Dollar Tree Discount Retailer Inc.
is trying to strengthen its supply chain to accommodate its ambitious expansion plans.
The company plans to spend more to improve its supply chain as it increases its use of data analytics and automation to get more goods more efficiently and quickly to more than 16,000 stores. Dollar Tree and Family Dollar, as well as about 590 other stores. plans to open this year.
A supply chain upgrade is also imminent as Dollar Tree resets its pricing strategy for consumers, with plans to roll out $3 and $5 listed items to more stores later. when it raised the multi-item pricing limit for a single quarter last year to $1.25. CEO Michael Witynski said he wanted to accelerate the introduction of higher-priced products, but deliveries ordered nine to 12 months ago have been delayed due to supply chain bottlenecks.
“The supply chain is really driving our pace right now,” Mr. Witynski said during an earnings conference call on Thursday.
Dollar Tree’s low prices make it particularly vulnerable to the soaring supply chain costs that plagued US retailers last year, prompting the company to raise prices on many items by more than $1.
Retailer Chesapeake, Va., was also impacted by the sudden high volume of containers being hit by trans-Pacific shipping routes amid stiff competition for space. That forced the company to secure points on charter ships at a higher cost and look for suppliers using other distribution channels.
Dollar Tree appears to have made progress in its import supply chain since last year, when inventories of $4.8 billion worth of goods rose 33% in the first quarter from a year earlier.
The company has been insulated from changes in purchasing patterns that have dampened sales at major retailers like Target. Corp.
and Walmart Inc.
when shoppers return to certain items because of inflation. Dollar Tree’s consolidated net sales were $6.9 billion in the first quarter, up 6.5% from a year earlier.
Dollar Tree didn’t say how much it would add to capital spending after growing to $253.4 million in the first quarter, up 13% from a year earlier, but the retailer said supply chain improvements will be the focus of investment. Earlier this month, the company said it had hired John Flanigan, a former supply chain manager for rival Dollar General. Corp.
as its supply chain manager.
“This is the ideal time to invest in our future.
Dollar Tree executives said they expected to continue to grapple with shortages of some items, such as helium for balloons. They are also being squeezed by soaring fuel and energy prices in part due to Russia’s invasion of Ukraine.
Executives say the retailer has also contracted with ocean carriers for more space than needed for 2022 in the event their containers fail later in the year and that the company still relies on the carriers. chartered ship to transport some of its cargo.
“We anticipate that we will continue to experience uncertainty related to inflation, global supply chains, and geopolitical factors,” Chief Financial Officer Kevin Wampler said during today’s earnings call. Thursday.
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https://www.wsj.com/articles/dollar-tree-targets-speed-productivity-in-supply-chain-upgrades-11653597261?mod=pls_whats_news_us_business_f Dollar Tree Targets Speed, Productivity in Supply Chain Upgrades