Dollar Tree Becomes $5 Tree: Inflation Forces Retailer To Expand Higher-Priced Products To 1,800 Stores

Zinger Key Points
  • Dollar Tree reported quarterly earnings of $2.04 per share, on sales of $7.72 billion.
  • The company said it plans to introduce $3 and $5 products to an additional 1,800 stores in 2023.

Dollar Tree Inc DLTR has announced plans to introduce $3 and $5 products to another 1,800 or more stores in 2023. This comes after the company raised its standard price point from $1 to $1.25 in 2022.

The move has been viewed as a necessary step by the company to hedge against still-high inflation, which was up 6.5% in December, down from 7.1% in November, but still significantly higher than its peak of 9.1% in June.

Dollar Tree Plus, the company's new initiative for expanding the products available in stores, has been a significant part of this shift. The program offers multi-price points in stores, with some locations now featuring $3 and $5 products. A shift away from the company's long-standing $1 price point.

Read also: US Retail Sales Jump 3% In January As Inflation Continues To Fall: What Investors Need To Know

In its just-released fourth-quarter earnings statement, Dollar Tree reported quarterly earnings of $2.04 per share, beating the analyst consensus estimate of $2.02. The company also reported quarterly sales of $7.72 billion, beating the analyst consensus estimate of $7.60 billion.

Dollar Tree expanded its multi-price Plus program to an additional 119 Dollar Tree stores in the fourth quarter and will be adding the offering to 1,805 stores over the course of 2023.

The move to higher price points comes after years of Dollar Tree resisting the urge to increase prices, with former CEO Michael Witynski saying back in 2021 that it was an “appropriate time” to shift away from the $1 price point.

Price action: Shares of Dollar Tree are trading 1.04% higher to $146.83, according to data from Benzinga Pro

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