Dollarama lifts annual comparable sales forecast on strong demand

Canada’s Dollarama Inc (DOL.TO) on Friday raised its full-year same-store sales forecast after topping quarterly revenue estimates, helped by strong demand for its groceries and household essentials as more consumers turn to discount stores amid surging inflation.

Rising prices of goods ranging from edible oils to paper products and gas has been forcing Canadian consumers to trade down to cheaper items to ease the strain on their wallets, benefiting discount store chains such as Dollarama.

Montreal-based Dollarama, which typically sells everything from kitchen essentials to party supplies under C$4, has also rolled out additional price points up to C$5, which Wall Street analysts have said would cushion margins amid higher costs.

Dollarama’s U.S. counterpart Dollar General Corp (DG.N) also lifted its annual comparable sales forecast last month, with inflation pushing affluent U.S. shoppers to hunt for bargains as well.

The discount store operator said it now expects comparable store sales growth of 6.5% to 7.5% for fiscal 2023, up from the 4% to 5% range estimated previously.

The company’s sales rose 18.2% to C$1.22 billion ($938.97 million) in the second quarter, beating analysts’ average estimate of C$1.19 billion, according to Refinitiv data.

Net income for the quarter ended July 31 rose to C$193.5 million, or 66 Canadian cents per share, from C$146.2 million, or 48 Canadian cents per share a year earlier.

($1 = 1.2993 Canadian dollars)