dollarama inc, Posted another strong quarter as inflationary pressures continue to weigh on consumer demand for consumable products at the discount retailer.
The Montreal-based retailer raised its comparable-store sales growth guidance on Wednesday as it reported that its third-quarter profit and sales were higher than a year earlier.
During a call with analysts, Dollarama chief financial officer J.P. Towner said the retailer saw its third consecutive quarter of “exceeding historic demand” for consumable products, a category that includes food as well as laundry detergent. Contains that can only be used once. ,
“Canadians from all walks of life continue to find value in low prices on the goods they need,” he said.
The company cited current economic conditions as a key factor in new customer demand as food prices rose faster than overall price growth figures for most of the year, rising 11.4 percent in August. With is at its peak.
During the call, Dollarama Chief Executive Officer Neil Rossi said convenient store locations and low costs will continue to be the discount retailer’s new customer base.
“Our value promise and the high inflation environment are even more relevant as consumers ease the pressure on their wallets and adjust their spending strategies,” Rossi said.
As Dollarama, traditionally known for prices between $1.25 and $2.50, continues to stock additional items up to $5, Rossi said the rollout has gone as planned and the company has yet to be informed about the higher prices. Negative feedback has not been received.
Dollarama posts higher sales, gains as buyers seek cheaper prices amid inflation
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Rossi said that although the company would like to offer $1 for each category, it is not possible in some cases due to raw material costs and higher prices from domestic vendors.
“I can’t control, even though I’d love to, where our vendors come in as far as cost,” he said.
The chief executive officer said the company would continue to “fight the fight” especially with regard to procurement and management of domestically procured goods.
The financial pressure placed on Dollarama is the same as that of every other Canadian retailer, Rossi said.
The discount retailer opened 18 new store locations in its third quarter for a total of 41 net new stores.
“We expect a busy fourth quarter on the real estate front and remain on track to reach our full-year target of 60 to 70 net new stores,” Rossi said.
Dollarama announced Wednesday that it has signed an agreement to purchase three contiguous industrial properties in Mount Royal, Ky., near its centralized logistics operations and next to its distribution center, for $87.3 million.
The company plans to redevelop the site to meet its future logistics and warehousing needs.
“This will provide us with additional flexibility to support our long-term logistics needs as we pursue our goal of 2,000 Dollarama stores across Canada by 2031,” Rossi said.
RBC Dominion Securities Inc. Analyst Irene Natel said in a report that the company’s third-quarter results reflect Dollarama’s “strong value position for consumers, especially those seeking it in the current high-inflation environment.”
Dollarama reported earnings of $201.6 million, or 70 cents per diluted share, for the 13-week period ended October 30, compared with a profit of $183.4 million, or 61 cents per share, in the same quarter last year.
In its guidance for the year, Dollarama says it now expects comparable-store sales growth for its current fiscal year to be in the range of 9.5 to 10.5 percent, compared to an earlier expectation of 6.5 to 7.5 percent.
The company also raised its guidance for its annual gross margin as a percentage of sales to 43.1 to 43.6 percent, compared to earlier expectations for a range of 42.9 to 43.9 percent.
Sales for the quarter totaled $1.29 billion, up from $1.12 billion a year ago.
Comparable-store sales rose 10.8 percent as the number of transactions climbed 10.3 percent and average transaction size rose 0.4 percent.
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