RTTNews | Nov 23, 2021 03:06PM EST

15:05 Tuesday, November 23, 2021 (RTTNews.com) - Discount retailer Dollar Tree Inc. (DLTR) announced on Tuesday that it would soon start selling most of its products at the price of $1.25, instead of its regular $1.00. The store took this decision, keeping in mind the impact of rising freight costs and other pandemic-related issues.

The company said that the new prices would be functional from the first quarter of 2022 and would allow the retailer to regain its gross margin range of 35-36 percent by next year. The Dollar Tree store is famous for selling everything for $1 but now the company is forced to raise prices as it deals with high costs and other related issues.

Commenting on the price rise, Chief Executive Officer Michael Witynski said, "The higher price point allows the discounter to expand assortments, introduce new products and sizes as well as bring back traffic-driving products."

Skyrocketing freight prices from global supply chain disruptions have deeply cut into the profits of most American retailers, who are already struggling with higher labor and raw material costs.

The company said that the freight costs were very high than expected in the third quarter and this would continue for some time.

Looking ahead, the company provided guidance for the fourth quarter and raised its outlook for the full-year 2022.

For the fourth quarter, the company estimates earnings in a range of $1.69 to $1.79 per share on consolidated net sales between $7.02 billion and $7.18 billion, based on a low single-digit increase in same-store sales for the combined enterprise.

On average, 15 analysts polled by Thomson Reuters expect the company to report earnings of $1.75 per share on sales of $7.03 billion for the quarter. Analysts' estimates typically exclude special items.

Looking ahead to fiscal 2022, the company now projects earnings in a range of $5.48 to $5.58 per share on consolidated net sales between $26.25 billion and $26.41 billion, based on a low single-digit increase in same-store sales and 3.3% square footage growth.

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