Hedge fund investor wants Dollar Tree to raise prices

Hedge fund investor wants Dollar Tree to raise prices
Dollar Tree is the nation's 21st-largest retailer by sales.

(CNN) - Have you ever wondered how Dollar Tree is still able to continue selling everything in its stores for just a single dollar after all these years?

According to one activist investor, it's because the store has lowered the value of the products it sells.

In a sense, that’s right, as a static $1 price will, over time, effectively get cheaper and cheaper with inflation.

A dollar's worth of merchandise in 1986, for instance, would cost roughly $2.30 today.

That, at least, is according to Jeffrey Smith, the CEO of hedge fund Starboard Value. And he says it’s time for Dollar Tree to raise its prices.

Starboard Value recently took a 1.7 percent stake in the bargain retailer, and wants to work with Dollar Tree on its pricing strategy.

Worry not, though, shoppers.

Dollar Tree responded politely to the suggestions, but it appears likely to push back on any proposed changes.

Dollar Tree is the nation’s 21st-largest retailer by sales, and second-largest by number of stores, according to the National Retail Federation.

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