Dollar Tree to raise prices to $1.25

Yahoo Finance's Akiko Fujita breaks down Dollar Tree earnings and how even the dollar store company will have to raise prices due to inflation.

Video Transcript

AKIKO FUJITA: Let's turn our attention to one stock that is moving to the upside in the session. That is Dollar Tree, up nearly 6% here. Of course, we know this as the dollar store, but goods at the Dollar Tree now, according to the company, is going to cost you a little more than a buck now. The company announcing it will raise prices from $1 to $1.25 for its products starting in January. Now, Dollar Tree says this was not a reaction to short-term or transitory market conditions. These are their words in this statement.

The company, though, admitting that they weren't able to continue selling some products by sticking to that dollar a product rule. This, of course, comes on the back of their earnings results in the most recent quarter. Dollar Tree earned $0.96 a share on sales of $6.4 billion. Same store sales increased 1.6% in the third quarter. Zack, you know, investors certainly liking the fact that profit margins certainly going to improve as a result of this $0.25 bump, but can we call it the Dollar Tree anymore if it's not $1?

ZACK GUZMAN: No, I don't think we can. I mean, I was just reflecting on this--

AKIKO FUJITA: The Discount Tree?

ZACK GUZMAN: --on the walk home last night, Akiko. And still dollar slices in New York City, which still baffles my mind, too, here. Because what you get at the Dollar Tree, I don't know if that's worth as much as a dollar slice. I haven't seen that change yet, though, in New York.

AKIKO FUJITA: I agree with you on that one, I think. Yeah, you're right. You can get a pretty decent pizza in New York for a dollar.

ZACK GUZMAN: Better value. And I'll panic when that happens. I'll start listening to the inflation worries when we see that change. But for now, people enjoying that change at Dollar Tree.