Dollar Tree wants to know if consumers will spend a little more

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Dollar Tree wants to know if consumers will spend a little more

05/31/2019
The company is not raising prices on its current assortment of $1 products.

After a positive first-quarter report, Chesapeake, Va.-based Dollar Tree is pondering an increase of prices on some products within its stores.

The discount retailer officially launched its previously announced multi-price point pilot, called “Dollar Tree Plus,” at a number of Dollar Tree store locations. According to the company, the test’s results will allow Dollar Tree to understand how its customers respond to the addition of merchandise at values greater than $1.

However, the company is not raising prices on its current assortment of $1 products. Consumers will instead be introduced to a section promoted as “More Choices, More Sizes, and More Savings.”

“During this test, we look forward to measuring and assessing the initial results and understanding if the introduction of multiple price points across a broader set of stores is in the best interests of our customers, company and shareholders,” said Gary Philbin, president and CEO of Dollar Tree.

Last week, Dollar Tree released its first-quarter report, which resulted in the company’s net sales increasing by 4.6% to $5.81 billion from $5.55 billion in the prior year’s first quarter. Enterprise same-store sales increased 2.2%.

Net income compared to the prior year’s quarter increased 65% to $267.9 million from $160.5 million, and diluted earnings per share increased 67.2% to $1.12 compared to $0.67 in the prior year’s quarter.

Dollar Tree also plans to re-banner approximately 200 Family Dollar stores to the Dollar Tree brand in fiscal 2019. Additionally, the company plans to add adult beverages in approximately 1,000 Family Dollar stores and expand freezers and coolers in approximately 400 Family Dollar stores in fiscal 2019. In the first quarter, adult beverage product was added to approximately 45 stores and freezers and coolers were expanded in approximately 55 stores.

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