Skip to main content
You have permission to edit this article.
Edit
Dollar Tree will soon be the $1.25 store
0 Comments
spotlight AP

Dollar Tree will soon be the $1.25 store

  • 0

The pandemic has caused prices to soar in just about every industry, and Dollar Tree has felt the effects of it as well.

(CNN) — Dollar Tree will soon be the $1.25 store.

The company, one of America's last remaining true dollar stores, said Tuesday it will raise prices from $1 to $1.25 on the majority of its products by the first quarter of 2022. The change is a sign of the pressures low-cost retailers face holding down prices during a period of rising inflation.

Dollar Tree said in a quarterly earnings release Tuesday that its decision to raise prices to $1.25 permanently, however, was "not a reaction to short-term or transitory market conditions."

Selling stuff strictly for $1 hampered Dollar Tree, the company said, and forced it stop selling some "customer favorites." Raising prices will give Dollar Tree more flexibility to reintroduce those items, expand its selection and bring new products and sizes to its stores.

Dollar Tree

Customers shop at a Dollar Tree store on March 4, 2021, in Chicago.

Dollar Tree also said that hiking prices will help the company increase its profit margins by "mitigating historically high merchandise cost increases," including freight and distribution costs, as well as wage increases.

"This is the appropriate time to shift away from the constraints of the $1 price point," CEO Michael Witynski said in a statement.

The end of dollar stores

Dollar Tree carries primarily seasonal goods, toys, stationary, home decor, kitchenware and party items.

It caters to suburban, middle-income shoppers, unlike Dollar General, its more rural-focused rival. Family Dollar, owned by Dollar Tree, targets mostly low-income shoppers in cities.

Dollar Tree has sold products at $1 for 35 years and was the last of the major dollar store chains to actually be a dollar store. (The company was called "Only $1.00" in the late part of the 20th century, before changing its name to Dollar Tree in 1993.)

Dollar Tree had started moving away from only offering goods for $1 in recent years, in part as a response to pressure on Wall Street to raise prices. Dollar Tree has lagged Dollar General and other discount chains.

In 2019, an activist investor took a stake in the company and pressed the chain to raise prices. The group ended its fight after Dollar Tree announced it planned to test different prices.

In September, Dollar Tree said it planned to begin selling items at $1.25 and $1.50 at some stores for the first time. It also said it would add $3 and $5 items to more stores, expanding on a prior strategy to offer these prices at select locations.

Since that announcement, a different activist investor built a stake in Dollar Tree and has tapped a former Dollar General CEO to push for changes at the company.

Although Dollar Tree said its decision to permanently raise prices was not a reaction to short-term inflation, one analyst was unconvinced.

"The pace of rollout, along with (the) engaged investor, Mantle Ridge, clearly suggests otherwise," Kelly Bania, an analyst at BMO Capital Markets, said in a note to clients Tuesday.

How to get the best Black Friday deals at major retailers

Here's a closer look at how major retailers like Best Buy, Walmart and others are handling Black Friday this year.

spotlight AP
  • Updated
  • 0

If you thought seeing holiday merchandise around Halloween was early, Amazon is now taking the holiday shopping season to a whole new — and earliest-ever — level.

spotlight AP
  • 0

Walmart is rolling out three sales events with its second annual "Black Friday Deals for Days."

  • Updated
  • 0

Like the rest of the retail world, Best Buy is expanding Black Friday into a monthlong event. The technology and appliance store has launched its holiday sales event.

  • Updated
  • 0

Lowe's Black Friday deals are most anticipated among shoppers who are looking to decorate for the holidays, make some home improvements or upgrade an appliance. And save a bunch of money.

  • Updated
  • 0

Macy's is joining the parade of national retailers expanding Black Friday throughout the month of November. The department store even has specials as low as $3.

  • Updated
  • 0

Target has already launched Black Friday discounts, with more deals dropping weekly. But the popular retailer is aiming to make this Black Friday shopping season not only longer, but also more convenient.

  • Updated
  • 0

The warehouse version of Black Friday is underway. Costco is super-sizing the holiday season with four stages of savings through November. Grab a basket and a couple of flat carts and pick up a pallet or two of your favorite bargains.

  • Updated
  • 0

While many third-party retailers (slightly) discount some devices, Apple Stores and the website maintain their low-key demeanor. But there are ways to get an Apple Black Friday deal.

  • Updated
  • 0
0 Comments

Related to this story

Most Popular

See how cracking a political party’s voters into more districts or packing party voters into fewer districts can assure more wins. Plus, get an update on political mapmaking across the U.S., and why it matters.

Get up-to-the-minute news sent straight to your device.

Topics

Breaking News