I added DLTR to our Best Idea Long list immediately following the blow up on the quarter. The more work my team and I do on this idea, the more convinced I am that there are far more ways to win than there are to lose with the stock at $85. There’s one roadblock, however – and it’s a big one. Management appears to either a) not get it, or b) not care. Let’s give these guys a little credit and front them with the premise that neither of those are true – but I think we can agree that there is a severe lack of any sense of urgency to both fixing Family Dollar, and in optimizing the core Dollar Tree concept. This leaves us with what I think is an opportunity that is otherwise extraordinarily difficult to find in public markets today.
What we need here is a playbook. The company certainly isn’t providing it, so we will. On Monday September 24th at 2pm we’ll be presenting a Black Book outlining the precise steps that need to be taken to get this company to accelerate productivity well above consensus expectations and get $7-$8 in EPS power to become part of the narrative. I’ll be clear about one thing…this cannot be chalked up to bad real estate at Family Dollar. That’s the easy bear case – and it’s wrong. We have the data, know the store locations, and are convinced that weak productivity is not a function of ‘broken stores’, but rather that the product that the company is trying to sell to consumers is merchandised, assorted, and priced wrong.
Timing is critical. Every day that passes without major change taking place to fix these stores is a day that Dollar General opens another box and puts on the pressure. The fixes that we’ll present next Monday won’t happen on their own. Management will either need to a) follow the book, b) come up with a better one, or c) get ready for a $65 stock. Ultimately, I think this situation is about as ripe as any for more active investors to partner with the management team/Board and enact the change that could make this a $150 stock.
Call Details
Day/Time: Monday September, 24th 2pm EDT
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Confirmation Number: 13683051
Live Video Link: CLICK HERE
