A Dollarama store in downtown Toronto is seen in this March 14, 2023 photo.Fred Lum/the Globe and Mail
The pain of inflation continues to drive shoppers to discount stores in search of some relief, a trend that is boosting sales at Dollarama Inc. DOL-T and contributed to a 23.6-per-cent increase in the retailer’s profits in the first quarter.
The Montreal-based discounter reported Wednesday that its net earnings grew to $179.9-million, or 63 cents per share, in the quarter ended April 30, compared with $145.5-million, or 50 cents per share, in the same quarter last year.
With food price increases outpacing the rate of general inflation for months, shoppers have been turning to discount stores in an attempt to cut down on their grocery bills – including Dollarama, which sells grocery items such as cereal, canned tuna, condiments and snacks. The retailer has also seen strong demand in “consumables” such as cleaning products and other categories.
“While we continue to experience strong demand for consumables in the context of persistent inflationary pressures, we are also seeing strength across our seasonal and general merchandise categories,” chief executive officer Neil Rossy said on a conference call with analysts Wednesday. “I am particularly pleased with the performance of our Easter season this year, demonstrating our strong fundamentals and the fact that the full mix is continuing to drive traffic to our stores.”
Visits to Dollarama stores increased in the quarter, with the overall number of transactions up 15.5 per cent.
Comparable store sales grew 17 per cent year-over-year. That is an important metric in retail because it measures sales growth that excludes the impact of new store openings.
Dollarama has been expanding its store count significantly, opening 21 new locations in the quarter. The company had 1,507 stores across Canada as of April 30 and plans to reach 2,000 by 2031.
That expansion, along with the growth in comparable sales, boosted the company’s overall sales by 20.7 per cent to $1.29-billion in the quarter.