Dollarama lifted its annual sales forecast, encouraged by strong demand for its household essentials and groceries as inflation-hit consumers turned to discount stores.
Consumers grappling with high interest rates and rental costs are swarming dollar stores in search of affordable holiday decorations and cheaper consumables including chocolates, snack bars and beverages.
Montreal-based Dollarama has also benefited from price hikes that were undertaken to offset higher costs resulting from persistent supply-chain challenges in logistics and labour.
The discount store operator now expects comparable store sales growth of 11% to 12% for fiscal 2024, up from the 10% to 11% it had estimated previously.
Quarterly Performance
Dollarama's sales rose nearly 15% to C$1.48 billion (€1.01 billion) in the third quarter, in line with analysts' average estimates, according to LSEG data.
Excluding items, the company posted adjusted profit of 92 Canadian cents per share, above expectations of 86 cents.
Its gross margin was 45.4% of sales, compared with 43.3% a year ago, helped by lower inbound shipping and logistics costs.
Neil Rossy, president and CEO said, "Sustained consumer demand for our broad range of affordable everyday products and strong execution in the third quarter of fiscal 2024 drove double-digit same store sales growth for a sixth consecutive quarter as well as over 31% earnings per share growth.
"Our financial and operational performance year-to-date reflects the strength and relevance of our value proposition and business model in a challenging macro-economic context."
Elsewhere, Dollar General posted a smaller-than-expected drop in quarterly sales, as more shoppers turned to its stores for cheaper groceries and household essentials.
News by Reuters, additional reporting by ESM.
