Shua| uan

1hls reporL ls publlshed for educaLlonal purposes only by

sLudenLs of Lhe !on M PunLsman School of 8uslness

Important disclosures appear at the back of this report

@|cker DL@ ecommendat|on no|d
r|ce 7966 r|ce @arget 829S


orninqs/5hore

,ar Iun Sept Dec ear ]L
at|o
2007A $023 $022 $023 $069 $139 126
2008A 032 028 032 077 169 173
2009A 044 042 030 101 237 131
2010L 049 061 073 127 310 197

n|gh||ghts

O u||et nead|ng Do||ar @ree Inc n|ts New S2 Week n|gh of 7S99 Sep 1S 2011
Do||ar @ree (NASDA DL@% h|t a new S2Week h|gh of 57S99 so far today Current|y the stock
|s up 5092 (123% to 57S68 on 247779 shares traded

O u||et nead|ng Do||ar @ree Inc Announces 5200 ,||||on Acce|erated Share epurchase
Aug 2S 2011
Do||ar @ree Inc announced that after market c|ose on August 24 2011 |t entered |nto an
agreement w|th I,organ Chase ank Nat|ona| Assoc|at|on to repurchase 5200 m||||on of |ts
common shares under a var|ab|e matur|ty acce|erated share repurchase program

O u||et nead|ng Do||ar @ree Inc eports Second uarter esu|ts and a|ses Gu|dance for the
Second na|f of 2011 Aug 18 2011
Larn|ngs per d||uted share for the second quarter were 5077 an |ncrease of 262
compared to the 5061 earn|ngs per d||uted share reported for the quarter ended Iu|y
31 2010



DoIIar Tree Inc.

ate: Sept 15
th
,
2011
















[Discount Stores(

arket ProfiIe
52 Week Pri ce Range
47.34-76.19
Average Daily Vol ume
1.61M
Bet a
0.23
Dividend Yield (Est imat ed)
0.00
Shares Out st andi ng
122.01M
Market Capi t ali zat i on
9.18B
nst i t ut i onal Holdings
91
nsider Holdings
3
Book Val ue per Share
$12.98
Debt t o Tot al Capi t al
94
Ret urn on Equit y
30
$0
$10
$20
$30
$40
$50
$60
$70
$80
DL@ Da||y Stock r|ce
IN 44S0 Student esearch eport
Date


2
Investment Summary

Cur hold recommendaLlon ls based on valuaLlon Powever our ouLlook for Lhe company ls poslLlve
glven whaL we see as lLs aLLracLlve value proposlLlon on consumables and seasonal merchandlse
caLegorles effecLlve lnvenLory and expense managemenL and sLrong cash flow generaLlon We also
Lhlnk uL18 ls galnlng new cusLomers and markeL share Lhrough boLh domesLlc and lnLernaLlonal
expanslon We look for Lhe company Lo make lnfrasLrucLure lnvesLmenLs ln l? 11 Lo supporL growLh of
lLs 88sLore uollar ClanL chaln ln Canada

We arrlve aL our 12monLh LargeL prlce of $8293 by applylng Lhe average of absoluLe value($7882)
and a forward /L mulLlple of 16x($7200) addlng a 10 premlum Lo uL18s elghLyear hlsLorlcal
average we see [usLlfled by Lhe companys growLh prospecLs ln Canada Lo our l? 12 LS esLlmaLe


