Dollar Tree shares gained 17% after announcing a rise in commodity prices
Retail chain Dollar Tree (DLTR) said it would expand its assortment and add more items above the dollar. Dollar Tree is a chain of cheap shops where most of the goods cost $ 1. We analyzed the company’s business in detail in our review. In 2019, Dollar Tree launched the new Dollar Tree Plus chain, which sells items for more than a dollar.
In its second-quarter financial report, the company noted that consumers liked the new format. So now Dollar Tree wants to add more products at different prices, including to their traditional stores.
In total, the company has almost 16 thousand stores.
Of these, 340 are in Dollar Tree Plus format. By 2024, the retailer expects to increase this number to five thousand. Dollar Tree also celebrates the success of the Combo Store.
In such stores, both departments have cheap goods, for the dollar, and departments with more expensive things. According to management, the profitability and sales of the Combo Store are much higher compared to traditional stores. Many retailers are struggling with supply chain disruptions, rising prices, and labor shortages. Retailers to raise prices. Even shops for cheap goods.
Due to high shipping costs, dollar Tree’s gross margin fell from 30.5% to 29.4% in the second quarter. However, by expanding its assortment with more expensive products, the company expects to increase its overall profitability and sales. Investors reacted positively to the Dollar Tree announcement. During the day, the company’s shares rose 17% to $ 101. Since the beginning of the year, the retailer’s shares have fallen in price by 6%.
