Local News

Actions

Dollar Tree encouraged to increase its prices by investor

Posted: 10:09 PM, Jan 07, 2019
Updated: 2019-01-08 15:20:00Z

LAS VEGAS (KTNV) — Dollar Tree is known for its items being no more than a dollar, but customers at the bargain retailer may soon see pricing on the rise.

"I hope they don't increase the prices, but I know things do go up," customer Kimberly Marellt said.

For Marellt, shopping at Dollar Tree has saved her money over the years.

However, a Dollar Tree investor from the hedge fund Starboard Value wants Dollar Tree to raise its prices to keep up with the times.

In a letter written to Dollar Tree's CEO, Jeffrey C. Smith, a shareholder from Starboard Value LP , stated a dollar is no longer the same as it was three decades ago because of inflation.

"Dollar Tree has kept its prices at $1 since its founding thirty years ago, even though $1 in 1986 is worth approximately $2.30 today," Smith said.

Las Vegas customers spoke with 13 Action News on Monday and said if prices increase, they will not be afraid to walk away.

"It's cheaper. Here you can get all the things for a dollar each, and at Walmart, it's like five dollars," Elijah Linzkowsky said.

The challenge for a business like Dollar Tree is trying to keep prices low but still make a profit.

Financial analyst Steven Budin said in the long run, investors know that the companies aren't going to be viable unless they continually generate profits.

"It's a fine line that these companies have to walk all the time," Budin said.

It is unclear when or if these prices will increase at the discount retailer.