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Checks at Dollar Tree, Inc’s (NASDAQ:DLTR) DT Plus! test stores indicate positive customer response and competitive pricing of items, according to UBS.
The Analyst
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UBS analyst Michael Lasser maintained a Buy rating on Dollar Tree, with a price target of $120.
The Thesis
Dollar Tree is taking the correct approach by gradually launching DT Plus! test stores in a few locations to better understand the impact of the new items on customer behavior as well as to identify which products resonate with customers and those that do not, Lasser said in the note.
He mentioned that the initiative would likely continue and provide significant value for both customers and shareholders.
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Multi-price points could drive sales and the gross margin would likely be in-line with the company’s average of 35% to 36%. This would “help with expense leverage,” as these sales would not require additional labor or other variable costs, Lasser mentioned.
So, overall DT Plus! may deliver high incremental margin of 30% to 40%. The analyst said that in case the company proceeds with a full rollout, it will do so gradually, providing several years of modest same store sales growth.
Price Action
Shares of Dollar Tree traded higher by 15% to $115.60 at time of publishing on Friday.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.