Dollar Tree can't afford to sell eggs anymore
Eggs have gotten too expensive for Dollar Tree.
(DLTR), which sells most products for $1.25 and a small selection of items for $3 or $5, will stop selling eggs at stores because the company can’t make money offering them at flat prices.
Egg prices have surged, fueled by short supply caused by the deadly avian flu, high production costs and egg producers increasing their own profits.
Egg costs jumped 38% for producers annually in February and 55% for shoppers, although eggs are beginning to get cheaper. The average price for a dozen Grade A large eggs was $4.21 in February, according to data from the Bureau of Labor Statistics.
Most retailers have raised egg prices on customers to adjust for higher costs, but Dollar Tree doesn’t have as much flexibility to raise prices.
“Our primary price point at Dollar Tree is $1.25. The cost of eggs is currently very high,” said company spokesperson Randy Guiler. Dollar Tree, which has around 9,000 US stores, will bring back eggs when “costs are more in line with historical levels.”
But that probably won’t be in time for a key egg-purchasing holiday, Easter, which is April 9 this year.
Reuters first reported that Dollar Tree would stop selling eggs. Family Dollar, owned by Dollar Tree, will continue selling eggs.
Shoppers on tight budgets have increasingly turned to dollar stores for food.
Dollar Tree, Family Dollar and Dollar General, the largest of the three chains, have spread in recent years and added more food basics, although fresh and healthy options are limited. Dollar stores are the fastest-growing food retailers in America, according to a study by Tufts University released this year.
Dollar Tree used to sell cartons of eight or six eggs for $1. In 2021, Dollar Tree announced it would raise prices to $1.25 because selling everything for $1 was squeezing business.
Dollar Tree also made the decision to pull eggs because it has a lean staffing model in stores, said David D’Arezzo, a former executive at Dollar General and other retailers who now works as an industry consultant. Workers changing price tags every week on eggs to account for wild swings in the market would be an extra strain on store operations, he said.
The chain caters to low and middle-income customers and it doesn’t want to offer eggs at sticker shock prices to hurt its price reputation with shoppers, D’Arezzo said.