2 weeks Ago
President-elect Donald Trump’s tariff plans may change what products customers can find on Dollar Tree’s shelves – and push the chain to increase prices again. The discount retailer said on its earnings call Wednesday that Trump’s plans to tax imported goods may lead it to alter some product specifications, change sizes or remove them from stores altogether if they become too costly. Dollar Tree may also raise prices from their current level of $1.
25. “We believe there is a wide range of potential actions that we can take to help mitigate additional tariffs if and when they materialize,” Dollar Tree interim CEO Michael Creedon said on the call. Dollar Tree, which also owns Family Dollar, did not say which products it may axe or hike prices on.
Trump has threatened to impose 25% tariffs on products from Mexico and Canada and an additional 10% tariffs on goods coming from China. Tariffs are taxes placed on imported goods designed to protect domestic manufacturers. Companies that import products pay the taxes and typically pass the extra cost on to customers in the form of higher prices.
An estimated 40% of Dollar Tree’s sales are reliant on imported goods, leaving the retailer highly exposed to tariffs, according to KeyBanc Capital Markets analysis. Dollar Tree said it will negotiate with vendors and shift where it gets its items from to alternate countries if tariffs take effect, a similar response to how it handled Trump’s tariffs during his first administration. Dollar Tree may also raise prices to combat tariffs, joining a growing list of chains from Walmart to Best Buy that say that will hike prices to offset any impact.
In 2021, Dollar Tree raised base prices to $1.25 after 30 years of selling items for just a dollar. Dollar Tree also sells some products for up to $7.
This “multi-price” strategy gives the chain more flexibility to raise prices if an item becomes too expensive because of tariffs, Creedon said. UBS analyst Michael Lasser expects Dollar Tree to raise its fixed $1.25 prices by 10 or 20 cents to mitigate the tariff impact, he said in a research report last month.
Tariffs may be another hit to Dollar Tree , adding to its struggles. Its CEO stepped down last month and shares of the company have plunged more than 40% this year. Dollar Tree’s low and middle-income customer base has been stung by higher prices, and they have stopped buying as much of the chain’s home furnishings and knickknacks the retailer is known for.
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