Dollar tree shares are up more than 16% on Wednesday discount retailer plans to sell some products for new prices above $ 1 at all Dollar Tree Plus stores and to test additional prices at more than 100 select legacy locations.
|DLTR||DOLLAR TREE, INC.||100.51||+14.23||+ 16.49%|
In 2019, the discount retailer started testing Dollar Tree Plus locations, They offer a variety of products at $ 1, $ 3 and $ 5. The company also launched a combined store format in March, combining the Dollar Tree and Family Dollar brands under one roof.
Dollar Tree President and CEO Michael Witynski says its existing 340 Dollar Tree Plus stores and 105 stores combined have seen “positive customer reaction” so far. Besides, he told analysts in August that Dollar Tree Plus stores have seen an overall increase in sales of approximately 6%, while the largest combined stores have generated 23% more sales.
“For decades, our customers have enjoyed the ‘thrill of the hunt’ for dollar value, and we remain committed to that core proposition, but many tell us they also want a wider variety of products when it comes to ‘We believe testing additional price points above $ 1 for the Dollar Tree product will allow us, over time, to expand our assortment, introduce new products, and better meet the daily needs of our customers. ” statement Tuesday. “The promise of our brand is that customers get great value for what they spend at Dollar Tree. We will continue to fiercely protect that promise, regardless of price, whether it’s $ 1, $ 1.25 or $ 1.50.”
The company is on track to have 500 Dollar Tree Plus stores by the end of fiscal 2021, with 1,500 additional Dollar Tree Plus locations planned for 2022 and at least 5,000 planned for the end of fiscal 2024. Meanwhile, Dollar Tree expects to add 400 additional Combo store locations in fiscal 2022, with the potential of up to 3,000 in the next few years.
The move comes as Dollar Tree recently lowered its full-year earnings outlook, citing higher supply chain and freight costs.
The company now projects that its regular ocean carriers will meet only 60-65% of their commitments, down from the previous guidance of around 85%. It also cited a more than 20% increase in spot market rates for ocean freight from China since its first-quarter earnings report in May.
Dollar Tree said it now expects an additional $ 185 million to $ 200 million, or 60 to 65 cents per diluted share, in freight costs from its May guidance. For fiscal 2021, Dollar Tree anticipates net sales in the range of $ 26.19 billion to $ 26.44 billion and diluted earnings per share in the range of $ 5.40 to $ 5.60.