Dollar Tree’s sales growth was lower than most other large discounters. The cut-rate-only chain is struggling to find success.
Dollar Tree, which sells brand-name and private-label goods priced at 99 cents or less, has raised its prices to 99 cents to 99.9 cents in 2011 and 2002.
The company announced Monday that it will raise prices to $1.25 by the end of April, a decision analysts say is aimed at boosting results and profit margins.
The chain has been plagued by a weak performance. Sales growth was about half of those of its biggest rivals, Wal-Mart Stores and Best Buy. Meanwhile, its operating profit margins trailed both of them. It had historically earned money on sales of $1.99, according to StarMine. But since 2010, Dollar Tree has consistently reported a loss.
“This is an important next step to returning the company to industry-leading profitability,” Dollar Tree Chairman and CEO Bob Sasser said in a statement.
The new prices could stoke rivals’ sales at the discount stores. Shares of Wal-Mart and Best Buy surged last week after price cuts on private-label goods by both companies. But Dollar Tree said it would “emphasize low prices” in its merchandising strategy.