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Dollar Tree Says $1.25 Price Point to Become New Standard

Bloomberg logoBloomberg 11/23/2021 Augusta Saraiva
Inside Dollar Tree Store Locations Ahead Of Earnings Figures © Bloomberg Inside Dollar Tree Store Locations Ahead Of Earnings Figures

(Bloomberg) -- Dollar Tree Inc. will sell a majority of its products for more than $1, edging away from the approach that gave the discount chain its name.

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After 35 years of selling goods for a buck, Dollar Tree is boosting its standard price point to $1.25 by the end of April, the company said in a statement Tuesday. While the decision is “not a reaction to short-term or transitory market conditions,” Dollar Tree acknowledged the inflationary environment and said the price boost will help mitigate historically high costs, including freight and distribution expenses, as well as wage increases.

“Lifting the one-dollar constraint represents a monumental step for our organization,” Chief Executive Officer Michael Witynski said in the statement. The move will allow Dollar Tree to expand its product assortment and reintroduce some items that were pulled due to the $1 constraint.

The move signals the end of an era for Dollar Tree, which has long based its business on the price point, as inflation pushes up the cost of many goods. 

Video: Dollar Tree soars, markets slip heading into November holidays (Yahoo! Finance)

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The company recently rolled out the higher price in select stores, and the tests “have demonstrated broad consumer acceptance of the new price point,” Witynski said. Dollar Tree plans to bring it to more than 2,000 additional stores in December and complete the rollout by the end of the first quarter of fiscal 2022. 

Read more: Dollar Tree surges most since 2000 on pricing test

The shares jumped 5.9% at 9:36 a.m. in New York after the company reported results that slightly beat Wall Street’s expectations. Dollar Tree also narrowed its earnings forecast for the year to $5.48 to $5.58 a share, compared with a prior outlook of $5.40 to $5.60.

(Updates with share gain in final paragraph.)

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