CHESAPEAKE, Va. (WAVY) — Dollar Tree will now permanently sell most of its traditionally $1-priced items for $1.25, the company announced on Tuesday in its third quarter report to investors, after sticking mostly to the buck since the company opened in Hampton Roads in 1986.
It’s a major milestone for the Chesapeake-based retailer, but one that’s been in the works for a while.
While the U.S. has been dealing with high inflation, with increasing freight and distribution costs, Dollar Tree says this move is “not a reaction to short-term or transitory market conditions” and it had been time to move on “from the constraints of the $1 price point.”
“For 35 years, Dollar Tree has managed through inflationary periods to maintain the everything-for-one-dollar philosophy that distinguished Dollar Tree and made it one of the most successful retail concepts for three decades,” the company said in a release.
Dollar Tree announced back in September it was planning to increase prices, and was already testing higher prices at several hundred of its 8,000 stores with positive feedback from customers. It also increased offerings in its “Dollar Tree Plus” section that includes items that can go as high as $5.
It plans to roll out the $1.25 pricing in more than 2,000 more legacy stores in December, with the rest by the end of the first quarter of 2022.
The company says raising prices will allow for more merchandise options in store and allow for some items that were discontinued to come back, as the company faces competition from other retailers.
CEO Michael Witynski also said the changes will allow the company to go back to its traditionally high profit margins of 35% to 36% by next year. Investors had been pushing the company to raise its prices.