Dollarama Sales Climb as Canadians Spend on Cleaning Supplies, Summer Products

Will kids still go trick-or-treating during a pandemic? That’s a question that hangs over discount retailer Dollarama Inc. as it prepares for the all-important holiday season.

Seasonal products are an important sales driver for Dollarama since they earn higher margins – and a decrease in holiday sales could impact the company’s profit margins for the fall and winter seasons. On September 2, the Montreal-based company reported that its second-quarter sales were boosted by summer products, as people stuck at home bought more gardening and barbecue supplies. But while the stores are stocking as normal for the holidays, executives are cautioning that they expect softer sales around Hallowe’en this year, and that there is uncertainty around people’s buying habits in the Christmas season.

“We don’t know whether people will compensate by simply wearing masks and being more careful, but still engaging in those seasons – which we’re hopeful they will, to try to maintain normalcy as much as possible,” chief executive officer Neil Rossy said on a conference call to discuss the company’s earnings. “…We’re all guessing. This is a debate, about whether society is fearful, or aggressive to have fun at this point in time.”

Over the summer, demand for party supplies was lower than in other years. The door-to-door activity at Hallowe’en is expected to decrease, Mr. Rossy said, but it’s possible people will have more limited gatherings to mark the holiday.

“Yesterday I bought a good amount of spectacular Christmas-decorated KN95 masks,” he added later on in the call. “Hopefully those masks will encourage people to get close and hug their families while still protecting themselves.”

On September 2, the company reported that its second-quarter sales grew 7.1%, to $1-billion, driven by continued demand for cleaning products as well as summer items. Comparable store sales — an important metric that tracks sales growth at stores open more than a year – were up 2.5% in the thirteen weeks ended Aug. 2. Excluding stores that were temporarily closed during the pandemic, comparable sales rose 5.4%.

Store traffic improved in the quarter as provinces lifted restrictions designed to curb the spread of COVID-19. While most of Dollarama’s stores were allowed to remain open during the pandemic to provide essential goods such as packaged foods and household items, 104 were forced to close, mostly in shopping malls that were shut down. All of the company’s 1,314 stores had reopened by June 19; 83 locations are still operating at reduced hours.

Shoppers continue to visit Dollarama stores less often but buy significantly more during each trip – a pattern other retailers have noted as the pandemic continues to affect shopping behaviour. Dollarama reported that the average transaction size rose by 41.7% in the quarter, while the number of transactions fell by 25.7%.

Limited vacation options due to ongoing travel restrictions in the height of summer meant Canadians turned inward, and even indoors, to fill their days. “Cleaning up the backyard and redoing the living room have all been impactful for Dollarama,” Rossy said. The retailer’s supply chain has stabilized, with many high-demand items now fully in stock, Mr. Rossy said on September 2. The only items Dollarama cannot buy as much as it would like is Lysol wipes, he added, though the company has sourced another brand of antibacterial wipes that will be in stock soon.

Dollarama reported $34.3-million in costs related to COVID-19 in the second quarter, which included costs related to cleaning and physical-distancing protocols in stores, and bonuses paid to store employees from March 23 to Aug. 2. The company reported net earnings of $142.5-million or 46 cents per share, compared to $143.2-million or 45 cents per share in the same period last year.

Source: Globe and Mail
Source: Toronto Star
Source: Financial Post

Walmart Unveils Membership Service in U.S. With Free Delivery, No Lines

On September 1, Walmart Inc unveiled the perks of its new membership program, Walmart Plus, which will grant subscribers unlimited free delivery, fuel discounts and no checkout lines. Touted as a rival to Inc’s Prime subscription, Walmart’s new loyalty program will cost US$98 a year or US$12.95 a month. It will become available to all U.S.-based customers on Sept. 15. Amazon Prime, which offers U.S. shoppers fast shipping, streaming video and other services, costs US$119 a year or US$12.99 a month.

“We are a company committed to meeting our customers’ needs,” said Janey Whiteside, chief customer officer at Walmart. “We’ve designed this program as the ultimate life hack for them.” The service aims to both attract new customers and turn existing ones into even more loyal shoppers, Whiteside said.

Members will have access to same-day delivery on more than 160,000 items from toys to groceries. To qualify, orders must be at least US$35.

Walmart was already offering a similar service called “Delivery Unlimited,” which allowed an unlimited number of deliveries for a yearly or monthly fee. Members of this service will automatically become Walmart Plus members. The retailer has also invested in services like curbside pickup and next-day and two-day delivery.

Using the Walmart app, Walmart Plus members will be able to scan their purchases as they shop and pay without having to wait in line. Additionally, members can save up to 5 cents a gallon at nearly 2,000 Walmart, Murphy USA and Murphy Express fuel stations.

Source: Financial Post