Family Dollar Dramatically Rethinks Private Brand

\"\"Late last week (May 25, 2017) discount retailer Dollar Tree held its Q1 2017 Results – Earnings Call lead by Bob Sasser – Chief Executive Officer and his team: Randy Guiler – Vice President of Investor Relations, Kevin Wampler – Chief Financial Officer and Gary Philbin – Enterprise President.


During the call, Bob Sasser, gave an overview of the retailer\’s results, “…our results for the first quarter of fiscal 2017. Consolidated sales for the first quarter increased 4% to $5.29 billion. Same-store sales increased 0.5%. By segment, same-store sales for the Dollar Tree banner increased 2.5% and for the Family Dollar banner same-store sales decreased 1.2%. Our combined gross margin rate improved 20 basis points to 30.8%; consolidated operating income increased 5% to $439.7 million, and our year-over-year consolidated operating margin improved from 8.2% to 8.3%.

Total net income for the quarter was $232.1 million and our adjusted EPS of $0.98 met the high end of our range of guidance. Excluding the one-time tax planning benefit of $0.09 per share in the first quarter last year, our EPS grew by 10.1% from the adjusted $0.89 a year ago. I am extremely pleased with the first quarter performance for our Dollar Tree banner and with the continued progress in rebuilding the Family Dollar business. For the combined banners total sales were near the mid-point of our range of guidance. Same-store sales were positive for our 37th consecutive quarter; consolidated gross margin and operating margin rates improved; SG&A expenses across both banners were well managed; and importantly, our adjusted EPS at the high-end of our range of guidance at $0.98 per diluted share.”

Gary Philbin – Enterprise President went on to discuss private brand at Dollar Tree owned Family Dollar.

\"\"“Most new stores will now open with our assortment and adjacencies that reflects our latest thinking of our report. Another key element of driving improvement in the Family Dollar business is the development of our private brand program. We’re in the process of moving away from family branded label such as Family Wellness, Family Gourmet and Family Chef with the intention to drive relevant brandings with new and improve packaging to refresh our assortment.

\"\"Some of these examples in our stores a day, you will see Homeline replacing Family Dollar brand in household products. You also see we’re transitioning from our private brand candy assortment from Family Gourmet where you will now see Catawba Candy Company. In the months ahead, we’ll be transitioning labels in several other pipelines mainly on the consumables categories. These private brands are being developed to provide national brand comparable quality and terrific values to support the compare and save component of our smart ways to save the program. Each of our brands will continue the 100% customer satisfaction guarantee. We look forward to providing you update on our progress in the quarters ahead on this important program.” \"\"\"\"

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Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.