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Dollar Tree branches
out
by Virginia Business Staff
August 2003
CEO
Macon F. Brock Jr. says a dollar can still buy a lot
and he must be right. In June his Chesapeake-based Dollar
Tree Stores completed the $100 million purchase of the
96-store Greenbacks chain, based in Salt Lake City.
It is the latest grab in a buying spree that has pushed
the total number of Dollar Tree stores to 2,441 —
a whopping 45 percent increase in just three years.
That’s
still far behind Tennessee-based Dollar General, which
has 6,300 stores in 27 states. But Dollar Tree plans
to get even bigger, adding about 200 more stores this
year. “We’re going to just keep going,”
says Brock, 61.
The
Greenbacks stores are scattered across the Rocky Mountain
region — “the only part of the country we
didn’t have any presence in,” Brock says.
Now the company has stores in 47 states, up from 41.
Brock
co-founded the chain in 1986 and took it public in 1995.
It has a basic model — sell a variety of discount
merchandise such as household staples and seasonal merchandise
at a single price that impulse buyers can’t resist.
Some merchandise is close-out — “yesterday’s
hot items,” Brock says, such as Pokeman cards or
suntan lotion from an out-of-business supplier. “It’s
nothing for us to buy one or two million pieces,”
he says.
Dollar
Tree is like the old Woolworth’s. “There’s
nobody filling that niche,” Brock says. And the
dollar price is magic. “People like to go shopping.
It feels good,” he says. “For $10 you get
a whole stack of stuff. It really does work.”
Apparently
so. Dollar Tree’s sales for its most recent quarter
totaled $615.6 million, higher than expected and nearly
21 percent higher than the same quarter a year earlier.
Its stock price lately has soared as well, rising from
a 52-week low of $17.40 in March to above $34 in July.
Analysts like the company — nine of 13 rated it
a strong buy according to one tally.
Greenbacks
uses the single-price strategy, and is a good fit with
Dollar Tree for another reason — its stores are
bigger, averaging 11,500 square feet. Most Dollar Tree
stores are a few thousand square feet in size and crammed
in high-traffic strip malls near a grocery store or
a mass-merchandiser like Wal-Mart. Now, though, the
company is opening stand-alone stores that can run 10,000
square feet or more. “They tend to be destination
stores now,” Brock says.
Dollar
Tree picked up a new distribution center this year in
Oklahoma, and next year will open two more distribution
centers — one in Washington state near a major
seaport and a second near Chicago that will replace
a smaller facility. The company picked a distribution
center in Salt Lake City with the Greenbacks purchase.
Dollar
Tree’s roots in Hampton Roads are deep. Brock started
working for his father-in-law, K.R. Perry, at a Ben
Franklin store in 1969. From that store Perry launched
the K&K Toys chain, growing it to 136 stores before
selling it in 1991 to KB Toys.
After
that sale Brock and Perry’s son, J. Douglas Perry,
and a third cofounder, H. Ray Compton, launched Dollar
Tree.
Virginia
Business - August 2003
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