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Dollar Tree Readies Warehouse Expansion in Georgia

CHESAPEAKE, Va. — Dollar Tree is close to completing an expansion of a Georgia warehouse that would allow the discounter to further grow its business in the Southeast.

The $19.5 million project to expand Dollar Tree's Savannah, Ga., warehouse to 1 million square feet, from 600,000 square feet, is on track for completion during the current quarter, Bob Sasser, chief executive officer of Dollar Tree, said in an earnings call last week. Completion of the project will allow Dollar Tree's infrastructure to support up to $8 billion in annual sales without any additional investment, he said. The chain had $5.2 billion in sales in fiscal 2010.

For the 2011 fiscal second quarter, Dollar Tree said net earnings improved by 21.7% to $94.9 million on $1.5 billion in sales. Sales improved 11.9% overall, and comparable-store sales were up by 4.7% in the quarter, which ended July 31.

Sasser said food was among the best-performing categories during the quarter, as shoppers looked to fulfill basic needs. However, he emphasized Dollar Tree would work to retain its edge as a variety store, despite an ongoing expansion of frozen food and coolers to the 4,200-store network.

“We are not a grocery store. We are not now, we have never been and will never be as long as I have anything top do with it,” Sasser told analysts in a conference call.

“[But] as long as the economy stays tough, [with] record high employment and record high fuel prices, they're going to want more of that [food], and they are looking for us to provide that to them.”

Dollar Tree, which also operates Dollar Giant in Canada and the Deal$ chain of multi-price discount stores, said the pace of sales would likely slow in the third quarter as compared with last year, when comps improved by 8.7%. Margins improved 10 basis points to 35.2% of sales.

For the six-month period, sales of $3.1 billion increased 13.1%.

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