Dollarama beats quarterly sales, profit estimates on strong demand

Dollarama beat fourth-quarter sales and profit estimates on Thursday, helped by cost-conscious consumers flocking to its stores during the holiday season to buy affordable items such as groceries and toys.

Consumers shopping on a budget have increasingly switched to lower-priced alternatives across categories ranging from pantry staples to cleaning supplies, boosting demand at dollar stores such as Dollarama.

Retailers in Canada also gained from offering discounts during the holiday quarter on categories such as decorations, which helped draw more shoppers to their stores.

Dollarama posted net sales of C$1.88bn for the quarter, compared with analysts’ estimate of C$1.87bn according to data compiled by LSEG.

It posted net earnings of C$1.40 per share in the three months to February 2, compared with C$1.15 a year earlier. Analysts on average expected profit of C$1.31 per share.

The Montreal, Quebec-based company’s quarterly gross margin was 46.8% of sales, from 46.3% a year earlier.

Easing costs of logistics helped the company in combating operations costs, in turn improving its margins.

US retailers such as Walmart, Target and Dollar General provided dour forecasts as they face the brunt of President Donald Trump’s import tariffs.

While Canadians opt for more locally produced items in the wake of “Buy Canadian” movement in response to Trump’s tariffs, retailers in the country are reshuffling their shelves and adding fewer products from US companies.

Dollarama, which last month bought Australia’s Reject Shop, expects annual sales to grow in the range of 3%-4%, the midpoint of which is slightly below analysts’ estimates of 3.7%.

The company said it believed consumers would continue to respond positively to its affordable products, convenient store network and strong value across consumables, seasonal items and general merchandise.

Reuters