Canadian retail giant Dollarama is expecting its sales growth to slow in the coming year as consumers struggle with high cost of living and price pressures.
The company’s latest earnings released on Tuesday saw sales grow by 4.2 per cent in the last financial year, compared with 4.6 per cent the year before.
In the coming year, the company expects sales to grow between three and four per cent, which could see them slightly below analyst expectations of 3.9 per cent.
Dollarama recorded $7.2 billion in sales in 2025, compared with $6.4 billion the year before.
The company saw its profits rise to $3.2 billion last year, compared with $2.89 billion the year before. However, gross margin – the total profit divided by sales – was 45 per cent of sales, compared with 45.1 per cent the year before.
“The slight decrease in Gross margin as a percentage of sales is primarily due to a lower gross margin in Australia,” the company said in a release.
Dollarama is not the only major retailer being “cautious” while forecasting future sales, retail analyst Bruce Winder said.
“I’ve listened to a number of retailers’ earnings calls, and a lot of retailers are being very, very cautious in how they’re forecasting 2026. They just see too much uncertainty,” he said, pointing to inflation fears from the oil price shock caused by the war in Iran.
“Unfavorable weather conditions” contributed to lower sales in the last quarter, the company said. The company saw the number of checkouts at the cashier drop by 1.6 per cent last quarter, but the average transaction size was up 3.1 per cent, Dollarama said.
A cautious outlook by Dollarama bodes poorly for the overall health of the economy, Winder said.
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“If you’re middle class and things are tough, you channel down to the dollar stores. But if you are already there, and things are tough, you stop buying things. You reduce your spend. And that’s the issue,” he said.
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The company also opened 75 new stores in Canada and seven in Australia, under the brand name the Reject Store – the Australian discount chain Dollarama bought last year.
About 53 per cent of the products Dollarama sells were procured from North American vendors, while other overseas imports accounted for 47 per cent of total procurement, according to the company’s 2025 annual report.
The high cost of living, amid multiple economic crises, is straining consumers.
U.S. dollar stores like Dollar Tree and Dollar General earlier this month also forecast muted annual sales, hurt by weaker demand in the face of tight spending.
Larger rivals such as Walmart, Target and Kroger have already slashed prices on essentials, including groceries, to lure in increasingly value-conscious shoppers.
While Dollarama is facing pressure from other larger retailers competing in the budget space, Winder said sales crossing $7 billion is still “overall” very positive for the company.
“Dollarama is still the king in this space,” he said.
Dollarama, which sells most of its products for between $1 and $5, beat sales estimates during the holidays, despite a winter storm hurting peak-season store traffic.
The company reported net sales of $2.10 billion in the quarter ended Feb. 1, compared with analysts’ average estimate of $2.08 billion.
– with files from Reuters
People don’t want to spend their money on overpriced cheap junk.
Nothing is cheap in Dollarama these days, most items (junk) cost close to $5. Dollar Tree seems to be even more expensive on the cheap side.