- Dollar Tree shares gained as much as 18% on Wednesday after it said it will start selling items priced above $1.
- Customers at Dollar Tree Plus stores will see products selling for $3 to $5.
- The company has been dealing with rising costs for shipping and labor.
Dollar Tree shares shot higher Wednesday after the discount retailer said it will start selling items priced at more than $1 each, a move that comes as the company deals with cost pressures.
Shares of Dollar Tree sprang up as much as 18% to a one-month high of $101.43 then trimmed the advance to 15%. Volume of nearly 20 million shares traded trounced average daily volume of 2.8 million shares.
Dollar Tree Plus stores will sell products with $3 and $5 price tags by the end of the fiscal year, the company said in a late Tuesday statement. Items priced at $1.25 and $1.50 will be added to shelves at some of its Dollar Tree stores, with plans to expand testing additional price points above $1.
The higher prices will arrive as the company said it has received "positive customer reaction" and has logged success at its new Combo and Dollar Tree Plus store formats.
"For decades, our customers have enjoyed the 'thrill-of-the-hunt' for value at one dollar - and we remain committed to that core proposition - but many are telling us that they also want a broader product assortment when they come to shop," said Dollar Tree CEO Michael Witynski in Tuesday's statement. The company started testing Dollar Tree Plus stores in 2019.
Witynski in August addressed concerns about inflation and the rising cost of goods, shipping, and labor.
"Freight costs have reached unprecedented levels as a result of increased demand, limited capacity, and shipping delays," he said during a second-quarter call with analysts. Dollar Tree is "more sensitive" to freight costs than other retailers that import products because it has focused on selling $1-priced items, the CEO said.