Dollar Tree CEO responds to outrage after company decided to drastically hike prices across stores

Dollar Tree’s bosses has boasted to the company’s investors that raising the price cap from $1.50 to $7 will boost profits. 

Customers had reacted angrily to news of the higher prices  – with one saying: ‘So now it is Seven Dollar Tree, and they can up their prices.’

But CEO Rick Dreiling said: ‘We are already seeing a meaningful sales lift at the 1,600 Dollar Tree stores that have been converted to our newest multi-price format.’

And chief financial officer Jeff Davis said that rolling out the $7 limit to more of the budget chain’s 16,000 stores will ‘drive higher gross profit per transaction’.

The company says that the higher price cap allows it to sell a much wider range of items – including food, snacks, beverages, pet care and personal care – that attract wealthier customers. 

Dollar Tree CEO Rick Dreiling (pictured) said higher prices as a hit with shoppers 

Dreiling’s comments came on Wednesday as the budget retailer reported dismal earnings to Wall Street. 

The jump in takings at the stores selling pricier items not enough to make up for a sales slowdown across the board.

Dollar Tree slashed its full-year earnings and sales forecasts as its customers continue to struggle with higher prices and spend less.

Shares tumbled more than 20 percent Wednesday after hitting a 52-week low on the prior day. 

The biggest one-day sell-off for Dollar Tree shares in more than 20 years arrived less than a week after rival bargain chain Dollar General also reported a dire quarter and suffered its largest single-day slump ever.

Dollar Tree has been in the process of restructuring its business and in June said it was exploring options, including a potential sale or spinoff of its Family Dollar banner.

Earlier this year, it had outlined plans to shutter 970 Family Dollar stores. As of August 3, Dollar Tree has shuttered about 655 stores and would close 45 stores through the remainder of the year, the company said on Wednesday.

The Chesapeake, Virginia, company also projected annual sales in a range of $30.6 billion to $30.9 billion, down from $31 billion to $32 billion. 

Both of those numbers fall short of Wall Street projections and it showed in the retailer’s plunging stock Wednesday.

The majority of products in Dollar Tree stores cost $1.25 but last year it raised the cap to $5

In March, Dollar Tree said it would increase the highest price it charges for items to $7 due to an increase in the number of wealthy shoppers visiting its stores.

The majority of items sold by the discount retailer still cost $1.25 after a price rise in 2021 from the previous $1 limit from which it gets its name. 

The company says it hopes to have 2,800 stores with higher $7 price cap by the end of the year, up from around 1,600 now. 

With the chain having around 16,000 outlets, it means the roll out of a higher price cap – which covers around 300 items – to all stores will not be completed until next year.