Dollar Tree makes it official: Items will now cost $1.25

NEW YORK, NY -- Dollar Tree, a discount retailer chain, announced Tuesday that it will raise its prices to $1.25 for most of its products in light of rising freight costs.

Dollar Tree makes it official: Items will now cost $1.25

NEW YORK, NY -- Dollar Tree, a discount retailer chain, announced Tuesday that it will raise its prices to $1.25 for most of its products in light of rising freight costs.

Dollar Tree stated that the price increase to $1.25 was not caused by "short-term market conditions", and that the price rises were permanent. It stated that the higher prices will allow the company to deal with both high merchandise costs and higher operating costs such as wages.

"Dollar Tree believes that this is the right time to move away from the restrictions of the $1.00 price point to continue offering extreme value for customers," the company stated in a statement.

Dollar Tree was the last "dollar store" that was still in existence after all its competitors had abandoned it.

The company is located in Chesapeake in Virginia. stated in September that it was testing higher prices in select stores. It announced Tuesday that it would introduce the new price point to more than 2,000 Dollar Tree stores in December, and will complete the rollout of the higher prices in all stores by the beginning of next year. There are approximately 8,000 Dollar Tree locations.

Michael Witynski, CEO of Dollar Tree, stated that he hopes customers will remain loyal to the company.

Witynski stated that the company's customers "believe that at $1.25 it's still going be an undeniable worth because of what they see out in market," during a conference call with industry analysts. They know Dollar Tree hasn’t increased its price in 35-years, so they give us credit."

Following the announcement, the stock price rose 9.2% Tuesday. This was in conjunction with quarterly earnings. Citigroup analysts called the earnings "disappointing", but they said that investors are now looking beyond earnings to see if the company is finally raising prices.

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