Dollarama beat second-quarter profit estimates on Wednesday, helped by lower costs and stable demand for low-priced essentials like groceries.
Consumers grappling with rising living costs have relentlessly bargain-hunted and traded down to cheaper alternatives.
In addition, lower costs of inbound shipping and logistics helped the dollar-store company counter lingering challenges related to shrink, in which inventory is either lost, stolen or damaged.
The Montreal, Quebec-based company’s gross margin rose to 45.2 per cent in the quarter ended July 28 from 43.9 per cent, a year ago.
The company also reiterated its fiscal 2025 comparable sales forecast of a rise in the 3.5 per cent-4.5 per cent range.
Get weekly money news
U.S. dollar stores like Dollar General and Dollar Tree have been trying to lift demand as larger rivals such as Target, Walmart and PDD Holding’s e-commerce platform Temu competed for customer dollar.
This also meant off-price retailers such as TJX and Ross Stores reported a sequential rise in customer traffic at the cost of higher-end department store operators like Macy’s.
Dollarama’s net sales rose 7.4 per cent to $1.56 billion compared to a year ago. Analysts estimated net sales of $1.57 billion, according to LSEG data.
The company posted net earnings per share of $1.02 compared with 86 cents a year ago. Analysts, on average, expected a profit of 97 cents.
Comments