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Dollar Tree's turnaround plan is producing results as more customers are choosing to shop in its stores, CEO Gary Philbin told CNBC Wednesday.
The company met earnings and revenue expectations, and beat on same-store sales with 2.4 percent compared to the 1.4 percent gain that Wall Street was looking for. The stock added more than 5 percent in the session and is up about 11 percent this year.
The company has invested $1 billion to renovate its Family Dollar stores to give it a "wow" factor and the entire enterprise was able to generate about $2 billion of cash flow, Philbin said in an interview on "Mad Money with Jim Cramer."
The plan is to "get the basics right, great looking store, great product, inject some Family Dollar wow items in there, but the magic … is exactly what you talked about: can we put some Dollar Tree items in there that's a surprise for the customer when she walks in the store," he said.
Dollar Tree is on a mission to renovate a total of 1,000 stores. The company still plans to continue closing underperforming Family Dollar locations that could total 390 stores. But Philbin also said they have been "very methodical" about paying down debt, which has helped their rates go down.
The locations that got a face lift last year, which includes rebranding Family Dollar stores as Dollar Tree, saw a 10 percent lift, Philbin said.
"And Dollar Tree is known for a wow first and foremost in the dollar price point and what can we add to that," he said. "It's more footsteps for our customers into a Family Dollar."
Shares of Dollar Tree are still down more than 3 percent compared to a year ago.