5ootce yoboo floooce

5ootce yoboo floooce

S2Wk ange 58136 48S1 Do||ar @ree Inc n|ts New S2 Week n|gh of 8136 ct 1S 2011





IN 44S0 Student esearch
Date

3
us|ness Descr|pt|on


uollar 1ree SLores was lncorporaLed ln Lhe SLaLe of vlrglnla lL ls Lhe operaLor of dlscounL varleLy
sLores offerlng merchandlse aL Lhe flxed prlce of $100 AL !anuary 30 2010 lL operaLed approx
3806 dlscounL varleLy reLall sLores ApproxlmaLely 3630 of Lhese sLores sell subsLanLlally all lLems
for $100 or less SubsLanLlally all of Lhe remalnlng sLores operaLlng as ueal$ sell lLems for $100 or
less buL also sell lLems for more Lhan $1 lLs sLores operaLe under Lhe names of uollar 1ree ueal$
and uollar 8llls lL belleves lLs opLlmal sLore ls beLween approx 8000 and 10000 selllng square feeL
lLs 8uslness SLraLegy ls value Merchandlse Cfferlng Mlx of 8aslc varleLy and Seasonal
Merchandlse CusLomer aymenL MeLhods ConvenlenL LocaLlons and SLore Slze roflLable SLores
wlLh SLrong Cash llow CosL ConLrol and lnformaLlon SysLems 1he reLall lndusLry ls hlghly
compeLlLlve and lL expecLs compeLlLlon Lo lncrease ln Lhe fuLure 1he prlnclpal meLhods of
compeLlLlon lnclude closeouL merchandlse convenlence and Lhe quallLy of merchandlse offered Lo
Lhe cusLomer lL operaLes ln Lhe dlscounL reLall merchandlse buslness whlch ls currenLly and ls
expecLed Lo conLlnue Lo be hlghly compeLlLlve wlLh respecL Lo prlce sLore locaLlon merchandlse
quallLy assorLmenL and presenLaLlon and cusLomer servlce lLs compeLlLors lnclude slngleprlce
dollar sLores mulLlprlce dollar sLores mass merchandlsers dlscounL reLallers and varleLy reLallers
ln addlLlon several mass merchandlsers and grocery sLore chalns carry dollar sLore or dollar zone"
concepLs ln Lhelr sLores whlch lncrease compeLlLlon 1he Company ls Lhe owners of several federal
servlce mark reglsLraLlons lncludlng uollar 1ree Lhe uollar 1ree logo Lhe uollar 1ree logo wlLh a
1" and Cne rlceCne uollar lL also own a concurrenL use reglsLraLlon for uollar 8lll$ and Lhe
relaLed logo













IN 44S0 Student esearch
Date

4
Industry verv|ew and Compet|t|ve os|t|on|ng
uollar sLores have become a famlly favorlLe and a popular shopplng spoL for all lncome groups 1he
sLores are usually small Lo mldslzed wlLh an assorLmenL of producLs and packaged food for sale aL an
affordable prlce 8ecenLly dollar sLores have lmproved food selecLlons and lncreased producLs
offerlngs Lo lnclude more foodsLuffs such as frozen lLems 1he sLores noL only offer food buL also
lnclude oLher baslc household lLems such as apparel cleanlng supplles and healLh and beauLy producLs
aL excepLlonally low prlces usually under uS$3 1he economlc downLurn broughL abouL flnanclal
lnsecurlLy hlgh unemploymenL and decllnes ln dlsposable lncomes whlch have conLrlbuLed Lo a
change ln uS consumer behavlor lrugallLy ls now Lhe norm and wlLh consumers spendlng less dollar
sLores are becomlng lncreaslngly popular WlLhln Lhe varleLy sLore channel dollar sLores make up Lhe
ma[orlLy of sales and have become lncreaslngly lmporLanL Lo uS consumers 1he lndusLry has
caplLallzed on Lhe recenL global economlc recesslon whlch has caused consumers Lo search for
bargalns raLher Lhan spendlng on expenslve branded producLs Lven wlLh Lhls shlfL dollar sLores are
lnLroduclng popular brands Lo Lhelr merchandlse for Lhe caplLallzaLlon on shlfLlng consumer hablLs

*1ogeLher uollar Ceneral lamlly uollar and uollar 1ree have some 19300 ouLleLs across Lhe uS
* 8ecenL research has revealed LhaL Lhere ls a hlgher proporLlon of affluenL consumers shopplng aL
dollar sLores and Lhe number lncreased by 18 beLween 2007 and 2008 1hls ls a vlable reLall markeL
channel across lncome brackeLs
* ApproxlmaLely 39 of consumers who llve ln households wlLh lncomes under uS$23000 shop aL
Lhe channel once a monLh or more
* lood conLlnues Lo be a boomlng segmenL of dollar sLore producLs uollar sLores have expanded
food offerlngs by addlng coolers and refrlgeraLors ln order Lo sell fresh and frozen lLems causlng
consumers Lo dlverL Lrlps away from grocery sLores and mass merchandlsers Lo flll up on grocery lLems
aL very low prlces

nun 99 uC uollar Ceneral CorporaLlon luC lamlly uollar SLores lnc lndusLry ulscounL
varleLy SLores

IN 44S0 Student esearch

Date

5
Ia|uat|on


$ ln Mllllons excepL per share daLa


2008 2009 2010 2011 2012 2013 2014 201S @erm|na|
Ia|ue
8evenues
4643

3231

3883

6377

7213

8074

9033

10110

8evenue growLh 8aLe 93 126 123 118 97 119 119 119
CosL of revenue
3033

3374

3793

4242

4634

3208

3827

6321

Gross prof|t
1392

1837

2088

2333

2361

2866

3207

3389

roflL Margln 343 333 333 333 333 333 333 333
erotinq exenses
Selllng general and admlnlsLraLlve
expenses

