NEW YORK (AP) – Amid rising costs of goods and freight, discount chain Dollar Tree said on Tuesday it would raise prices to $ 1.25 for the majority of its products.
Dollar Tree said the reason for its price increase to $ 1.25 was not due to “short-term or transient market conditions” and said the price increases were permanent. The higher prices will also allow the company to cope with high increases in commodity costs as well as higher operating costs, such as wages, he said.
“(Dollar Tree) believes the time is right to move away from the constraints of the $ 1.00 price tag in order to continue to provide extreme value to customers,” the company said in a statement.
Dollar Tree was one of the last real “dollar stores” after most of its competitors moved away from this price point.
The company, based in Chesapeake, Va., Said in September it was testing higher prices at some stores. On Tuesday, it announced it would roll out the new price to more than 2,000 additional Dollar Tree stores in December and complete the rollout to all of its stores by early next year. The company has approximately 8,000 Dollar Tree stores.
CEO Michael Witynski said he expects Dollar Tree customers to stay loyal.
Its buyers “believe that at $ 1.25 it will still be undeniable value because of what they see in the market,” Witynski said on a call with industry analysts. “And they know Dollar Tree hasn’t increased its price in 35 years, so they’re giving us credit.”
The company’s shares rose 9.2% on Tuesday after the announcement, which was associated with the company’s quarterly profits. Citigroup analysts called earnings “disappointing,” but said investors were looking at the company’s earlier earnings by finally raising prices.
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