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CHESAPEAKE, Va. — Dollar Tree executives said the retailer’s new pricing strategy lifted operating income nearly 23% to $381 million in the third quarter ended October 29. Top-line sales rose 8.1% to $6.94 billion.
Comparable-store sales at its Dollar Tree stores increased 8.6% from a year earlier, while comps at its Family Dollar stores were up 4.1%.
The company last year converted to a $1.25 price point across all Dollar Tree stores in the United States, a move made to significantly enhance the company’s ability to diversify its product offerings and provide customers with more of their daily essentials.
Virtually all of the same-store sales growth in the third quarter was attributed to the price increases.
Store traffic declined at Dollar Tree stores and was up just 0.1% at the Family Dollar unit, where traffic increased for the first time in 12 quarters. Overall, traffic has declined for five consecutive quarters.
“Our third quarter sales performance reflects the timely execution of merchandising initiatives to drive our consumables business in this uncertain and inflationary environment,” Mike Witynski, Dollar Tree’s president and chief executive officer, said in announcing the third quarter financial results. “Shoppers are responding to our new value proposition at Family Dollar and Dollar Tree as we focus on driving both traffic and store productivity.”
Dollar Tree raised its sales outlook for the end of the year. Witynski noted that the company’s recent additions to its executive team are expected to lead it to the next evolution of growth.
In March, Dollar Tree announced a shake-up of its board of directors, with former Dollar General Corp. CEO Richard Dreiling assuming the role of executive chairman, the board’s top post.
