NEW YORK: Faced with rising costs of goods and merchandise, discount retail chain Dollar Tree on Tuesday said it will increase its prices for most of its products by up to $1.25.
Dollar Tree said the reason for raising its prices to $1.25 was not due to short-term or temporary market conditions and added that the price hike was permanent. Higher prices will allow the company to face higher trading cost growth as well as higher operating costs, such as wages, it said.
(Dollar Tree) believes this is an appropriate time to move away from the barriers of the $1.00 price point to continue offering customers exorbitant value, the company said in a statement.
Dollar Tree was one of the last true dollar stores, as most of its competition was blown away by that price point.
The company, which is based in Chesapeake, Virginia, said in September that it was testing higher prices at select stores. On Tuesday, it said it would introduce the new price point in more than 2,000 additional Dollar Tree stores in December and complete the rollout in all of its stores by early next year. The company has about $8,000 tree stores.
CEO Michael Wittensky said he expects Dollar Tree customers to remain loyal.
Its shoppers believe that at $1.25, it’s still going to be an undeniable value because of what they’re seeing in the market, Wittensky said on a call with industry analysts. And they know Dollar Tree hasn’t raised its price in 35 years, so they’re giving us credit.
The company’s stock rose 9.2% on Tuesday following the announcement, which was combined with the company’s quarterly earnings. Analysts at Citigroup described earnings as disappointing, but said investors looking to the company’s past earnings are ultimately driving up prices.
Disclaimer: This post has been self-published from the agency feed without modification and has not been reviewed by an editor
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