:10 So food items, whether it's confectionery items, snack food, soft drinks, 00:00:37:10 - 00:00:40:15 canned food, and discretionary items. 00:00:40:15 - 00:00:45:10 Discretionary items could be anything from things that are required in the house, 00:00:45:10 - 00:00:50:16 utensils for the kitchen, candles, clothing items. 00:00:50:16 - 00:00:52:18 Anything that you can imagine 00:00:52:18 - 00:00:55:20 that could be priced between $1 and $3. 00:00:55:20 - 00:00:58:02 Dollar Tree will have it between their four walls. 00:00:58:02 - 00:01:01:21 Dollar Tree has a very large global sourcing operation, 00:01:01:21 - 00:01:05:11 one of the largest in the United States for sourcing goods into the country 00:01:05:11 - 00:01:08:16 and it uses that large buying power to provide 00:01:08:16 - 00:01:11:17 products to their customers at very low prices 00:01:11:17 - 00:01:16:18 as virtually the entire store is priced between $1 and $3 per product. 00:01:16:18 - 00:01:21:05 So when consumers feel pinched, which is happening more and more recently 00:01:21:05 - 00:01:24:21 certainly in the US, they tend to trade down on their purchases 00:01:24:21 - 00:01:30:21 and Dollar Tree is one of the top positioned retailers in the United States to benefit from that trade down. 00:01:30:21 - 00:01:35:05 The opportunity for Dollar Tree to grow earnings it's quite substantial. 00:01:35:05 - 00:01:38:01 First, they're still opening 500 stores a year, 00:01:38:01 - 00:01:42:21 with great success and earning great returns from those new stores. 00:01:42:21 - 00:01:48:19 Second, they continue to roll out multi-priced offerings, which is new for them. 00:01:48:19 - 00:01:52:10 At the beginning of this year over 80% of the store 00:01:52:10 - 00:01:54:11 was $1.25 00:01:54:11 - 00:01:56:00 and that's changing. 00:01:56:00 - 00:02:01:02 These multi-priced offerings are going to help both revenue growth and margins expand. 00:02:01:02 - 00:02:04:19 Third, the multi-priced offerings gives more flexibility 00:02:04:19 - 00:02:08:24 to expand the range of items that you can have in a Dollar Tree store now 00:02:08:24 - 00:02:13:00 and that is also leading to margin accretion for the business. 00:02:13:00 - 00:02:16:10 When you combine those three things happen with Dollar Tree. 00:02:16:10 - 00:02:20:08 We see substantial double-digit earnings potential for the next 3 to 5 years. 00:02:20:08 - 00:02:23:21 Dollar Tree is a winning format that has been outperforming 00:02:23:21 - 00:02:27:11 in the US retailing space over the last few years, 00:02:27:11 - 00:02:33:10 yet they’re still really early in their evolution on multi-price formatted stores. 00:02:33:10 - 00:02:37:15 We believe that the company will earn over $8 a share in a few years 00:02:37:15 - 00:02:43:10 and the stock today is under 12 times that earnings potential 00:02:43:10 - 00:02:46:14 which we think is very attractive in the context of today's market.