Eggs from New York (CNN) have become too expensive for Dollar Tree.
Dollar Tree (DLTR), which sells most products for $1.25 and a small selection of items for $3 or $5, will stop selling eggs in stores because the company cannot make money from it, offer them at flat rates.
Egg prices have skyrocketed, fueled by tight supply caused by deadly bird flu, high production costs and egg producers boosting their own profits.
Egg prices rose 38% annually for producers and 55% for buyers in February, although eggs are gradually becoming cheaper. The median price for a dozen large Grade A eggs was $4.21 in February, according to data from the Bureau of Labor Statistics.
Most retailers have increased egg prices for customers to adjust for higher costs, but Dollar Tree doesn’t have as much flexibility to increase prices.
“Our primary price point on Dollar Tree is $1.25. The cost of eggs is very high right now,” the company spokesman said Randy Guiler. Dollar Tree, which has around 9,000 US stores, will bring back eggs when “costs return to historical levels.”
But that probably won’t be in time for an important egg-buying holiday, Easter, which is April 9th this year.
Reuters first reported that Dollar Tree would stop selling eggs. Family Dollar, owned by Dollar Tree, will continue to sell eggs.
Increasingly, budget-conscious shoppers have turned to dollar stores for groceries.
Dollar Tree, Family Dollar, and Dollar General, the largest of the three chains, have expanded in recent years, adding more staples, though fresh and healthy options are limited. According to a Tufts University study released this year, dollar stores are the fastest growing grocery retailers in America.
Dollar Tree used to sell boxes of eight or six eggs for $1. In 2021, Dollar Tree announced it would raise prices to $1.25 as selling anything for $1 was squeezing the business.
Dollar Tree also chose to grow eggs because it has a lean in-store staffing model, said David D’Arezzo, a former manager at Dollar General and other retailers who now works as an industry consultant. Workers who change price tags on eggs each week to compensate for wild swings in the market are putting additional strain on store operations, he said.
Targeting low- and middle-income customers, the chain doesn’t want to shock price eggs to damage its price reputation with shoppers, D’Arezzo said.