CHESAPEAKE, Va. — Dollar Tree Inc. sees a new format that combines features of its two brands as offering significant growth potential.

The format brings together Family Dollar’s value and assortment with Dollar Tree’s “thrill of the hunt” and fixed price point — creating a new strategic store format targeted for small towns and rural communities with populations of 3,000 to 4,000. These are markets where the company would traditionally not open a stand-alone Dollar Tree store, although it does operate Family Dollar stores in those markets.

The company opened its first combination store in late 2019, followed by two additional test stores in early 2020. After analyzing the store’s performance and customer feedback, Dollar Tree refined the concept further, and opened an additional 32 such stores in the second half of 2020. It currently operates nearly 50 combination stores.

Compared to other Family Dollar stores located in small markets, the combination stores are delivering a same-store sales lift of greater than 20% on average. The combination stores are more productive, delivering higher gross margins, and are better leveraging store expenses. H2 stores and combination stores will both be part of the Family Dollar new store and renovation strategy moving forward.

Dollar Tree president and chief executive officer Michael Witynski mentioned the format in his discussion of fourth quarter results. “I am very pleased with the team’s operating performance for the fourth quarter, highlighted by a solid same-store sales increase, improved gross margin and expense leverage,” he said. “Furthermore, Dollar Tree has completed the rollout of the expanded Crafter’s Square assortment to all U.S. stores and has begun the expansion of our Dollar Tree Plus! initiative to a total of 500 stores, as announced last quarter. At Family Dollar, we have partnered nationally with Instacart, are continuing to see strong results from our H2 stores, and we are thrilled to introduce a new combination store format that performed extremely well in nearly 50 small towns and rural communities during fiscal 2020.”

Dollar Tree reported that consolidated net sales totaled $6.77 billion for the fiscal fourth quarter ended January 30, up 7.2% compared to the prior-year ­period. Same-store sales for Family Dollar increased 8.1%. Dollar Tree same-store sales increased 2.4%.