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Dollar Tree continues to deliver despite 2.6% profit decline in Q2

BY Vivian Gomez

CHESAPEAKE, Va. — Dollar Tree delivered its 26th consecutive quarter of positive comparable store sales growth in second-quarter 2014, but profit declined 2.6% thanks to increased freight costs and investments in higher-value products.

Consolidated comparable-store sales increased 4.5% on a constant currency basis. Adjusted for the impact of Canadian currency fluctuations, the comparable store sales increase was 4.4%. Consolidated net sales increased 9.5% to $2.03 billion from $1.85 billion in the prior year’s second quarter.

Gross profit in the quarter increased 7% to $694.1 million from $648.7 million in the prior year’s second quarter.

Net income, compared to the prior year’s second quarter, including acquisition-related costs, decreased approximately $3.2 million to $121.5 million, and diluted earnings per share increased by 5.4% to $0.59. Excluding acquisition-related costs, net income increased approximately $1.4 million to $126.1 million and diluted earnings per share increased 8.9% to $0.61.

“I am very pleased with our second quarter results,” CEO Bob Sasser said. “Expanded assortments of high-value product contributed to our strongest quarterly comparable store sales performance in two years. Pet supplies, hardware, household products, food, electronics and party goods all performed well in the quarter. Our 4.5% comp sales resulted from increases in both customer traffic and average ticket. I am particularly proud of our store associates. Our store teams continue to execute at a high level as the Company delivered its 26th consecutive quarter of positive comparable store sales growth. In challenging macro environments, consumers are increasingly relying on Dollar Tree to be part of the solution in managing their family’s budget. Our stores are well-stocked with incredible values and we are prepared for the fall selling season.”

The company opened 90 stores, expanded or relocated 20 stores and closed 4 stores during the quarter. Retail selling square footage increased to 44.8 million sq. ft., a 6.8% increase compared to the prior year.

Looking ahead, the company estimates sales for the third quarter to range from $2.02 billion to $2.07 billion, based on low- to mid-single digit positive comparable store sales. Diluted earnings per share are estimated to range from $0.61 to $0.66, excluding acquisition-related costs.

Full-year 2014 sales are now estimated to range from $8.44 billion to $8.55 billion. This estimate is based on a range of low- to low-mid-single digit positive comparable store sales. Diluted earnings per share, which includes $0.02 per share of second quarter acquisition-related costs, are expected to range from $2.94 to $3.06, excluding third and fourth quarter acquisition-related costs.

Early this week, Dollar General bid $78.50 for Family Dollar Monday morning in a $9.7 billion deal that exceeds the $74.50 a share Dollar Tree offered for Family Dollar on July 28. The deal would create a small format powerhouse with nearly 20,000 stores in 46 states and sales of more than $28 billion. In a statement released this morning, Family Dollar’s board of directors has unanimously rejected the non-binding proposal made by Dollar General on the basis of antitrust regulatory considerations. The Family Dollar board also unanimously reaffirmed its recommendation in support of the merger agreement with Dollar Tree.

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Brandperx augments point-of-care marketing solution with launch of Patientperx

BY Michael Johnsen

NEW ALBANY, Ohio — Brandperx in November will be launching its Patientperx platform, a diseases-state specific health resource that's being published in partnership with Reader's Digest. "We're going to have a diabetic edition coming out in November that will be handed to 250,000 diabetic patients by their trusted endocrinologist," noted Jeff Garshon, VP sales Brandperx. "It's going to have about 40 pages of information about how to take care of your condition if you're a diabetic."
 
Patientperx was founded with the aim to empower people with healthy lifestyle choices across a multitude of disease states, make those choices more affordable and provide perks on the road to good health, the company stated. 
 
With a healthcare practitioner reach of 217,000 professionals, Brandperx is already successfully connecting brands to patients at the point of care."We lead patients to the path to purchase," Shauna Garshon, president Brandperx, told DSN. "Through our platforms you can connect with the patient inside the doctor's office setting … in the exam room," she said. 
 
Brandperx features a sampling platform called Scriptbags, what the company references as "a patient activation starter kit," where doctors opt-in to provide material like product samples, coupons and educational pamphlets to patients regarding specific products. "Scriptbags was developed as a simple, easy-to-dispense way to discharge a patient with information, a product sample or a co-pay card for a particular product," commented Jeff Garshon.
 
"It's a much more powerful message that's being handed directly to the patient," Shauna Garshon said. And the conversion rate is relatively high, she added, as many of those patients are headed to their pharmacy to fill their prescriptions. 
 
As part of the Scriptbag program, Brandperx' exclusive doctor network is polled on the current recommendations they are making in any particular area, informed about the attributes of a new or existing product and then provided an opt-in form to receive that particular Scriptbag. 
 
Doctors employ the Scriptbags program in their practice as a value add for their patients. "Our average physician lift [in product recommendations] for any of our programs is 52%," Jeff Garshon added. "In terms of consumer lift it varies based on a number of factors," he said. "Some companies have reported between 3% and 5% coupon redemption to us; we've had others that were higher than that."
 
Brandperx also has a program that can help manufacturers detail doctors called Rep in a Box. "Rep in a Box was developed out of a separate need [than Scriptbags]," Jeff Garshon said. "Some companies were most interested in delivering samples of their products to doctor's offices, typically prescription products that needed to remain in the sample closet." Based on the input from a focus group of 10,000 doctors, Brandperx developed a patent-pending system for the distribution of samples and their corresponding materials. 
 
However, typically one of the doctor's challenges in receiving prescription samples is where to put them and the corresponding materials. "Typically, it's not just a sample but a whole lot of collateral material to support that sample," Jeff Garshon said. "[Doctors] just didn't have a great way to store, organize and dispense those items," he said. "So Rep in a Box was created as a solution … for physicians to have immediate access to all of those materials where everything can be stored together in what we call a 'home base' system."
 
And it's a turnkey service. "We provide a service whereby we [detail doctors] for a company that maybe doesn't have detailers in certain markets of the country or doesn't have their own sales force," he said. "We'll work with the doctors who we've recruited into our network. We'll detail them on the product. We'll send the Rep in a Box to their office. We'll manage the inventory in it. And we'll oversee the entire process just as an external detailing force would."
 
In addition to the 217,000 doctors and nurse practitioners within Brandperx' reach, the company has developed a network of 30,000 veterinarians and dentists. "We continue to recruit additional healthcare professionals daily," Jeff Garshon said. 
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Walmart opens two Georgia clinics

BY Michael Johnsen

COLUMBUS, Ga. — Walmart will be opening two Walmart Care Clinics in Columbus, Ga., and in Carrollton, Ga., on Aug. 29, according to a report in the Columbus Ledger-Enquirer published Wednesday. 
 
"There's about a dozen locations that are part of the pilot program," Walmart spokeswoman Danit Marquardt told the Ledger-Enquirer. "We don't have a specific time identified for when it will go out of pilot mode" and be expanded.
 
Walmart currently has six primary care clinics in South Carolina and Texas. In addition to the two Georgia locaations, another four locations are slated to open by year-end, according to reports.
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