A dollar no more: Dollar Tree raising prices starting next year
Global News
Dollar Tree said on Tuesday the new price point will be fully rolled out by the first quarter of 2022.
Dollar Tree Inc will start selling most products for US$1.25 at all its eponymous stores, in an effort to offset the impact of spiraling freight costs and other pandemic-driven challenges.
The retailer said on Tuesday the new price point, which will be fully rolled out by the first quarter of 2022, would allow it to return to “its historical gross margin range” of 35 per cent to 36 per cent next year.
Chief Executive Officer Michael Witynski said the higher price point allows the discounter to expand assortments, introduce new products and sizes as well as bring back “traffic-driving” products.
Dollar Tree, known for selling everything from make-up to homeware at the $1 price-point, in September said it planned on adding new price points above $1 across some of its stores.
The price increase is a good thing, as the 3Q results, and our first-quarter outlook indicate freight headwinds are worse than anticipated, Evercore analyst Michael Montani said.
Rising freight costs from global supply chain disruptions have dented profits for most of Corporate America, further pressuring many retailers already grappling with higher labour and raw material costs.
Dollar Tree said that freight costs were significantly higher than anticipated in the third quarter and expects this to continue in the near term.
It projected fourth-quarter earnings per share of $1.69 to $1.79. Analysts on average were anticipating $1.75, according to Refinitiv IBES data.
