Dollar Tree Provides Update On Integration And Capital Allocation Plans

(RTTNews) - While reporting its third-quarter financial results on Thursday, Dollar Tree, Inc. (DLTR), an operator of discount variety stores, provided an update on its integration and capital allocation plans.

Dollar Tree noted that following the completion of the acquisition of Family Dollar in July 2015, it has made significant progress on integration. The company believes that Family Dollar will demonstrate its potential as the store optimization program and integration initiatives are implemented and gain traction throughout 2019.

As part of the integration process, Dollar Tree has implemented initiatives to establish a single foundation to improve efficiencies across the organization and support the growth of the Dollar Tree and Family Dollar brands.

According to Dollar Tree, significant company-wide integration achievements include implementing a shared services model across corporate support functions, introducing common technology platforms and improving logistic as well as supply chain efficiencies. The company expects to complete the consolidation by Fall 2019.

Dollar Tree also said it will accelerate its store optimization program, and currently expects to renovate a minimum of 1,000 Family Dollar stores in fiscal 2019.

The company also plans to open 350 new Dollar Tree and 200 new Family Dollar stores in fiscal 2019, as well as re-banner an additional 200 Family Dollar stores to Dollar Tree stores. The company will provide additional information related to the store optimization program at its investor day in 2019, which it is in the process of planning.

On account of the Family Dollar acquisition, Dollar Tree said it stopped repurchasing shares in order to allocate sufficient capital to reduce outstanding debt, invest to support the growth of Dollar Tree as well as Family Dollar, invest in initiatives to integrate Family Dollar, and improve store performance across the Family Dollar portfolio.

The company noted that since completing the acquisition, it has reduced its outstanding debt by about $3.5 billion through November 3, 2018.

As a result of its progress with integration and free cash flow in excess of investment needs, the company expects to reduce its variable rate outstanding debt.

The company has an existing $1.0 billion board authorization to repurchase shares and will continue to evaluate share repurchases in 2019.