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Dollar Tree announces first price hike in 35 years! 25% increase!


marylander1940
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4 minutes ago, JoeMendoza said:

I've been to dollar stores before, but 80% of the stuff in the stores is over a dollar. so this price hike probably doesn't warrant a name change.

You might be confusing Dollar Tree where everything is sold for $1 with Family Dollar and other similar named stores. 

Yes, I admit it! I do buy a few things from stores like that. Guilty as charged! 

Liberal, born and raised in Maryland, proud member of pink pistols!

Ignore list: WilliamM

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38 minutes ago, jtwalker said:

A business cannot absorb rising costs without passing it onto the consumer.  Income has to exceed expenses; pretty basic economics here and we all know that most things are more expensive this year.

A business CAN pause increases on top salaries in order to avoid burning loyal customers. It chooses not to. It’s a 25% price hike across the board. 
 

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I’m amused at how easily people are angered and riled up over Dollar Tree’s proposed 25% base point price increase.  I’m the first to admit I shop there routinely for specific items.  Examples of what I call bargains include:

1.  Greeting cards.   Many times they’re 2 for a dollar.  Why pay $4-5 for a Hallmark card?  People remember the personalized note I write in the card and then usually toss the card. 

2.  Gift bags.  Another inexpensive item.  The gift I put in the bag is where I spend my money, not the gift wrapping vessel.

3.  Special occasion balloons.  Admittedly, I’ve only purchased one in the past year.

4.  Foil roasting pans. $4.00 at Kroger. $1.00 at Dollar Tree. 

5.  Seasonal decorations. 

As an accountant I look behind the numbers.   On the surface a 25% increase sounds outrageous.  When viewed as 25 cents it doesn’t seem so bad.  Conversely, a 25% increase on a $100,000 item is something to take notice of.  

At the end of the day I’d tell you that Dollar Tree sells a lot of junk.  They also sell some one-use items that are truly bargains. If someone is shopping exclusively at Dollar Tree then they probably have a very difficult life and perhaps a quarter won’t severely impact their life.  I would assume their life is already extremely difficult.  

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2 hours ago, jeezifonly said:

A business CAN pause increases on top salaries in order to avoid burning loyal customers. It chooses not to. It’s a 25% price hike across the board. 
 

If their cost has increased 25%, how do you expect them to cover that without raising prices?

The top exec makes 6.5M, which we can all agree is a lot.  Total revenue is 25.5B.

Mr execs salary is nothing compared to total revenue, so his salary cut or even disappearing completely does not solve their issue with inflation.

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11 hours ago, marylander1940 said:

Great. First escorts increase from $250 to $300 and now Dollar Tree increases 25 more cents. My life is in decline.

Edited by lonely_john
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On 11/24/2021 at 8:54 AM, JoeMendoza said:

I've been to dollar stores before, but 80% of the stuff in the stores is over a dollar. so this price hike probably doesn't warrant a name change.

Nope, that's Dollar General, everything at DollarTree is $1 and has been for 30 years.

This is huge. 

Edited by tassojunior

The French aristocracy didn't see it coming either.

Ignore list: marylander1940, WilliamM, JJKirkwood

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14 hours ago, jeezifonly said:

It’s a multi-billion dollar enterprise with CEO making annually several million, and employees paid minimum wage.

No, it’s not justified. It’s greed.

Their pre tax profit margin is about 8%

The CEO’s comp is about 0.000165 of their revenues and most of it is at risk

The price increase is warranted on tight margins and the CEO’s comp is irrelevant 

Edited by BnaC

“The cure for a fallacious argument is a better argument, not the suppression of ideas” Carl Sagan

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8 minutes ago, lonely_john said:

I liked your comment, but just out of curiosity ... source?

SEC Filings...

I get detail on composition of executive compensation from S&P Global (subscription site) but the raw data is still available in the SEC filings.

Edited by BnaC

“The cure for a fallacious argument is a better argument, not the suppression of ideas” Carl Sagan

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16 hours ago, Beancounter said:

I’m amused at how easily people are angered and riled up over Dollar Tree’s proposed 25% base point price increase.  I’m the first to admit I shop there routinely for specific items.  Examples of what I call bargains include:

1.  Greeting cards.   Many times they’re 2 for a dollar.  Why pay $4-5 for a Hallmark card?  People remember the personalized note I write in the card and then usually toss the card. 

2.  Gift bags.  Another inexpensive item.  The gift I put in the bag is where I spend my money, not the gift wrapping vessel.

3.  Special occasion balloons.  Admittedly, I’ve only purchased one in the past year.

4.  Foil roasting pans. $4.00 at Kroger. $1.00 at Dollar Tree. 

5.  Seasonal decorations. 

As an accountant I look behind the numbers.   On the surface a 25% increase sounds outrageous.  When viewed as 25 cents it doesn’t seem so bad.  Conversely, a 25% increase on a $100,000 item is something to take notice of.  

