Dollar Tree Analysis

Dollar Tree Analysis

Introduction

The purpose of this paper is to analyze the business strategy of “Dollar Tree Stores”. We will discuss its industry position and competitive edge on the competitors.

Company History

Dollar tree company was started about 50 years back when in 1953, K.R.Perry started a variety store of Ben Franklin in Norfolk, Virginia. In 1970, it was then converted into K&K Toys. The chain of these stores crossed 130 toy stores in Virginia. In 1991, K&K toys were sold to KB toys, and the name was changed to “Dollar Tree Stores”. The company went public in 1995 through NASDAQ. Dollar Bill$, Inc. and 98-Cent Clearance Centers were acquired by Dollar Tree in 1996 and 1998 respectively. Company also acquired Only $One Stores in 1999, Dollar Express in 2000, Greenback, Inc. in 2003, 138 Deal$ Stores in 2006 and 86 Canadian Dollar giant store in 2010.

Products

The company has different product lines: household, party supplies, health & beauty etc. In house hold they have different sections like kitchen and dining, home decor, cleaning, clothing, storage, art craft, pet supplies and food. In party supplies it offers a variety of decoration materials, health and beauty range covers cosmetics and personal care products. Office and school products have different type of stationery materials and toys range has indoor and outdoor toys. Floral products have fresh flowers and vases.

Management team

The management team of dollar tree includes Bob Sasser (President & CEO); Gary M.Philbin (COO), Kevin S.Wampler (CFO), James A.Gorry (General Counsel and Corporate Secretary) and Robert H. Rudman (Chief Merchandising Officer)

Mission

Dollar Tree, Inc. is a value driven and customer oriented variety store that operates at a 1$ price point. Company's mission is to generate profit, associates empowerment to share successes and rewards by dealing others in honest and considerate way.

Values

The corporate values of Dollar Tree, Inc. are attitude, commitment and judgement. Attitude of integrity, responsibility and courtesy; commitment of respect and honor for the company and self and judgment for doing things for a valid and just reason.

Analysis of Industry

Dollar Tree, Inc. belongs to services sector, and it falls into the discount, variety store industry. The major competitors of Dollar Tree, Inc. are Wall-Mart, Costco Wholesale Corporation & Target Corp. The overall industry capitalization is 2059.8 billion and company's capitalization is 10.8 billion, Industry avg. P/E ratio is 18.10 whereas the company has P/E ratio of 17.32, industry ROE% is 16.20 and Dollar Tree, Inc. has ROE% of 39.54, debt to equity ratio of the industry is 45.67% where as the company has 15.60. Industry's price to book value ratio is 4.19, and the company's ratio is 6.18, net profit margin of the company is 7.16% whereas industry resides at 2.60, price to free cash flow margin of the industry is -165.10 where as the company has 231.74.

Core Competencies

Target Particular Customers and Understand their Needs

Dollar Tree, Inc. has focused customer driven marketing strategy. The company targets its customer and focuses on their needs. Company is in the industry of discount and retail that is ...