During Q4 2023, the company announced a comprehensive store portfolio optimization review, leading to the planned closure of approximately 970 underperforming Family Dollar stores and 30 Dollar Tree stores. The closures are expected to occur in fiscal 2024.

Dollar Tree is expanding its multi-price product assortment, which now includes $3, $4, and $5 frozen and refrigerated products, as well as a wide assortment of other consumable and discretionary products. This strategy is aimed at providing greater value and increasing customer traffic.

Family Dollar is implementing store design initiatives, including H2.5, larger rural stores, and XSB (Extra Small Box) formats, to tailor space and assortment to local demographics. As of February 3, 2024, there are more than 1,890 stores across these three formats.

Dollar Tree is investing in its talent, including initiatives to provide competitive pay and benefits, enhanced training, and attractive career opportunities. These efforts are intended to improve store standards, efficiencies, and the customer experience.

The company is enhancing its distribution and transportation network, including investments in its trucking fleet, transportation management systems, and a new distribution center with enhanced automation. Significant investments are also underway to improve climate control conditions in distribution centers.

Dollar Tree is continuing its multi-year plan for significant investment in technology across its business, including its store network and point-of-sale, merchandising, and supply chain. The company believes these improvements can promote operational efficiencies and deliver an elevated customer experience.

Future increases in costs such as the cost of merchandise, wage and benefit costs, ocean shipping rates, domestic freight costs, fuel and energy costs, duties and tariffs, and store occupancy costs would reduce our profitability.

Our success is dependent on our ability to import or transport merchandise to our distribution centers and store, pick and ship merchandise to our stores in a safe, timely and cost-effective manner, and we are relying on a number of initiatives to improve upon our logistics execution, including new management systems.

A deterioration in economic conditions could reduce consumer spending or cause customers to shift their spending to products we either do not sell or do not sell as profitably. Adverse economic conditions such as a recession could disrupt consumer spending and significantly reduce our sales, decrease our inventory turnover, cause greater markdowns, or reduce our profitability due to lower margins.

We operate in the discount retail sector, which is currently and is expected to continue to be highly competitive with respect to price, store location, merchandise quality, assortment and presentation, and customer service, including merchandise delivery and checkout options.

Our competitors include dollar stores, mass merchandisers, online retailers, discount retailers, drug stores, convenience stores, independently-operated discount stores, grocery stores and a wide variety of other retailers.

We believe we differentiate ourselves from other retailers by providing high-value, high-quality, low-cost merchandise in attractively-designed stores that are conveniently located.

Shrink costs increased approximately 55 basis points primarily due to unfavorable physical inventory results.

Distribution costs increased approximately 40 basis points primarily due to a higher amount of costs capitalized during the prior year resulting from increasing inventory levels during that period, and higher distribution center payroll costs recognized during the current year in the Dollar Tree segment.

Occupancy costs decreased approximately 30 basis points primarily due to leverage from the comparable store net sales increase and leverage from the 53rd week of sales in the current year.

To support the growth of our business, we are making substantial investments in our information technology systems. Transitioning to these new or upgraded processes and systems requires significant capital investments and personnel resources.

As part of this technology transformation, we plan to continue growing our information security team, enhance our cyber response plan and data privacy policies and evolve our procedures around third-party risk management.

We are dependent on our management's ability to oversee these initiatives effectively and implement them successfully. If our estimates and assumptions about our initiatives are incorrect, or if we miscalculate the resources or time, we need to complete them or fail to execute on them effectively, our pursuit of these initiatives may increase our costs and reduce our margins and profitability.

We anticipate that substantially all of our cash flow from operations in the foreseeable future will be retained for the development and expansion of our business, the repayment of indebtedness and, as authorized by our Board of Directors, the repurchase of stock.

We do not anticipate paying cash dividends on our common stock in fiscal 2024.

At February 3, 2024, we had $1.35 billion remaining under our existing $2.5 billion Board repurchase authorization.

Our business is subject to evolving disclosure requirements and expectations with respect to environmental, social and governance matters that could expose us to numerous risks.

We risk damage to our brand and reputation, including risk to our plans for profitable growth, if we fail to act responsibly in a number of areas, such as worker safety and welfare, diversity and inclusion, environmental stewardship, support for local communities, and corporate governance and transparency.

Adverse incidents could impact the value of our brand, the cost of our operations and relationships with associates, customers or investors, all of which could adversely affect our business and results.

We operate in the discount retail sector, which is currently and is expected to continue to be highly competitive with respect to price, store location, merchandise quality, assortment and presentation, and customer service, including merchandise delivery and checkout options.

A deterioration in economic conditions could reduce consumer spending or cause customers to shift their spending to products we either do not sell or do not sell as profitably.

Adverse economic conditions such as a recession could disrupt consumer spending and significantly reduce our sales, decrease our inventory turnover, cause greater markdowns, or reduce our profitability due to lower margins.