Canada's Dollarama Inc has raised its full-year same-store sales forecast after topping quarterly revenue estimates, helped by strong demand for its groceries and household essentials as more consumers turn to discount stores amid surging inflation.
Rising prices of goods ranging from edible oils to paper products and gas has been forcing Canadian consumers to trade down to cheaper items to ease the strain on their wallets, benefiting discount store chains such as Dollarama.
Additional Price Points
Montreal-based Dollarama, which typically sells everything from kitchen essentials to party supplies under C$4, has also rolled out additional price points up to C$5, which Wall Street analysts have said would cushion margins amid higher costs.
Dollarama's US counterpart Dollar General Corp also lifted its annual comparable sales forecast last month, with inflation pushing affluent US shoppers to hunt for bargains as well.
The discount store operator said it now expects comparable store sales growth of 6.5% to 7.5% for fiscal 2023, up from the 4% to 5% range estimated previously.
Neil Rossy, president and CEO of Dollarama, stated, "Our strong performance in the first half of fiscal 2023 reflects a sustained consumer response to our unique value proposition, especially for everyday essentials, as Canadians from all walks of life adapt to a high-inflation environment. As a result, we are increasing our assumption for annual comparable store sales [...]."
The company's sales rose 18.2% to C$1.22 billion ($938.97 million) in the second quarter, beating analysts' average estimate of C$1.19 billion, according to Refinitiv data.
Net income for the quarter ended 31 July rose to C$193.5 million, or 66 Canadian cents per share, from C$146.2 million, or 48 Canadian cents per share a year earlier.