Jeff Davis: Paul, I guess the way we think about it, we really, the balance of the comp has really been between ticket and traffic. It has been pretty consistent in this make-up. It’s been around 50-50. What we’ve seen here more recently is ticket has dropped off as that customer has been a little more challenged. We’re continuing to see that going into the fourth quarter. That’s our guidance of down 1% to plus 1%. We’re not prepared to start getting into AUR and other further dissection of it, but as we think about traffic and ticket, it’s going to, we think we’re going to have traffic probably driving more of the comp offset by some ticket pressure.
Rick Dreiling: And, Paul, I’d like to add to that, that I — we are intently focused on three key metrics. Transactions, traffic, whatever you want to call it, unit growth, and sales per square footage — square foot. And those are the things that we want to report on because I believe that drives comp sales and ultimately growth in the chain.
Operator: Thank you. Next question is coming from Edward Kelly from Wells Fargo. Your line is now live.
Rick Dreiling: Good morning, Ed.
Edward Kelly: Hi, guys. Good morning. Rick, I wanted to ask you, I guess, a two-part question around Dollar Tree, the core Dollar Tree business. You continue to roll out new price points. Maybe just an update on where you think the evolution of that is going over time, and how we should think about the timing of rollout of those price points. And then that concept generally, it does look like it’s developing into a very formidable traditional dollar store competitor. I’m curious as to where you think you’re gaining the share from. Is there any impact in Family Dollar, given what’s happening there? And how is the evolution of concept impacting the way you think about growth, both number of units and where those units may go?
Rick Dreiling: Great question. Let’s start with the price points. We have — Rick McNeely and his team have done an outstanding job of introducing new price points. And you have to remember, Ed, we have to buy these things almost a year in advance in order to get them into the stores. And we’re starting to see them arrive. We’ve actually done a test on Halloween in a number of stores with multi-price candy and we’re really, really excited with what happened with that. Now, it’s really important that, and I’ve said this frequently, I don’t want anyone to think there’s going to be 100 different price points in that store. We are going to — our core price point is still $1.25. And what we’re working on, what is the right amount and right number of price points?
And what I can tell you is the consumer is, when we broke the $1.25 a year ago, I have to tell you that that barrier was broken and now the consumer is very receptive to what’s going on. And when we add an incremental price point, Rick and his team were not adding $1.25 item that’s a little bit bigger or a little different at $2, we’re adding a different item that has even more value. So there’s no SKU overlap, which makes this a little more harder to get executed. Now, we’ve already done the work. I know what it’s going to take to get the items into the store, get them marked, priced properly. 40% of our SKUs are coming from overseas and they’re going to add the price point right on the product. So a lot of great work has been done. And I think that’s some of what we’re seeing as the — with the multi price point, we’ve been able to make the brand more relevant to more people.
And I know it’s hard but the consumable side and the way the team reacted to that, I think, is also proof positive that we’re attracting a different customer segment. Now, in regards to future store growth, we are weighing right now what is the proper mix between Family Dollar and Dollar Trees. Obviously the Dollar Trees become very profitable, very fast, and it appears that we broaden the demographic appeal of that brand. And I’ve said this, a well-run Dollar Tree is a pretty powerful retail format. And it’s a format that a lot of people would shop in. And the fact that we’re getting our arms around the price points, the fact that we’re getting our arms around our store standards is putting us in a position where that brand might be — we might be able to go to different areas that we’ve historically stayed away from.
In regards to is it affecting Family Dollar, I would look at you and say those are two different customer segments. The first thing we did when we got together as a team is realize that the go-to-market strategies for both brands are totally different. One is the thrill of the treasure hunt, in and out, if you run out, I should have bought more versus Family Dollar, which is traditional consumable retailing, where there’s an expectation of what has to be in that store and it’s got to be there every time I come in to get it.
Jeff Davis: And, Ed, just to add in your prepared comments, we had mentioned the fact that a lot of the growth that’s happening in Dollar Tree is actually coming from that higher income customer. Well, we’re attracting 4.3 million new customers on a year-over-year basis. A lot of those customers are in that income demographic of $125,000 or greater and we’re capturing that passing.
Operator: Thank you. Next question today is coming from John Heinbockel from Guggenheim. Your line is now live.
Rick Dreiling: Good morning, John.
John Heinbockel: Good morning. Two quick things, or maybe the first one’s not as quick, but on your FDO review, can you talk philosophically, right, how you’re going to attack that? Because on the one hand, you’d want to dedicate more resources to the stores that have the most potential, but you also don’t want to cut back too far from a de-scaling or de-leverage perspective. So maybe talk about that, the opportunity to convert a lot of those to Dollar Tree. Does that exist? And then my small follow-up is just remind us when you think you’ll get to eight cooler doors at $3 to $5 price point at Dollar Tree? Is that you know two years out, a year out, three years out, when is that?
