Renowned specialty retailer Dollar Tree (NASDAQ:DLTR) announced a 25% hike in its prices on November 23, after more than three decades of constant prices. So, will the company be able to maintain its growth trajectory following its price increase? Let’s find out.Dollar Tree, Inc. (DLTR), which is headquartered in Chesapeake, Va., is a leading discount retailer operating in 48 states in the United States and Canada. It owns and operates more than 15,500 stores in the United States. Its subsidiary Family Dollar is one of the fastest-growing retailers in the country. The company has offered its products at $1 for 35 years.
However, on November 23, 2021, DLTR announced that it is raising prices by 25% to $1.25. Management has stated that the price increase will allow the company to materially expand its offerings by introducing new products and sizes. Also, DLTR is expected to reintroduce many customer favorites and key traffic-driving products that were previously discontinued due to its $1 pricing constraints. The price hike is expected to be implemented across more than 2,000 legacy Dollar Tree stores by next month and to all stores by the first quarter of 2022. Regarding this, DLTR President and CEO Michael Witynski said, “Lifting the one-dollar constraint represents a monumental step for our organization, and we are enthusiastic about the opportunity to meaningfully improve our shoppers’ experience and unlock value for our stakeholders.”
Shares of DLTR have declined 2.3% in price since the news release to close yesterday’s trading session at $141.35. While analysts expect the company’s revenues to improve, its EPS might fall amid continuing supply chain disruptions despite the price hike.