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The money dance, dollar dance, or apron dance is an event at some wedding receptions in various cultures. During a money dance, male guests pay to dance briefly with the bride, and sometimes female guests pay to dance with the groom. The custom originated in Poland in the early 1900s in immigrant neighborhoods.
Sometimes guests are told that the money will be used for the bride and groom's honeymoon or to give them a little extra cash with which to set up housekeeping. I always thought that when the money dance was over, the bride kind of looked like a dollar tree.
Today I bought Dollar Tree (DLTR) at 41.98. I will sell it in 4 to 6 weeks at 48.37. Here’s why I like DLTR:
Look at this chart…it says go go go go go go go go go go go go:
DLTR has a lot of mo. The stock is up 41% in the last 52 weeks while the S&P 500 has only gone up 7%. All of this with a generously low forward PE of 12.5.
Discount retailers did very well at the height of the recession. High joblessness, lower incomes and reduced disposable income made discount retail vital for many consumers and was what consumers required in those trying times. The good news is that good habits die hard. It is getting faddy to be frugal. No more are there great stores such as Spags and Value Village. If you want to get your cheap stuff fix, you have to go to a dollar store.
In fact, Wal-Mart Stores is beginning to lose its grip on cash-strapped customers. Dollar Tree has seen traffic at their stores improve this year, while Wal-Mart's U.S. numbers have slipped. One reason for this is that DLTR stores are located where the customers are. These customers, who don’t want to spend money in the first place, aren’t going to get in the SUV and stock up on $500 of Wal Mart sales. They would rather stay local and spend $20 here or there at a Dollar Tree store. Why? Gasoline is expensive, that’s why.
The difference is that Dollar Tree has everyday low pricing at a convenient location. It’s like going out to your local main street general store without feeling guilty about spending $2 for a small jar of mustard. Of course these customers are going to spend the same amount of money for their stuff, but what they have found is that these customers would rather spend $75 once a week than $300 once a month. That way, they are buying what they need when they need it. Dollar Tree mostly has name brand stuff, so customers are spending less for things they perceive are high quality. It’s a great formula. The housing dive put pressure on rent prices, so land overhead at these stores is lower too.
There are a bunch of different retailers (Dollar General, Family Dollar, 99 cent stores) that follow this formula, but DLTR is the cheapest of the main names in the sector, but it consistently beats Wall Street's expectations and has an above-average long-term growth rate. Going forward, its growing number of stores and continuing innovation should drive the stock higher. Dollar Tree shares have been decent outperformers, beating both peers in the Dow Jones U.S. Specialty Retailers Index and the overall market year-to-date, as well as in the past one-, two- and five-year periods.
Here is a typical online review:
“I am a mother of two and a wife. As an at home my mom it is my responsibility to look after our budget. I like to try to find bargains and deals wherever I can to save money. I’ve went to many dollar stores over the years, but only one has really caught my heart and money. Unlike other dollar stores, Dollar Tree is a real dollar store. Yes that is right, nothing is over a dollar. I know at other stores like Family Dollar and Dollar General it’s hard to find anything for a dollar. At the Dollar tree store I buy all of my household products. They are really good for this, holding both name brand and generic items. When it comes to household cleaning I can purchase everything I need in one spot. This includes trash bags, cloths and sponges, dish soap, laundry detergent, wood cleaner, and all sorts of disinfectants. It’s great because I can use the same products I see on TV for a considerably lower price.
Another thing I like about the dollar tree is that it also contains anything you need for a baby excluding diapers. It would be great to get a pack of diapers for a dollar, but that is probably never going to happen. I however, can purchase my babies wipes, soap, lotion, powder, bottles, cups, baby spoons and even clothes. It’s really good to know that I don’t ever have to worry about not being gable to afford all of my little ones needs. They also sell food in the dollar tree, but mostly only dry foods. You can get a three liter of soda for a dollar or even boxes of cereal. Some of there generic food items don’t taste as good as name brands, so I tend to stay away from the canned foods. One time I tried there clam chowder and beef stew. They were both watered down and had virtually no substance or flavor. The things I do like to buy are pasta, cake and cookie mixes as well as canned vegetables and bread. They always have fresh sunbeam bread for a dollar. This is hard to find anywhere else, so I try to take advantage of it.”
