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Dollar Tree sees inflation cut both ways


  • Demand for consumables is pressuring margins, and inflation is also impacting costs
  • Frozen foods for family meals are a key area of focus
  • Private label sales growth has outpaced national brands for past 39 weeks

Inflation has become a two-edged sword for Dollar Tree, as consumers seeking bargains are driving sales and profit growth but rising costs and a shift toward lower-margin consumable items are expected to pressure margins in the near term.

In a conference call with investors discussing results for the fiscal third quarter on Thursday, executives at the Chesapeake, Va.-based retailer said shoppers are stepping up their purchases of grocery items, which are outpacing the growth of high-margin discretionary purchases.

As a result of that shift, combined with other rising cost pressures, such as freight, the…

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