Dollar Tree is also adding more $3 and $5 items to stores, building on a previous strategy.
When Dollar Tree said it would raise prices to $1.25 after 35 years sticking to $1, some fans protested and industry analysts questioned the decision.Higher prices have added to Dollar Tree's sales. The switch has also allowed the company to introduce merchandise it couldn't previously sell because of its $1 price constraint, helping it draw new shoppers. Other companies have also raised prices, so Dollar Tree has been shielded from major customer blowback.
Dollar Tree said a year ago it raised prices to offset higher costs and to improve the quality of its merchandise, which comes in small packaging sizes. "Our consumable sales continued to decline quarter after quarter because of the product availability and the assortment we just couldn't provide for the customer at that $1 price," Witynski said Tuesday.
Still, Wall Street remains cautious about the company's long-term prospects. Dollar Tree's stock tumbled 8% during Tuesday because it lowered its profit expectations for the year. The company said it's drawing more higher-income customers than its typical demographic. These customers are buying necessities at stores to try to stretch their budgets.
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