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Dollar Tree items no longer just a dollar

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Brian Sozzi and Julie Hyman break down the news behind Dollar Tree’s decision to sell more items above the average $1 price mark and how supply chain pressures and inflation are pushing this latest move.

Video Transcript

BRIAN SOZZI: Julie, you and I have been watching the past 24 hours, this social media uproar over Dollar Tree. They came out this week saying they're going to start selling more products over $1. So are they a Dollar Tree plus store? Yeah, perhaps. But this is, you got another example of why if you are an investor or just a human being living in this world, you should just pull up and read free earnings call transcripts that are on the Yahoo Finance site.

Dollar Tree, and this is something we have reported on consistently, they have already been testing this at hundreds of stores, most notably in early August just as a way to offset inflation, ultimately appease an activist investor that showed up on their doorsteps last year here. They cannot continue to sell a whole store full of stuff for $1 when you have inflation in transportation and workers going through the roof. Realistically over time, Julie, it will probably be a $10 tree store.

JULIE HYMAN: I mean, that might take quite a while, but what's interesting to me also is the stock reaction. Yesterday we saw a big pop in the shares. Today they're coming back down a little bit. I don't know if them raising the prices is going to be that great for the bottom line, especially if they're just trying to keep up with the pace of increasing costs. And as you know, the dollar store business, not just Dollar Tree, but Dollar General, has been a challenged one as of late. You know, even when we were seeing other parts of retail thrive, this is an area that was not.

BRIAN SOZZI: Yeah, and again, a lot of other dollar stores have been doing this probably for as long as I've been in this world. They try to get you in there selling stuff at $1. Family Dollar has been testing multiple price points for years. Dollar General, multiple price points. But for some reason the market just really dug this news out of Dollar Tree.