Dollarama sales rise as consumers flock to lower prices amid high inflation

Discount chain Dollarama Inc. posted a surge in sales in recent quarters. Low prices for commodities have attracted shoppers seeking relief from high inflation.

The Montreal-based company’s same-store sales, a key metric that compares same-location sales and excludes new stores, increased 15.9% in the fourth quarter compared to the same period last year.

The result comes as Canada endured the highest inflation in decades, prompting many consumers to change their shopping habits in search of discounts and lower prices.

Overall, $1 store sales totaled $1.47 billion in the quarter, up from $1.22 billion in the year-ago quarter.

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An increase in the number of transactions was also reported, with a 14.1% increase over the same period in 2022, and a 1.6% increase in average transaction size.

Revenue growth brought Dollarama’s fourth-quarter earnings to $261.3 million, up from $220 million a year ago, and prompted the company to increase its quarterly dividend to 7.08 cents per share, up from 5.53 cents. rice field.

Diluted earnings per share for the 13 weeks ended Jan. 29 were 91 cents per share, up from 74 cents per diluted share in the same period last year, the company said.

Daralama President and CEO Neil Rossey said in a conference call with analysts on Wednesday that the results “consumer continuation of our full-year value proposition, only strengthened in the context of high inflation. “It reflects a positive reaction,” he said.

“We have been very proactive in rebuilding inventories to pre-pandemic levels and avoiding some of the system delays affecting all retailers, but all with rising freight and logistics We have mitigated the cost impact.”

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In its outlook for fiscal 2024, Daralama said it expects 60 to 70 net new store openings and 5 to 6 percent comparable store sales growth.

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“Our property sourcing is vast and diverse, and is really more a matter of opportunity than strategy itself,” said Rossi, noting Daralama’s interest in malls, strip centers and stand-alone buildings. pointed out.

“We are interested in locations that we believe will increase the convenience of our customer base and not cannibalize existing stores.”

In fiscal 2023, 65 new stores will be opened, bringing the number of stores to 1,486 as of January 29.

Dalalama is also focused on ensuring that the customers it acquired as a result of high inflation return, Rossy said.

As long as Dramarama continues to satisfy these new customers and offer products that offer the best value every day, many of them are likely to stay.

“But of course there’s always the risk. There’s the risk that if you’re in another store and your time is a little easier, you’ll simply pay more.”

Meanwhile, retailers’ general and administrative expenses and store operations expenses were $209.6 million in the fourth quarter, up 17.8% from $178 million a year ago.

Dollarama’s chief financial officer, JP Towner, said much of the cost pressure was due to rising wages.

“We are still facing a very tight labor market,” Towner said on a conference call. “We are seeing an acceleration in wage pressures … and we expect that trend to continue in 2024.”

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Towner said Daralama’s employees are also working more hours to keep up with demand.

“In addition to wages, we are seeing increased traffic in stores, which means more time is spent restocking shelves,” Towner said.

RBC Dominion Securities analyst Eileen Nuttell said Daralama’s “very strong” same-store sales performance puts the retailer in a valuable position for consumers, especially in the current high-inflation environment. said to reflect that.

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Sales performance exceeded expectations, indicating that consumers continue to turn to Dorama for “consumables in addition to everyday household items and seasonal items.”

The store launched a new $5 price last year, allowing it to stock new products and replenish other products that have been discounted off the shelves due to inflation.

Dallama has added shelves with an expanded selection of everything from cleaning and kitchen supplies to personal care and clothing.

While sales have been strong in various divisions, Rossy said the Dollarama consumables category is selling particularly well.

100-yen shops have expanded their grocery aisles in recent years, offering more pantry items such as instant noodles, cereal, tuna and olive oil.

© 2023 The Canadian Press

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