Get the idea?
Middle-income consumers are still trying to right size their finances and reduce some of their debt and household inventory so they are squeezing that penny tight and making it cry. Consumers are working off of clutter free just in time inventory in their households. Dollar Tree stores are offering value at the low end, and at moderate prices. As Americans have faced economic challenges in recent years, they've learned a lot about value shopping. Dollar Tree now has freezers and coolers in almost half of its 3800 stores which means that grocery shopping is taking place here as well. If people make Dollar Tree a habitual stop for groceries (something they need weekly) it is likely they will make supplemental purchases of non food items as well. The company firmly believes that things they sell for less than a buck are typically sold for higher prices elsewhere.
How do they do it? They usually have a selection of closeouts, manufacturer overruns, and other one off inventory acquisitions that are priced way below market. So sometimes the margins of the day to day stuff people buy is subsidized by these once in a while super cheap inventory items.
On June 21, Dollar Tree announced it would buy back $500 million worth of its own shares. That means management is more bullish on their stock than the market is. This almost always ends well for shareholders. So what kind of earnings ARE we talking about?
DLTR has shown positive sales & earnings growth for each of the last 8 quarters. Sales growth has been in double digits. Last quarter, DLTR reported its results for the quarter ended May 1, 2010. Consolidated net sales for the first quarter were $1.35 billion, a 12.6% increase compared to $1.20 billion reported for the quarter ended May 2, 2009. Comparable store sales increased 6.5%, on top of a 9.2% increase for the first quarter 2009.
Earnings per diluted share for the first quarter were $0.73, including a non-recurring, non-cash charge of $26.3 million, or $0.19 per diluted share, relating to the Company's previously announced retail inventory change. Absent this charge, diluted earnings per share were $0.92, an increase of 39.4% compared to the $0.66 earnings per diluted share reported for the first quarter 2009.
Operating margin for the quarter was 7.6%, including the aforementioned non-recurring, non-cash charge, which amounted to 190 basis points of gross margin. Excluding the charge, operating margin was 9.5%, a 140 basis point improvement from the 8.1% operating margin in the first quarter 2009.
The Company continues to grow. During the first quarter, Dollar Tree opened 74 stores, closed 6 stores, and expanded or relocated 34 stores. Retail selling square footage increased 6.5% compared to a year ago, to 33.0 million square feet.
The Company estimates sales for the second quarter of 2010 to be in the range of $1.32 billion to $1.36 billion, based on low to mid single digit positive comparable store sales. Diluted earnings per share are estimated to be in the range of $0.77 to $0.85.
Full year sales are now estimated to be in the range of $5.67 billion to $5.80 billion and diluted earnings per share are expected to be $4.10 to $4.31, including the impact of the non-cash, non-recurring charge in the first quarter. Excluding the charge, diluted earnings per share for the full year 2010 are expected to be $4.29 to $4.50.
DLTR plans to open up 220 stores next year. If each store has a business model that makes money, all of these new stores will contribute directly to revenue and earnings growth.
The Price / Book value is 3.75 compared to 4.09 in this industry group. Return on Assets is 16% compared to 9% in the rest of this group. Return on Equity is 25% compared to industry average of 15%. ANAL-ysts think that DLTR will make $2.97 EPS this year on revenues of $5.78 billion. That’s a howl. Thurston Howell would even howl. With the trend in earnings and revenue growth accelerating, $$$MR. MARKET$$$ sees revenues of $6.1 billion which will generate earnings of $3.05/share. If you take these earnings and multiply by today’s PE of 17.3, you get a share price of $52.77 which is well past my sell target. So there you go.
What does the boss have to say?
"I am pleased with the continued momentum in our business," President and CEO Bob Sasser said. "Both traffic and average ticket increased during the quarter driving sustained growth in sales and earnings. Leading categories in the first quarter included health and beauty care products, food, household consumables, and party goods."
