COVID-19 is driving increased traffic in retailer's stores

CHESAPEAKE, Va. — Dollar Tree Inc. has seen a surge in store traffic and sales as consumers stock up in response to the COVID-19 pandemic, but Easter holiday business is being hurt by the crisis.

The details were part of a business update the company issued on Tuesday about impacts related to the novel coronavirus.

In March, directly related to COVID-19 concerns, Dollar Tree and Family Dollar stores began to experience a material pick-up in store traffic and sales related to essential products, including cleaning supplies and sanitizer, household products, paper goods, food and over-the-counter medicine.

“Customers rely on Dollar Tree and Family Dollar as an essential retailer for their daily shopping needs. Understandably, they are very concerned about the recent global spread of the coronavirus. Our stores experienced an unprecedented spike in demand for certain products,” Dollar Tree CEO Gary Philbin said in a statement. “Our efforts have been focused on continuing to protect the health and safety of our associates and customers, and to effectively serve customers during their time of need.”

On March 18 Dollar Tree announced that it was closing all stores at 8:00 p.m. to give its store teams adequate time to exercise enhanced cleaning protocols and to replenish store shelves. The next day it announced plans to hire 25,000 more people to work in its stores and distribution centers, and on March 25 it said it would reward hourly-paid store and distribution centers with an estimated $30 million in wage premiums for at least a four-week period in recognition of their hard work. The company also said it would be dedicating the first operating hour each morning in all 15,000-plus stores to serving at-risk customers.

Dollar Tree said it is taking a number of precautionary steps to protect its customers and employees. Those steps include:

• Communicating and adhering to Centers for Disease Control and Prevention (CDC) recommendations.
• Equipping stores, distribution centers and its store support center with necessary supplies for enhanced cleaning protocol.
• Activating its Business Response Team to meet daily to communicate, assess and address potential exposure throughout the organization.
• Eliminating all non-essential air travel; utilizing technology options for all large group meetings; prohibiting external visitors access to its store support center.
• Enabling the majority of its support teams to work remotely.

Dollar Tree reported that quarter-to-date same-store sales were up 7.1% for Dollar Tree and up 14.4% for Family Dollar. Sales have moderated more recently, though, as the company enters the peak of the Easter selling season. For the seven days ended March 29, Dollar Tree recorded a same-store sales decline 19.4% while Family Dollar had a same-store sales increase of 8.8%. Sales of household consumables and food remained strong in both banners.

The company’s first quarter will end on May 2 and it will report earnings on May 28. Given the uncertainty resulting from the impact of COVID-19, Dollar Tree is withdrawing its outlook for the first quarter and the fiscal year. The company said it is also is in the process of reassessing its full-year fiscal 2020 plans and initiatives. All Family Dollar H2 renovations and Dollar Tree Snack Zone installations have been suspended through at least April 27, the company said.