Dollar Tree Shares Up 17% after the news of the rise in prices for goods

Dollar Tree Shares Up 17% after the news of the rise in prices for goods

Retail chain Dollar Tree reported, which will expand the range and add more goods worth more than a dollar.

Dollar Tree - a chain of cheap stores, where most of the goods are 1 $. We analyzed the business of the company in detail in our review..

In 2019, Dollar Tree launched the new Dollar Tree Plus network, where goods are sold for more than a dollar. In its second quarter financial report, the company noted, that consumers liked the new format.

Now Dollar Tree wants to add more products with different prices, including in their traditional stores. In total, the company has almost 16 thousand stores. Of which in Dollar Tree Plus format - 340. By 2024, the retailer expects to increase this number to five thousand.

More Dollar Tree Celebrates Combo Store Success. In such stores there are departments with cheap goods., per dollar, and departments with more expensive things. According to management, profitability and sales in the Combo Store is much higher compared to traditional stores.

Due to disruptions in the supply chain, rising prices and labor shortages, many retailers are struggling. To cut costs, retailers are forced to raise prices. Even shops for cheap goods.

Dollar Tree's gross margin fell from 30.5 to 29,4%. Expanding the assortment with more expensive goods, the company expects to improve overall profitability and increase sales.

Investors respond positively to Dollar Tree announcement. During the day, the company's shares rose by 17%, to 101 $. Since the beginning of the year, the retailer's securities have fallen in price by 6%.

Dollar Tree Shares Up 17% after the news of the rise in prices for goods

  Structural notes. Detailed analysis
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