At the end of the day I’d tell you that Dollar Tree sells a lot of junk.  They also sell some one-use items that are truly bargains. If someone is shopping exclusively at Dollar Tree then they probably have a very difficult life and perhaps a quarter won’t severely impact their life.  I would assume their life is already extremely difficult.  

Wonderful analysis. I hope you're not counting the commute it takes you to get there and I'm sure you're using spare time to go. I have a cousin who lives near a Dollar Tree store and whenever I visit him I stop buy that store and buy Colgate liquid toothpaste, Sensodyne toothpaste, acetaminophen, Neosporin, scotch tape for boxes, and also other items that at a store might go for 1 dollar while on sale but not always (tuna can, detergent, liquid soap, 1 pound French fries, mayonnaise, etc.)

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Liberal, born and raised in Maryland, proud member of pink pistols!

Ignore list: WilliamM

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11 hours ago, BSR said:

$1 in 1986 is worth $2.52 today.  I assume the quantity and quality of items sold for $1 has diminished significantly in the past 35 years.

Not really. I have some apts. I rent and depend on them for $1 liquid plumber, windex, disinfectant sprays, cleaning supplies, paint brushes, drop cloths, gallons of bleach, etc etc but usually pick up some neat things too. The general feel in the store is everything is so cheap it seems free. DollarTree is WalMart's big competitor in household goods and WalMart, before pandemic, marketed identical items for 88 cents (now $1.28). DollarTree often locates next to WalMarts. The big beneficiary of this price hike will be WalMart. 

Janet Yellen needs to figure this DollarTree emergency out. Hitting low-income voters up with a 25% price hike in their daily lives is bad politics. 

Edited by tassojunior

The French aristocracy didn't see it coming either.

Ignore list: marylander1940, WilliamM, JJKirkwood

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Some factoids that may or may not be of interest:

Dollar Tree net worth as of November 23, 2021 is $32.55B. Dollar Tree is the largest and most successful single-price-point retailer in North America.                                                                                                                                                                             https://en.wikipedia.org

Dollar Tree is a self-owned company that itself has acquired numerous national and regional competitors over the years, including Family Dollar and Dollar Bill$.                                                                                                                                                      https://www.mercurynews.com 

Bob Sasser, chief executive officer of the nation's largest chain selling everything for $1, received a nonequity incentive of $497,541, more than half the value of his $700,000 salary last year, according to the filing with the U.S. Securities and Exchange Commission.                                                                                                                                                                            https://querysprout.com 

Strong consumer demand and labor shortages are among some of the reasons for rising prices. Dollar Tree said the shift to $1.25 pricing will allow them to introduce new products and bring back previous products discontinued because of the $1 price constraint.  https://www.wmtw.com › article › dollar-tree-price-hike

 

 
 
 
 
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22 hours ago, ButchAtl said:

The inflation calculator I used said a 1986 dollar was worth $ 27.94 in 2021. 

https://www.usinflationcalculator.com/

I'm sorry, but there's an input error.  You have to hit "calculate" after inputting the starting year.   Your number is from the 1913 base year.

$1 in 1986 is $2.52 in 2021.   This has not been a period of high inflation.

 

“The cure for a fallacious argument is a better argument, not the suppression of ideas” Carl Sagan

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The issue with incremental pricing perspective is that pricing doesn't happen on fractions of decimals.

Example - when you're dealing with 25cents, you are already dealing with a fraction - 1/4 of a $.     You can't price something on a retail shelf at 25.5cents to achieve a 2% price increase.

Another example - the old "coin operated laundry" where you pumped quarters into the machine (maybe you still do...).   Machines weren't set up for pennies, nickles, or dimes.   So, you could raise your price once in a while.   Yr 1, you'd get the benefit of the price increase.   Yrs 2-4, costs would eat away at the profit benefit.   Yr 5, you'd raise the price 25cents again...nominally, a lot...but not when cast over the multiple interim years.  

To some of you I'd say - you wanted $15/hr and it's sticking.   On this site, for many years, I've asserted that artificially increasing the minimum wage above market equilibriums would result in inflation and NO pickup in standard of living and/or purchasing power.   Now, you are seeing it happening.   The same will occur with Universal Basic Income - you will give people money to spend and more money will chase the same supply of goods pushing prices up and not increasing purchasing power.    As sure as many of you find the idea attractive, I assure you that the benefits will not be sustained.

DollarTree and other Dollar Stores are skilled at sizing quantities to get a moderate income consumer from paycheck to paycheck with things they need.   Nominal Wages are growing (for those choosing to work) but real wage increases are nil because of inflation.   Dollar Tree has two options - raise prices or cut quantities.   In reality, they're doing both to balance the fact that they only have so many decimals to play with.

“The cure for a fallacious argument is a better argument, not the suppression of ideas” Carl Sagan

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1 hour ago, BnaC said:

I'm sorry, but there's an input error.  You have to hit "calculate" after inputting the starting year.   Your number is from the 1913 base year.

$1 in 1986 is $2.52 in 2021.   This has not been a period of high inflation.

 

OOPS!  my bad.  thanks for the correction.

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