Dollar Tree switches to delivery, in-store pickup
CHESAPEAKE — As more people have been shopping online to avoid going inside stores as a result of the COVID-19 pandemic, Dollar Tree and its other store brand, Family Dollar, have begun trying out delivery and in-store pickup for online orders.
On Tuesday, new Dollar Tree CEO Mike Witynski told analysts during a call to report the company’s positive third-quarter earnings that it had started testing deliveries via Instacart and Shipt as well as online order pickup in the past few months and the experiment was still “really early.”
An internet search on Instacart showed deliveries were available in some local ZIP codes from Family Dollar, with products selling for $1.19 each. It wasn’t immediately clear how widely available in-store pickup and Shipt deliveries were.
There were 7,741 Dollar Tree stores and 7,865 Family
Dollar stores across 48 states and Canada as of Oct. 31.
Dollar Tree, which bought Family Dollar in 2015, has tended to take as much as two years in testing new store features or operations in a small number of locations before growing. Asked by a stock analyst Tuesday why it had taken the company so long to expand a plan to add different priced items inside Dollar Tree stores if it appeared to be a success so far, Witynski defended the pace, saying, “We want to make sure it’s right and aligned.”
The company announced an initiative to charge more than $1 for some items at Dollar Tree in March 2019,
starting with more than 100 stores in the southwest carrying a selection of products for $3 and $5. The higher-priced items will be in 500 stores early next year, the company said.
It also took more than 18 months to expand its Crafter’s Square section inside Dollar Tree locations from just three or four stores to 2,400 this year. The successful feature won’t be rolled out to the remaining Dollar Tree stores until next year.
The discount retailer reported a $330 million profit on $6.18 billion in sales in the three months ending Oct. 31, or $1.39 per diluted share, up from $1.08 per share or nearly 29% the year prior.
Same-store sales were up at both of its store brands, year-over-year, increasing 6.4% at Family Dollar (on top of a 2.3% increase a year ago) and 4% at Dollar Tree, the strongest margin in more than 2 years.
The trend has carried for the nine months of the company’s fiscal year so far, with same-store sales at Family Dollar growing by 11.2% over the three quarters and at Dollar Tree, growth of 2.1%.
With three months left, including the lucrative holiday months, the Chesapeake-based company’s profit so far has risen 19.2% to $839.1 million compared with a year ago, on sales of $18.74 billion.
The company said Tuesday that it had spent $10.9 million on pandemic-related payroll costs during the third quarter. After paying its employees a $2-per-hour premium beginning March 8 for working during the COVID-19 pandemic, the company stopped doing so on Aug. 29.