Dollar Tree’s rising celebrity on TikTok is benefiting sales big time. During a third-quarter fiscal earnings report, Dollar Tree shared that its net sales increased by 3.5 percent to $7.56 billion. Net income for 2024 is $233.3 million, compared to $212 million in 2023. However, the chain’s CEO isn’t confident that Dollar Tree will sit in the green for long. The discount retailer is now hinting at a potential price hike for 2025.
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Since Dollar Tree first opened its doors in 1986, the retailer has only increased its base price once. That came 35 years later, in 2021, when the store quietly boosted its base price from a buck to $1.25, per CNN. (Dollar Tree Plus sections, where items range from $2 to $7, were also introduced around this time.) Unsurprisingly, the 25-cent jump received backlash, but Dollar Tree eventually found its footing.
According to Placer.ai., Dollar Tree’s “foot traffic shows no signs of slowing [down.]” For 2024 Q3, visits to Dollar Tree were up by 5.3 percent year-over-year. However, there could be a potential drop in numbers come next year when Dollar Tree is expected to implement its second price hike in less than five years—also its second price hike under President-elect Donald Trump.
Dollar Tree told analysts during its Dec. 4 earnings call that Trump's proposed tariffs on imports could significantly impact the chain’s business model, including its wide breadth of inventory. More specifically, Dollar Tree may be forced to cut ties with some international brands and, much to customers’ dismay, raise its $1.25 base price.
Company interim CEO Michael Creedon didn’t allude to what that new price tag may be or which products would be affected. However, he did seem to assure customers that a price hike would be a last resort.
“We believe there is a wide range of potential actions that we can take to help mitigate additional tariffs if and when they materialize,” he told analysts, as reported by CNN.
Beloved for its seasonal decorations, beauty dupes, and affordable household essentials, Dollar Tree heavily relies on imported goods. According to KeyBanc Capital Markets analysis obtained by CNN, an estimated 40 percent of Dollar Tree’s sales come from imported merchandise.
Should Trump’s tariffs go into effect, Dollar Tree is prepared to reconsider vendor partnerships and source inventory elsewhere. The proposed tariffs would affect items coming from Mexico, Canada, and China.
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Dollar Tree is just one of many companies that could be impacted by the new tariff ruling. Last month, Walmart CFO John David Raineyissued a similar warning about a potential price surge in 2025.
"We never want to raise prices," he told CNBC. "Our model is everyday low prices. But there probably will be cases where prices will go up for consumers."
That said, Rainey believes Walmart is up for the challenge and has been preparing for something like this for some time now.
"We’ve been living under a tariff environment for seven years, so we’re pretty familiar with that," he continued. "Tariffs, though, are inflationary for customers, so we want to work with suppliers and with our own private-brand assortment to try to bring down prices."
