Dollar Tree plans to renovate 1,250 Family Dollar stores to the “H2” format in fiscal 2020, as the discount retailer builds on the momentum of a strong fiscal 2019 performance. Net sales increased 3.5% to $23.6 billion during the year, while overall same-store sales increased 1.8%.
The company’s new H2 format features a wider array of products, including an expanded freezer and cooler section. Some stores also will stock Dollar Tree Plus! 2.0 selections, which consist of items that cost more than a single dollar.
The remodels will build on previous plans for 1,000 new store openings in 2020, which were announced after an impressive Q3 2019 sales report. However, Dollar Tree’s Q4 results, while positive, weren’t as strong as the overall 2019 results: sales rose 1.8% to $6.3 billion, and same-store sales saw a modest 0.4% increase for the quarter. The changes were driven by healthy 1.5% same-store sales growth at Dollar Tree stores, but offset by a 0.8% sales decline at Family Dollar.
Additionally, the retailer may be off to a slow start in 2020 as tariffs and new clean fuel regulations weigh on its performance, and the company did not state how the COVID-19 coronavirus and its associated supply chain challenges may impact sales. However, Dollar Tree is forecasting continued success later in the year.
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“As we enter 2020, our teams are aligned, energized and focused,” said Gary Philbin, CEO of Dollar Tree in a statement. “While our first quarter outlook includes expected pressure from the incremental tariffs and promotional activity, we believe we are well-positioned to deliver improved sales, operating margin and earnings in the following three quarters and for full-year fiscal 2020.”
