This summary is based on the first quarter fiscal 2008 earnings call conducted by Dollar Tree, Inc. (DLTR: chart) on May 28, 2008.

Management:

Vice President Investor Relations: Tim Reid
President, Chief Executive Officer: Bob Sasser
Vice President, Controller: Katy Mallas

Key Investors Issues

- EPS were 48 cents per share compared to 38 cents per share last year.
- Net income was $43.6 million compared to $38.1 million a year earlier.
- Sales increased 7.8% to $1.05 billion from $975 million last year.

First Quarter Highlights

Earnings were 48 cents per share.

That represents a 26.3% increase over last year''s 38 cents per share. This increase was driven by a 50 basis point improvement in gross margin to 33.9% from 33.4% in the first quarter last year. Two main factors contributed to this performance improvement. First, the company had improved merchandise margin driven by continued improvements in sourcing. Second, shrink rate was lower than last year. This is the result of an intense focus for more than a year by Operations and Loss Prevention, including additional training and new procedures to minimize shrink.

Total sales were $1.051 billion, an increase of 7.8% over the first quarter of fiscal 2007.

Comparable store sales increased 2.1% on top of a 5.8% increase last year and a 4% increase the year before. Comparable store sales increase was the result of a 2% increase in traffic and a small increase in transaction size. These results were accomplished despite an earlier Easter, which cost about $15 to $20 million of lost volume compared to the fiscal 2007.

The company has continued expansion of frozen and refrigerated product to more stores, and added freezers and coolers to 84 Dollar Tree stores.

Party and seasonal businesses drove sales, energy and merchandise excitement throughout the quarter.

- The company opened 83 new stores and relocated and expanded another 24 stores grew total square footage about 8%. Targeted size range remains 10,000 to 12,000 square feet. Last year the company averaged squarely in the middle, around 11,000 square feet on new stores and the 2008 class is running about the same.

- The company ended the quarter with 3,474 stores and room to grow.
- The company plans to open 225 to 245 new Dollar Tree stores, 25 to 30 new Deals stores, and expand and remodel 90 to 100 stores this year.

SG&A expense was 27.3% of sales, an increase of 30 basis points from the first quarter last year.

This was driven by a planned increase in advertising, higher utility costs, and increased fees for debit and credit cards resulting from recent rollout of Visa credit cards and continued growth and penetration of debit cards in overall sales mix.

- Depreciation and amortization was $41.8 million, unchanged from last as a rate of sales. The company continues to expect depreciation of $160 to $165 million for the year, which, as a rate of sales, should be down about 20 to 30 basis points.
Operating margin was 6.6%, a 20 basis point improvement compared to the first quarter last year.
- The tax rate was 36% versus 37.2% in last year''s first quarter. The decrease is due to the recognition of certain tax benefits in accordance with FIN 48, which offset a reduction in tax-exempt interest income. The lower rate resulted in a benefit of approximately 1 cent per share compared to last year.

Cash balance approximated $84 million at the end of the first quarter of 2008 versus $189 million of cash and investments at the same point last year.

The company ended last year with $80 million of cash and investments reflecting more than $473 million of share repurchases in 2007 and no increase in long-term debt. The company decided to conserve cash in the first quarter of 2008 rather than buyback stock.

- Capital expenditures were $32.7 million versus $39.7 million in the first quarter last year. The majority of capital expenditures this year were for new stores, remodeled and relocated stores, and the addition of frozen and refrigerated product to 84 stores.
- Inventory grew by 2.8% on a per-store basis compared with the prior year period. This is principally due to planned increases in inventory to support second quarter promotions as well as increases in inventory to meet the stronger demand for basic consumable products. Inventory turns in were unchanged from last year, and the company would expect them to increase for the full year.