By Adriano Marchese
Dollarama plans to keep its prices steady and accelerate store growth to meet strong demand in Canada, even as tariffs and inflationary pressure weigh on the retail landscape.
"Our objective is to hold on price for as long as possible for our customers, and we are working extremely hard on this front," Chief Executive Neil Rossy said on an earnings call Wednesday, noting that price adjustments are "always a last resort."
The executive said that counter-tariffs imposed by Canada on U.S. imports are impacting some product costs, but that the company remains focused on delivering value to its customers.
The Canadian dollar-store chain plans to open 70 to 80 net new stores in Canada this fiscal year after ending the last year with 1,616 locations. This is up from its usual target of 60 to 70. For the long term, the company has raised its target to 2,200 stores in Canada by 2034, up from a previous goal of 2,000 stores by 2031.
"This new target is based on the positive customer response to our value proposition year after year and supported by a thorough re-evaluation of our market potential," he said in an annual general-meeting results call earlier on Wednesday.
Dollarama's growth plans follow a stronger-than-expected fiscal first-quarter performance, driven by more frequent customer visits and higher average spending that drove up same-store sales by 4.9%. The company said the main drivers were strong demand for consumables, from food and beverages to household and personal-care items, along with solid sales of Easter seasonal goods.
Shares traded 9.3% higher at 192.06 Canadian dollars, bringing the year-to-date gain to about 37%.
Gross margin surprised to the upside as well, reaching 44.2% compared with analyst expectations of 43.3%, according to Scotiabank analyst John Zamparo. He noted that the improvement came despite a product-mix shift toward lower-margin consumables, a weaker Canadian dollar, and earlier concerns about logistics costs.
"This demonstrates both the benefits of scaling"--seen in the company's higher same-store sales, Zamparo said--"and also Dollarama's pricing power," he added.
Dollarama also benefited from continued growth at Dollarcity, its majority-owned Latin America business. Dollarama's 60.1% share of Dollarcity's net earnings came to C$40.3 million ($29.5 million) in the three months ending in March, up from C$22.1 million for the company's 50.1% share a year earlier. Sales at Dollarcity rose nearly 13% in the quarter as store count expanded to 644 from 547.
CEO Rossy said expansion efforts in Latin America are on track, with the first Dollarcity locations in Mexico set to open imminently.
Dollarama said overall sales for the company rose 8.2% to C$1.52 billion in the fiscal first quarter, which ended in May, beating forecasts for a rise to C$1.5 billion, according to FactSet.
Net income came to C$273.8 million, or C$0.98 a share, up from C$215.8 million, or C$0.77 a share, in the comparable quarter a year earlier. Analysts were expecting a more modest rise to C$0.83 a share.
Write to Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
June 11, 2025 13:34 ET (17:34 GMT)
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