Dollar Tree (DLTR) - Get Dollar Tree, Inc. Report surged the most in more than two years Wednesday after the discount retailer said it would begin testing the sale of higher-priced items in some of its stores and boosted its share buyback program to $2.5 billion.
Dollar Tree said it would test the sale of merchandise priced at $3 and $5, alongside its traditional $1 offerings, in 500 so-called "Dollar Tree Plus" stores by the end of the year, with another 1,500 planned for fiscal 2022.
The group also boosted its share buyback program by $1.05 billion as part of what it called a "disciplined capital allocation strategy that balances returning capital to our shareholders and investing in our business for growth."
“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," said CEO Michael Witynski. "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.”
Dollar Tree shares were marked 15.7% higher in mid-morning trading Wednesday to change hands at $99.85 each, a move that would trim the stock's year-to-date decline to around 7.55%.
Last month, Dollar Tree forecast full year revenues of between $26.2 and $26.44 billion, but lowered its earnings estimate by around 40 cents to range of $5.40 to $5.60 per share, citing the impact of "well-publicized challenges in the global supply chain, as well as higher freight costs and other inflationary pressures.