Dollar Tree breaks through $ 1 barrier as costs take a bite
CHESAPEAKE, Virginia (AP) – Dollar Tree writes in its very name what it stands for: behind those doors, anything can be bought for just $ 1.
The mantra that the Chesapeake, Virginia company has held true for decades will now only hold true for most.
After expanding nationwide from a handful of stores in Georgia, Tennessee, and Virginia, Dollar Tree is breaking the mold and will sell items in some places that exceed the tantalizing $ 1 take-out price.
The cost of clothes, cars, food and just about everything has skyrocketed this year as the global economy emerges from a pandemic uppercut and Dollar Tree has not been spared.
Last month, the retail chain said the hike in shipping costs would reduce its earnings per share from $ 1.50 to $ 1.60 this year. This is a huge success for any business, perhaps even more so for a business founded decades ago that is emphatically called “Only $ 1.00 Inc.”
“For decades our customers have enjoyed the ‘thrill of the hunt’ for a dollar – and we remain committed to this basic proposition – but many tell us they also want a wider product assortment when they’re coming to shop, ”CEO Michael Witynski said in a prepared statement.
The increase in some prices will certainly give the national chain some flexibility and possibly more variety on its shelves. But a dollar this year won’t buy you what it did in 2020.
Annual inflation in the United States reached 4.2% in July, the highest in three decades. And this week, in an appearance before Congress, Fed Chairman Jerome Powell said price increases had worsened amid booming supply chains and rising labor costs. of work.
It has hit businesses of all types, perhaps especially one that has held the line at $ 1 for decades.
Witynski said this week that Dollar Tree is a “test and learn” business and that it will monitor customer reaction.
The company had already started testing higher prices at several hundred of its nearly 8,000 locations in a section of the store called “Dollar Tree Plus” with items up to $ 5. Items ranging from $ 1.25 to $ 1.50 will soon be available in the mix in some places within the typical assortment of $ 1 products.
JP Morgan analysts noted past conversations with Dollar Tree executives who cited a significant increase in sales at stores offering a Plus section and if no one else is cheering for the jump to the top $ 1 at Dollar Tree. , Wall Street is.
Shares of Dollar Tree Inc. jumped 13% at the opening bell on Wednesday.
As Dollar Tree crosses the $ 1 mark, Witynski said the company will stay true to its value promise.
“We will continue to fiercely protect this promise, no matter what the price, whether it’s $ 1.00, $ 1.25, $ 1.50,” Witynski said.