CHESAPEAKE, Virginia: Discount retail chain Dollar Tree said it will raise its prices from $1 to $1.25 for most of its products, due to the increasing cost of supplies and transport.
Raising prices permanently to $1.25 was not due to "short-term or transitory market conditions," company officials added, noting that higher prices will also allow the company to cope with increased costs of merchandise, as well as higher operating costs, such as wages, the company said.
"Dollar Tree believes this is the appropriate time to shift away from the constraints of the $1.00 price point in order to continue offering extreme value to customers," the company added.
In September, the Chesapeake, Virginia-based company announced it was testing the $1.25 price at select stores.
In its announcement, Dollar Tree stated that it will introduce the new price in more than 2,000 Dollar Tree stores in December, and in all of its 8,000 stores by early next year.
Dollar Tree CEO Michael Witynski said he expects customers to remain loyal.
In a call with industry analysts, he said shoppers "believe that at $1.25, it is still going to be an undeniable value because of what they are seeing out in the marketplace. And they know that Dollar Tree has not raised its price in 35 years, so they are giving us credit."
After the announcement, the company's stock rose 9.2 percent.
At the same time, the company announced its quarterly earnings, which were described by Citigroup analysts as "disappointing," but they added that investors are looking past earnings to the company finally raising prices.