A growing Canadian store footprint and sales growth fuelled by consumers’ cost of living concerns helped Dollarama Inc. notch a strong first quarter , the discount retailer’s chief executive said Thursday.
The M ontreal-based company reported Thursday that sales climbed 21 per cent year over year to nearly $1.85 billion in the first quarter, which ended May 3.
Net earnings grew 10 per cent to just over $302 million, or $1.11 in diluted earnings per share, beating analysts’ forecasts of $0.99 cents per share.
“In Canada, our value proposition continued to resonate with consumers as affordability and everyday value remained top of mind in an uncertain economic environment,” Dollarama president and chief executive Neil Rossy said on a call with analysts.
Sales in Dollarama’s core Canadian market reached $1.65 billion during the quarter. Dollarama has opened 81 new stores across Canada over the last year, which included 28 during the first quarter.
“Front-loading store openings during the fiscal year is always the objective given that the back half historically represents our seasonally busiest sales period,” Rossy said.
Dollarama declared a dividend of $0.12 cents per share, unchanged from the previous quarter. The company also repurchased more than 1.9 million shares during the quarter for a total cash consideration of $339 million.
Traffic and basket growth helped drive a 5.6 per cent increase in comparable store sales, a key retail industry metric that only tracks locations open for longer than 12 months.
Chief financial officer Patrick Bui said the retailer also saw demand recover after extreme winter weather curtailed store traffic in the fourth quarter.
Bui said Dollarama’s first quarter wasn’t affected by higher fuel prices due to the war in Iran, though the company expects costs in the second half of the year. The retailer reiterated its margin guidance of 45 per cent to 45.5 per cent for 2027, assuming the conflict ends soon and fuel prices normalize “in short order,” Bui said.
“Now, certainly, (if) the conflict and fuel prices increase and drag on for a much longer period … we may need to revise our assumptions,” Bui said. “But if things calm down very quickly, we feel comfortable reaffirming that guidance.”
The retailer reported $192.8 million from sales in its 410 locations in Australia , which includes stores that are part of The Reject Shop (TRS) chain that Dollarama acquired last year. Dollarama is both building new stores and converting existing TRS outlets with the goal of reaching 700 stores in Australia by 2034.
Rossy said the company is starting to transition merchandise to Dollarama-sourced products, with the first batch reaching shelves after the quarter ended. He said the retailer expects about half of imported merchandise to be changed over by year end.
“Although these customer-facing changes remain preliminary, we have seen encouraging signs in terms of customer interest in reception to the new layout and to our imports used as they gradually make their way across Australia,” Rossy said.
As it moves forward with its Australian expansion, the company expects the unit to post a net loss in fiscal 2027.
Dollarama shares were trading higher on Thursday afternoon after the earnings release and are up around one per cent over the last year.
• Email: jswitzer@postmedia.com