Dollar Tree lifts price cap to $7, cites influx of shoppers making $125K and up
Dollar Tree said that it’s raising its price cap to $7 as it sees an influx of shoppers making upwards of $125,000 a year, according to the discount giant’s CEO.
“This year, across 3,000 stores, we expect to expand our multi-price assortment by over 300 items at price points ranging from $1.50 to $7,” Dollar Tree chief Rick Dreiling said during the company’s fourth-quarter earnings call earlier this month.
The move comes three years after the company raised the base price of its items to $1.25 — and just months after Dollar Tree set a $5 cap in June, according to USA Today.
Items closer to the $7 threshold will include food and snacks, as well as pet and personal care products.
Dollar Tree raised its price cap after seeing that more high-earning shoppers were visiting its 16,700-plus stores across the US as inflation rages.
“Dollar Tree added 3.4 million new customers in 2023, mostly from households earning over $125,000 a year,” Dreiling said during the earnings call.
“The fastest-growing demographic is north of $125,000 a year in income,” he added. “It’s not like the Northeast is strong and the West is weak. That boat is lifting pretty even all the way up.”
Still, Dollar Tree reported a net loss of $1.71 billion, or $7.85 per share in the quarter ended Feb. 3, compared with a year-ago profit of $452.2 million, or $2.04 per share.
It expects 2024 sales between $31 billion and $32 billion, the mid-point of which is below the estimate of $31.65 billion, according to LSEG data.
In the wake of the losses, Dollar Tree announced plans to close nearly 1,000 stores collectively between its namesake general discount stores and subsidiary chain, Family Dollar.
Family Dollar will close 600 locations in the first half of 2024 and 370 stores over the next several years as store leases expire, the company said Wednesday.
Dollar Tree, which bought Family Dollar for $8.5 billion in 2015, will also be closing 30 stores as leases expire.
Dollar stores have suffered in recent months as consumer spending habits have shifted, favoring e-commerce platforms such as Temu, the Chinese app that has ballooned in popularity for offering everyday must-haves on the app for as low as 99 cents.
In November, Dollar Tee — which operates more than 8,400 Family Dollar locations — had said it would be reviewing its Family Dollar business, including potentially shutting down underperforming stores, to return to growth.
After deciding on nearly 1,000 store closures, the company said it took a $594.4 million charge for a portfolio optimization review and incurred a goodwill impairment charge of $1.07 billion, as well as $950 million in other asset impairment charges in the reported quarter.
Representatives for Dollar Tree did not immediately respond to The Post’s request for comment.
