Dollar store chain Dollar Tree, Inc. (NASDAQ: DLTR) has spent $1 billion to improve its Family Dollar brand and the company now has a game plan to generate sustainable growth, CEO Gary Philbin told CNBC's Jim Cramer Wednesday evening.
Family Dollar contributed around $2 billion of cash flow to its parent company based on the most recent earnings report. The retailer's plan to continue growing the chain, the CEO told Cramer, includes a combination of getting the "basics right" by making stores look nice with a compelling product assortment. But most important is to "inject some Family Dollar wow items."
Why It's Important
Dollar Tree plans on bringing this "wow" factor to 1,000 already renovated or soon-to-be-renovated stores, Philbin said. On the other hand, the company will continue closing underperforming locations, which may total as many as 400 stores, he said.
"We invest in stores, we are a growth company — we build stores," he said. "We are putting a lot into our renovated Family Dollar stores."
Part of the company's strategy also includes rebranding Family Dollar stores to the core Dollar Tree brand. The move is paying off, as an average store is seeing an increase in foot traffic and an uptick in average transaction size, Philbin said.
The company will explore moving beyond the $1 price mark, although it will be careful to only sell products that "stick to the brand," the CEO Said.
"Dollar Tree is known for a wow first and foremost in the dollar price point and what can we add to that," he said. "It's more footsteps for our customers into a Family Dollar."
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Photo by Michael Rivera/Wikimedia.
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