He doesn’t say much. But why should he? Talk is cheap. So is Dollar Tree.
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
Please tell me what you think of this write up.
Sometimes guests are told that the money will be used for the bride and groom's honeymoon or to give them a little extra cash with which to set up housekeeping. I always thought that when the money dance was over, the bride kind of looked like a dollar tree.
Today I bought Dollar Tree (DLTR) at 41.98. I will sell it in 4 to 6 weeks at 48.37. Here’s why I like DLTR:
Look at this chart…it says go go go go go go go go go go go go:
DLTR has a lot of mo. The stock is up 41% in the last 52 weeks while the S&P 500 has only gone up 7%. All of this with a generously low forward PE of 12.5.
Discount retailers did very well at the height of the recession. High joblessness, lower incomes and reduced disposable income made discount retail vital for many consumers and was what consumers required in those trying times. The good news is that good habits die hard. It is getting faddy to be frugal. No more are there great stores such as Spags and Value Village. If you want to get your cheap stuff fix, you have to go to a dollar store.
In fact, Wal-Mart Stores is beginning to lose its grip on cash-strapped customers. Dollar Tree has seen traffic at their stores improve this year, while Wal-Mart's U.S. numbers have slipped. One reason for this is that DLTR stores are located where the customers are. These customers, who don’t want to spend money in the first place, aren’t going to get in the SUV and stock up on $500 of Wal Mart sales. They would rather stay local and spend $20 here or there at a Dollar Tree store. Why? Gasoline is expensive, that’s why.
The difference is that Dollar Tree has everyday low pricing at a convenient location. It’s like going out to your local main street general store without feeling guilty about spending $2 for a small jar of mustard. Of course these customers are going to spend the same amount of money for their stuff, but what they have found is that these customers would rather spend $75 once a week than $300 once a month. That way, they are buying what they need when they need it. Dollar Tree mostly has name brand stuff, so customers are spending less for things they perceive are high quality. It’s a great formula. The housing dive put pressure on rent prices, so land overhead at these stores is lower too.
There are a bunch of different retailers (Dollar General, Family Dollar, 99 cent stores) that follow this formula, but DLTR is the cheapest of the main names in the sector, but it consistently beats Wall Street's expectations and has an above-average long-term growth rate. Going forward, its growing number of stores and continuing innovation should drive the stock higher. Dollar Tree shares have been decent outperformers, beating both peers in the Dow Jones U.S. Specialty Retailers Index and the overall market year-to-date, as well as in the past one-, two- and five-year periods.
Here is a typical online review:
“I am a mother of two and a wife. As an at home my mom it is my responsibility to look after our budget. I like to try to find bargains and deals wherever I can to save money. I’ve went to many dollar stores over the years, but only one has really caught my heart and money. Unlike other dollar stores, Dollar Tree is a real dollar store. Yes that is right, nothing is over a dollar. I know at other stores like Family Dollar and Dollar General it’s hard to find anything for a dollar. At the Dollar tree store I buy all of my household products. They are really good for this, holding both name brand and generic items. When it comes to household cleaning I can purchase everything I need in one spot. This includes trash bags, cloths and sponges, dish soap, laundry detergent, wood cleaner, and all sorts of disinfectants. It’s great because I can use the same products I see on TV for a considerably lower price.
Another thing I like about the dollar tree is that it also contains anything you need for a baby excluding diapers. It would be great to get a pack of diapers for a dollar, but that is probably never going to happen. I however, can purchase my babies wipes, soap, lotion, powder, bottles, cups, baby spoons and even clothes. It’s really good to know that I don’t ever have to worry about not being gable to afford all of my little ones needs. They also sell food in the dollar tree, but mostly only dry foods. You can get a three liter of soda for a dollar or even boxes of cereal. Some of there generic food items don’t taste as good as name brands, so I tend to stay away from the canned foods. One time I tried there clam chowder and beef stew. They were both watered down and had virtually no substance or flavor. The things I do like to buy are pasta, cake and cookie mixes as well as canned vegetables and bread. They always have fresh sunbeam bread for a dollar. This is hard to find anywhere else, so I try to take advantage of it.”
