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US: Dollar Tree breaks $1 barrier, price will increase

U.S.A.US: Dollar Tree breaks $1 barrier, price will increase

NEW YORK (AP) — With the rising cost of freight and transportation, discount store chain Dollar Tree announced Tuesday that it will increase prices on most of its items by up to $1.25.

Dollar Tree explained that the reason for its price increase to $1.25 was not due to “transient or short-term market conditions” and specified that the increase is permanent. He added that the higher prices would allow the company to cope with rising business costs as well as higher operating expenses such as salaries.

“(Dollar Tree) believes the time is right to move away from the $1 price restrictions to continue offering exceptional value to customers,” the company said in a statement.

Dollar Tree was one of the last true “dollar stores” after most of its competitors moved away from that price level.

The Chesapeake, Virginia-based company reported in September that it was testing price hikes at some stores. On Tuesday, it said it would introduce new pricing at more than 2,000 new Dollar Tree stores starting in December and complete all of its stores early next year.

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The company has about $8,000 tree stores.

CEO Michael Wittensky said he expects Dollar Tree customers to remain loyal.

“Its buyers believe that at $1.25 it is still an undeniable value compared to what they see in the market,” Wittensky said in a call with industry analysts.

“And they know Dollar Tree hasn’t raised its price in 35 years, so they give us credit.”

Shares of the company rose 9.2% on Tuesday following the announcement, which coincided with the company’s quarterly results.

Analysts at financial services company Citigroup called the results “disappointing” but said investors ignored earnings, prioritizing the fact that the company would eventually raise its prices.

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