1226

1344

1438

1oLal operaLlng expenses
1226

1344

1438

1644

1804

2018

2239

2327

Cperalng Lxpense 8aLe 264 237 248 230 230 230 230 230
perat|ng |ncome
366

313
630 691 738
848

949

1062

CperaLlng margln 79 98 107 103 103 103 103 103
ncome from continuinq erotions
CLher lncome (expense) 3 2
Larn|ngs before Interest and @axes
369

313
630 691 738
848

949

1062

lnLeresL expense 9 7
Income before tax
360

308
630 691 738
848

949

1062

lncome Lax expense
130

187
233 236 280
314

331
393
Average 1ax 8aLe 332 363 370 370 370 370 370 370
Net |ncome from cont|nu|ng
operat|ons

230

321
397 433 477
334

398
669
-onrecurrinq vents
LffecLs of AccounLlng Changes
CLher lLems
Net |ncome
230

321
397 433 477
334

398
669
referred SLock And CLher
Ad[usLmenLs

Net |ncome ava||ab|e to common
shareho|ders

230

321
397 433 477
334

398
669
10031

CALk
131

163
179 197 216
242

271
303
of 8evenue 28 32 30 30 30 30 30 30
IN 44S0 Student esearch
Date

6

ree cash f|ow 99
136
218 238 261
292

327
363
10031

Cash 486
Longterm debt 389

LL CASn LW @ LUI@ 99
136
218 238 261
292

327
363
10128

resent Ia|ue Stream 229 241
239

279
300
8309

Sum I Stream 9616

8lsk lree 8aLe 20
LqulLy 8lsk remlum 120
8eLa 017
equ|red eturn]D|scount ate 40400



Shares utstand|ng 122

Lst|mated Share Ia|ue
7882


Current Share r|ce
7966


S|mp|e eturn 11





















IN 44S0 Student esearch
Date

7
|nanc|a| Ana|ys|s

We pro[ecL samesLore sales growLh of 4 Lo 3 ln l? 12 (!an) versus l? 11s 118 lncrease as we
see conLlnulng beneflLs from cosLconsclous consumers seeklng ouL Lhe besL values on everyday
necesslLles We look for uL18 Lo drlve hlgher sLore Lrafflc Lhrough beLLer lnsLock poslLlons and Lhe
conLlnued rollouL of frozen and refrlgeraLed merchandlse Lo sLores Coupled wlLh expecLed reLall
selllng square fooLage growLh of approxlmaLely 7 we look for neL sales Lo reach $634 bllllon ln l? 12

uesplLe fasLer sales growLh ln consumables Lhan ln hlghermargln dlscreLlonary caLegorles as well
as rlslng fees for deblL card and credlL card LransacLlons and an expecLed lncrease ln ocean frelghL and
dlesel fuel cosLs we see opporLunlLy for annual operaLlng margln expanslon Lhrough lmporL sourclng a
new ocean frelghL conLracL LhaL ls expecLed Lo yleld beneflLs ln Lhe second half of Lhe year aggresslve
cosL conLalnmenL and expense leverage off pro[ecLed samesLore sales growLh

lacLorlng ln planned share buybacks we esLlmaLe LS of $390 ln l? 12 up from $323 ln l? 11
(excludlng a oneLlme $263 mllllon charge due Lo a change ln lnvenLory accounLlng)

lrom l? 03 Lhrough l? 10 uL18s sales lncreased aL a CAC8 of 103 Powever wlLh Lhe shlfL ln
sales mlx Lo lowermargln consumables over Lhls perlod operaLlng marglns only wldened from
97 ln l? 03 Lo 98 ln l? 10 uesplLe sales sLrengLh ln consumables whlch drove a 124 sales galn
ln l? 11 Lhe companys operaLlng margln (before a oneLlme lnvenLory accounLlng charge of $263
mllllon) wldened 140 bps Lo 112 on effecLlve expense managemenL We noLe LhaL uL18 has Lhe
hlghesL operaLlng marglns ln our coverage peer unlverse
IN 44S0 Student esearch
Date

8
ln CcLober 2007 dlrecLors auLhorlzed Lhe repurchase of $300 mllllon of common shares 1hls
auLhorlzaLlon was ln addlLlon Lo a november 2006 auLhorlzaLlon LhaL had abouL $984 mllllon
remalnlng ln March 2010 uL18 enLered lnLo an agreemenL Lo repurchase $200 mllllon of lLs common
shares under an AcceleraLed Share 8epurchase AgreemenL (AS8) A LoLal of 3 mllllon shares were
repurchased under Lhe AS8 ln !une 2010 dlrecLors auLhorlzed Lhe repurchase of an addlLlonal $300
mllllon of common shares As of Lhe end of l? 11 Lhe company had $3439 mllllon remalnlng under
repurchase auLhorlzaLlons



