(Bloomberg) -- Dollar Tree Inc. is moving above the price point that gave the discounter its name.
The retailer’s legacy stores will soon begin testing sales of products that cost more than $1, according to a company statement Tuesday. Dollar Tree will also add more goods that go for more than a buck at its Combo and Dollar Tree Plus stores, which were already charging $3 or $5 for some items. Dollar General Corp., a rival chain, also sells products for more than $1.
Many customers “are telling us that they also want a broader product assortment when they come to shop,” Dollar Tree Chief Executive Officer Michael Witynski said in the statement. “We believe testing additional price points above $1 for Dollar Tree product will enable us over time to expand our assortments, introduce new products and meet more of our customers’ everyday needs.”
The test signals the potential end of an era for Dollar Tree, which has long based its business on the $1 price point, as inflation pushes up the cost of many goods. Annual growth in U.S. consumer prices surged past the 5% mark this year for the first time in more than a decade, as rising demand collided with supply constraints in the second year of the Covid-19 pandemic.
The company is on track to have 500 Dollar Tree Plus stores by the end of its fiscal year in January, and plans to open another 1,500 next year. It’s also planning to add 400 Combo stores in fiscal 2022, almost four times as many as the format’s total store count now. As a whole, Dollar Tree operated 15,865 stores in the U.S. and Canada as of July 31.
Dollar Tree’s second-quarter sales missed analyst estimates last month, and the company’s guidance for the current quarter fell short of expectations. Shipping costs and lag times have been wreaking havoc on profit margins at the Chesapeake, Virginia-based retailer, which relies on a steady volume of cheap goods to make money at low prices.
©2021 Bloomberg L.P.