- The stock price of Dollar Tree, Inc. (NASDAQ: DLTR) increased by over 15% during intraday trading today. This is why it happened.
The stock price of Dollar Tree, Inc. (NASDAQ: DLTR) increased by over 15% during intraday trading today. Investors are responding positively to a couple of major Dollar Tree announcements.
Price Points Above $1
Investors are responding positively to Dollar Tree announcing that based on positive customer reaction and the success of its new Combo and Dollar Tree Plus store formats, the company plans to begin adding new price points above $1 across all Dollar Tree Plus stores and will begin testing additional price points above $1 in selected legacy Dollar Tree stores.
Dollar Tree already announced that it is on track in 2021 to have 500 Dollar Tree Plus stores by fiscal year-end – offering an assortment of value priced $1, $3, and $5 products. And another 1,500 stores are planned for fiscal 2022, and at least 5,000 Dollar Tree Plus stores are expected by the end of fiscal 2024. The company has also had significant success with its newest store format, the Combo Store, which leverages the strengths of both banners by bringing a multi-price assortment to Dollar Tree shoppers. Plus the company currently has 105 Combo Stores and expects to add 400 Combo Stores in fiscal 2022 with the potential of up to 3,000 over the next several years.
$1.05 Billion Share Repurchase
Dollar Tree also reported that its Board of Directors has increased the company’s share repurchase authorization by $1.05 billion to an aggregate amount of $2.5 billion, including approximately $1.45 billion available for repurchases under the Board’s previous repurchase authorization approved on March 2, 2021.
The Board’s authorization permits the company to make purchases of its Common Stock from time to time in the open market or through privately negotiated transactions, subject to market and other conditions, up to the aggregate amount authorized by the Board. And the Board’s authorization has no expiration date.
KEY QUOTES:
“For decades, our customers have enjoyed the ‘thrill-of-the-hunt’ for value at one dollar – and we remain committed to that core proposition – but many are telling us that they also want a broader product assortment when they come to shop. We believe testing additional price points above $1 for Dollar Tree product will enable us over time to expand our assortments, introduce new products and meet more of our customers’ everyday needs.”
“We are a ‘test-and-learn’ organization which is what we are doing with this new initiative. We listen to our customers and believe it will make shopping with us an even better experience. Our merchants have proven that they are among the best in the industry in working with suppliers to create extreme value, and we will continue to deliver the ‘thrill-of-the-hunt’ to our customers.”
“Our brand promise is that customers get great value for what they spend at Dollar Tree. We will continue to be fiercely protective of that promise, regardless of the price point, whether it is $1.00, $1.25, $1.50.”
“Delivering value to our customers and shareholders is our top priority. We are committed to a disciplined capital allocation strategy that balances returning capital to our shareholders and investing in our business for growth. In fiscal 2021, we have repurchased $950 million of shares. Over the past several years, we have paid down more than $4 billion in debt and returned to an investment grade rating. As a result, with the meaningful free cash flow from our business, we expect to maintain share repurchasing as an important part of our capital allocation strategy.”
— Michael Witynski, President and Chief Executive Officer
Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.
