Dollarama Inc. reported a 24% annual increase in profit in the fourth quarter, as Canadians experiencing inflation continue to visit discount retailers for everyday necessities such as food, cleaning products, and personal-care items. The Montreal-based company also boosted its quarterly dividend by 29.9% to 9.2 cents a common share. 

While people are buying fewer items during each trip to Dollarama, they are shopping there more frequently due to their search for lower prices on “consumables.” This has been a continuing trend over the past two years as prices have risen and people are looking for ways to cut back.

Dollarama is forecasting continued strong demand in the months ahead, with comparable store sales expected to increase by a range of 3.5% to 4.5%. Market surveys show that the uptick in traffic is coming from across the economic spectrum, including lower-income households and those with annual incomes above $100,000. 

Dollarama’s comparable store sales grew by 8.7% in the quarter ended Jan. 28, compared to the previous year, when the company reported growth of 15.9%. For the full year, comparable sales were up 12% compared to the year before, as store visits increased.

Retailers attract continued store traffic by offering shoppers incentives through loyalty programs, which have seen increased activity as people pay for purchases with points to save money. Last summer, the Air Miles reward program announced a limited-time partnership with Dollarama, allowing Air Miles Mastercard holders to earn points on purchases there.

Dollarama has also observed an uptick in “shrink,” an industry term that often refers to merchandise that is stolen or damaged during shipping or spoilage. The company is implementing strategies to combat shrink, including investigating the role self-checkouts might play. The cost of shipping products into the country has continued to decline from its pandemic peaks, helping to expand Dollarama’s gross profit margin to 46.3% of sales.

Source: Globe and Mail
Source: The Star
Source: Dollarama