Investment |sks

Cur 12monLh LargeL prlce of $8293 ls derlved based on quallLaLlve and quanLlLaLlve facLors
lncludlng elLher lnLrlnslc value Analysls 8elaLlve valuaLlon Sum of arLs or a comblnaLlon of Lhese
meLhods LogeLher wlLh Lhe analysLs quallLaLlve rlsk premlum assessmenL

8lsks Lo our recommendaLlon and LargeL prlce lnclude sales shorLfalls due Lo changes ln consumer
confldence and buylng preferences and merchandlse avallablllLy Cur corporaLe governance concerns
lnclude cashonly compensaLlon for dlrecLors and Lhe nondlsclosure of speclflc performance crlLerla
and hurdle raLes for equlLy lncenLlve awards

IN 44S0 Student esearch
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9
|gure 1 Income Statement
ln mllllons
5ootce compooy uocomeots 5toJeot stlmotes

IN 44S0 Student esearch
Date

10
|gure 2 a|ance Sheet
ln mllllons

5ootce compooy uocomeots 5toJeot stlmotes

IN 44S0 Student esearch

Date

11
|gure 3 Statement of Cash |ows
ln mllllons

5ootce compooy uocomeots 5toJeot stlmotes

IN 44S0 Student esearch
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12
D|sc|osures
wnersh|p and mater|a| conf||cts of |nterest
1he auLhor(s) or a member of Lhelr household of Lhls reporL holds/does noL hold a flnanclal lnLeresL ln Lhe securlLles of Lhls company
1he auLhor(s) or a member of Lhelr household of Lhls reporL knows/does noL know of Lhe exlsLence of any confllcLs of lnLeresL LhaL mlghL blas Lhe
conLenL or publlcaLlon of Lhls reporL 1he confllcL of lnLeresL ls
ece|pt of compensat|on
CompensaLlon of Lhe auLhor(s) of Lhls reporL ls noL based on lnvesLmenL banklng revenue
os|t|on as a off|cer or d|rector
1he auLhor(s) or a member of Lhelr household does noL serves as an offlcer dlrecLor or advlsory board member of Lhe sub[ecL company
,arket mak|ng
1he auLhor(s) does noL acL as a markeL maker ln Lhe sub[ecL company's securlLles
at|ngs gu|de
8anks raLe companles as elLher a 8u? PCLu or SLLL A 8u? raLlng ls glven when Lhe securlLy ls expecLed Lo dellver absoluLe reLurns of 13 or greaLer over
Lhe nexL Lwelve monLh perlod and recommends LhaL lnvesLors Lake a poslLlon above Lhe securlLy's welghL ln Lhe S 300 or any oLher relevanL lndex A
SLLL raLlng ls glven when Lhe securlLy ls expecLed Lo dellver negaLlve reLurns over Lhe nexL Lwelve monLhs whlle a PCLu raLlng lmplles flaL reLurns over Lhe
nexL Lwelve monLhs
Investment esearch Cha||enge and G|oba| Investment esearch Cha||enge Acknow|edgement
5oclety Nome lnvesLmenL 8esearch Challenge as parL of Lhe ClA lnsLlLuLe Clobal lnvesLmenL 8esearch Challenge ls based on Lhe lnvesLmenL 8esearch
Challenge orlglnally developed by Lhe new ?ork SocleLy of SecurlLy AnalysLs
D|sc|a|mer
1he lnformaLlon seL forLh hereln has been obLalned or derlved from sources generally avallable Lo Lhe publlc and belleved by Lhe auLhor(s) Lo be rellable
buL Lhe auLhor(s) does noL make any represenLaLlon or warranLy express or lmplled as Lo lLs accuracy or compleLeness 1he lnformaLlon ls noL lnLended Lo
be used as Lhe basls of any lnvesLmenL declslons by any person or enLlLy 1hls lnformaLlon does noL consLlLuLe lnvesLmenL advlce nor ls lL an offer or a
sollclLaLlon of an offer Lo buy or sell any securlLy 1hls reporL should noL be consldered Lo be a recommendaLlon by any lndlvldual afflllaLed wlLh 5oclety
Nome ClA lnsLlLuLe or Lhe Clobal lnvesLmenL 8esearch Challenge wlLh regard Lo Lhls company's sLock