35 years later, dollar Tree has announced that it will begin charging $1.25 for most of its products at all of its locations nationwide by the end of April.
The discount retailer says the $1.25 move will allow it to “physically expand its offerings, introduce new products and sizes, and provide families with their daily essentials.” Additionally, the company stresses that it will be able to reintroduce items that were previously discontinued due to the constraints of the $1 price point.
Michael Wittensky, President and CEO of Dollar Tree, said in a statement, “Removing the $1 barrier is an important step for our organization and we are looking to meaningfully improve our buyer experience and unlock value for our stakeholders. Excited about the opportunity to do so.” “Guided by the same founding principles as Dollar Tree, we will remain relentless in our commitment to providing the best value to our customers.”
The announcement came as Dollar Tree saw “wider consumer acceptance” of new price points above $1 during its period Initial testing phase at over 100 legacy stores. As a result of positive customer feedback and store performance during testing, the initiative has already been rolled out at approximately 200 additional Legacy Dollar Tree stores. The company plans to roll out the new price points at over 2,000 additional legacy stores in December.
FILE – Dollar tree sign in front of a store.
The initiative, announced in September, came in an effort to reduce rising freight, delivery and operating costs.
Dollar Tree moved more containers during the third quarter than originally planned, resulting in significantly higher freight costs than originally forecast. However, the company said its strong sales performance was able to offset those costs, with earnings per share coming in at the high end of the company’s projected range.
Third-quarter net sales rose 3.9% to $6.42 billion, up from $6.18 billion a year ago, while enterprise same-store sales grew 6.7% on a two-year stacked basis. Third-quarter net income was $216.8 million and diluted earnings per share were $0.96, compared to $1.39 per share a year ago.
For the first nine months of the year, Dollar Tree reported a 2.6% increase in net sales to $19.23 billion, compared to $18.74 billion in the same period last year, a 4.1% year-over-year improvement in net income A 7.6% jump in diluted earnings per share to $3.80 compared to $873.7 million and $3.53 in the prior year period.
related: Dollar Tree for selling more than $1 items amid rising shipping costs
While Dollar Tree believes most of its freight challenges are “transient”, it warned that disruptions to freight and supply chains remain its biggest challenges in the near term.
Looking ahead, Dollar Tree expects its higher freight costs to be offset by a $1.25 price point in the fourth quarter, with its forecast for consolidated net sales in the range of $7.02 billion to $7.18 billion, low single digits. on the basis of growth. -Store sales. Diluted earnings per share are estimated to be in the range of $1.69 to $1.79.
For the full year, net sales are expected to be between $26.25 billion and $26.41 billion, based on low single-digit growth in same-store sales and 3.3% square footage growth. Diluted earnings per share for fiscal year 2021 will range from $5.48 to $5.58.
Dollar Tree shares are up 5% during Tuesday’s trading session as of the time of publication.