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Dollar Tree Breaks The $1 Barrier As Costs Take A Bite


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Dollar Tree breaks the $1 barrier as costs take a bite

by: The Associated Press

Posted:  / Updated: dollar-tree.jpg?w=1024&h=683&crop=1

Dollar Tree store logos indicating that everything in the store is for $1 are promoted on its storefront window in Jackson, Miss. Dollar Tree, the national chain of stores that promises everything from a buck, will begin introducing items on its shelves that will exceed $1. The company said, Wednesday, Sept. 29, that it’s responding to customer requests and said pushing the $1 barrier will allow for a better mix of products. (AP Photo/Rogelio V. Solis)

 

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CHESAPEAKE, Va. (AP) — Dollar Tree embedded in its very name what it stands for: Behind these doors, everything can be had for just $1.

The mantra to which the Chesapeake, Virginia, company has held true for decades will now be only mostly true.

After expanding nationwide from only a handful of stores in Georgia, Tennessee and Virginia, Dollar Tree is breaking the mold and will sell items in some locations that exceed the tantalizing $1 grab-n-go price.

The cost of clothes, cars, food and just about everything else has soared this year as the global economy emerges from a pandemic uppercut and Dollar Tree has not been untouched.

Last month the retail chain said that rising shipping costs would take a bite of $1.50 to $1.60 out of its per-share profits this year. That’s a huge hit for any business, perhaps more so for one founded decades ago steadfastly calling itself “Only $1.00 Inc.”

“For decades, our customers have enjoyed the ‘thrill-of-the-hunt’ for value at one dollar – and we remain committed to that core proposition – but many are telling us that they also want a broader product assortment when they come to shop,” said CEO Michael Witynski in a prepared statement.

Raising some prices will certainly give the national chain some flexibility and likely more variety on its shelves. But a dollar this year will not buy you what it did in 2020.

Annual inflation in the U.S. reached 4.2% in July, the highest in three decades. And this week in an appearance before Congress, Fed Chair Jerome Powell said that price increases have worsened amid snarled supply chains and rising labor costs.

That has hit businesses of every type, perhaps especially one that has held the line at $1 for decades.

Witynski said this week that Dollar Tree is a “test-and-learn” company, and they’ll be watching how customers react.

The company had already begun testing higher prices at several hundred of its nearly 8,000 locations in a section of the store called “Dollar Tree Plus” with items that can go for as much as $5. Items that can go for $1.25 to $1.50 will soon be found in the mix at some locations amid the typical assortment of $1 products.

Analysts with J.P. Morgan noted past conversations with Dollar Tree executives who cited a significant sales boost at stores offering a Plus section and if no one else is cheering the shift to the top side of $1 at Dollar Tree, Wall Street is.

Shares of Dollar Tree Inc. jumped 13% at the opening bell Wednesday.

As Dollar Tree breaks the $1 barrier, Witynski said the company would remain true to its promise of value.

“We will continue to be fiercely protective of that promise, regardless of the price point, whether it is $1.00, $1.25, $1.50,” Witynski said.

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Dollar Tree has a big following...given their $1.00 prices.  Now that Dollar Tree is going over the $1.00 threshold, I'm willing to bet there will be a lot of very unhappy people.

And guess who they're going to blame for this?  Yep.....the stooge in the White House.

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  • 1 month later...

Dollar Tree permanently raising prices of most items to $1.25

by: Brian Reese, Nexstar Media Wire

Posted:  / Updated: AP21272492770837.jpg?w=2560&h=1440&crop=

In this Feb. 25, 2021 photo, Dollar Tree store logos indicating that everything in the store is for $1 are promoted on its storefront window in Jackson, Miss. The national chain will raise the price of most of its products to $1.25. (AP Photo/Rogelio V. Solis)

 

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CHESAPEAKE, Va. (WAVY) – Dollar Tree will now permanently sell most of its traditionally $1-priced items for $1.25, the company announced on Tuesday in its third-quarter report to investors, after sticking mostly to a single buck since the company opened in 1986.

It’s a major milestone for the Virginia-based retailer, but one that’s been in the works for a while.

While the U.S. has been dealing with high inflation and increasing freight and distribution costs, Dollar Tree says this move is “not a reaction to short-term or transitory market conditions” and it had been time to move on “from the constraints of the $1 price point.”

“For 35 years, Dollar Tree has managed through inflationary periods to maintain the everything-for-one-dollar philosophy that distinguished Dollar Tree and made it one of the most successful retail concepts for three decades,” the company said in a release.

Dollar Tree announced back in September it was planning to increase prices and was already testing higher prices at several hundred of its 8,000 stores with positive feedback from customers. It also increased offerings in its “Dollar Tree Plus” section that includes items that can go as high as $5.

It plans to roll out the $1.25 pricing in more than 2,000 more legacy stores in December, with the rest by the end of the first quarter of 2022.

The company said raising prices will allow for more merchandise options in-store and allow for some items that were discontinued to come back, as the company faces competition from other retailers.

CEO Michael Witynski also said the changes will allow the company to go back to its traditionally high-profit margins of 35% to 36% by next year. Investors had been pushing the company to raise its prices.                                                                                                                           ( Might now be called - Dollar Tree Plus)

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