Get the idea?
Middle-income consumers are still trying to right size their finances and reduce some of their debt and household inventory so they are squeezing that penny tight and making it cry. Consumers are working off of clutter free just in time inventory in their households. Dollar Tree stores are offering value at the low end, and at moderate prices. As Americans have faced economic challenges in recent years, they've learned a lot about value shopping. Dollar Tree now has freezers and coolers in almost half of its 3800 stores which means that grocery shopping is taking place here as well. If people make Dollar Tree a habitual stop for groceries (something they need weekly) it is likely they will make supplemental purchases of non food items as well. The company firmly believes that things they sell for less than a buck are typically sold for higher prices elsewhere.
How do they do it? They usually have a selection of closeouts, manufacturer overruns, and other one off inventory acquisitions that are priced way below market. So sometimes the margins of the day to day stuff people buy is subsidized by these once in a while super cheap inventory items.
On June 21, Dollar Tree announced it would buy back $500 million worth of its own shares. That means management is more bullish on their stock than the market is. This almost always ends well for shareholders. So what kind of earnings ARE we talking about?
DLTR has shown positive sales & earnings growth for each of the last 8 quarters. Sales growth has been in double digits. Last quarter, DLTR reported its results for the quarter ended May 1, 2010. Consolidated net sales for the first quarter were $1.35 billion, a 12.6% increase compared to $1.20 billion reported for the quarter ended May 2, 2009. Comparable store sales increased 6.5%, on top of a 9.2% increase for the first quarter 2009.
Earnings per diluted share for the first quarter were $0.73, including a non-recurring, non-cash charge of $26.3 million, or $0.19 per diluted share, relating to the Company's previously announced retail inventory change. Absent this charge, diluted earnings per share were $0.92, an increase of 39.4% compared to the $0.66 earnings per diluted share reported for the first quarter 2009.
Operating margin for the quarter was 7.6%, including the aforementioned non-recurring, non-cash charge, which amounted to 190 basis points of gross margin. Excluding the charge, operating margin was 9.5%, a 140 basis point improvement from the 8.1% operating margin in the first quarter 2009.
The Company continues to grow. During the first quarter, Dollar Tree opened 74 stores, closed 6 stores, and expanded or relocated 34 stores. Retail selling square footage increased 6.5% compared to a year ago, to 33.0 million square feet.
The Company estimates sales for the second quarter of 2010 to be in the range of $1.32 billion to $1.36 billion, based on low to mid single digit positive comparable store sales. Diluted earnings per share are estimated to be in the range of $0.77 to $0.85.
Full year sales are now estimated to be in the range of $5.67 billion to $5.80 billion and diluted earnings per share are expected to be $4.10 to $4.31, including the impact of the non-cash, non-recurring charge in the first quarter. Excluding the charge, diluted earnings per share for the full year 2010 are expected to be $4.29 to $4.50.
DLTR plans to open up 220 stores next year. If each store has a business model that makes money, all of these new stores will contribute directly to revenue and earnings growth.
The Price / Book value is 3.75 compared to 4.09 in this industry group. Return on Assets is 16% compared to 9% in the rest of this group. Return on Equity is 25% compared to industry average of 15%. ANAL-ysts think that DLTR will make $2.97 EPS this year on revenues of $5.78 billion. That’s a howl. Thurston Howell would even howl. With the trend in earnings and revenue growth accelerating, $$$MR. MARKET$$$ sees revenues of $6.1 billion which will generate earnings of $3.05/share. If you take these earnings and multiply by today’s PE of 17.3, you get a share price of $52.77 which is well past my sell target. So there you go.
What does the boss have to say?
"I am pleased with the continued momentum in our business," President and CEO Bob Sasser said. "Both traffic and average ticket increased during the quarter driving sustained growth in sales and earnings. Leading categories in the first quarter included health and beauty care products, food, household consumables, and party goods."
He doesn’t say much. But why should he? Talk is cheap. So is Dollar Tree.
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
Please tell me what you think of this write up.
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