Dollarama Profit Jumps 31.4% as Shoppers Continue to Look to Discount Retailers for Inflation Relief

If domestic manufacturers and suppliers keep pushing their prices up on food and several household goods, Dollarama Inc.’s chief executive says retailers will have no choice but to raise prices too. “Retailers are doing their best not to push those costs on to the consumers, but retailers can only absorb so much,” Neil Rossy told analysts.

He said the increases have come from the consumables category, which Dollarama defines as paper, plastics, foils, cleaning supplies, basic health and beauty care products, pet food, confectionery, drinks, snacks and other food products. General merchandise, which runs the gamut from party supplies to greeting cards and electronics and kitchenware, hasn’t seen the same shift in pricing pressures, Rossy added.

His remarks come as Canadians have been grappling with rising costs for the last two years, putting a strain on budgets and causing some to adopt more price-conscious behaviour. Inflation eased considerably over the last year, reaching 3.1% in October.

Inflation has had some positive impacts for Dollarama as customers have been drawn to the Montreal-based chain’s lower prices, bringing added foot traffic and purchases to its stores. The retailer said that it earned $261.1 million or 92 cents per diluted share for the 13-week period that ended Oct. 29, up from a profit of $201.6 million or 70 cents per diluted share a year earlier.

Sales totalled $1.48 billion, up from $1.29 billion in the same quarter last year.Dollarama says the increase in sales was driven by growth in its total number of stores and increased comparable-store sales, which evaluates sales at a company’s existing stores.

Dollarama ‘resonates with cash-strapped Canadians’

Irene Nattel, an analyst with RBC Dominion Securities Inc., took such numbers to mean that Dollarama’s strategy “resonates with cash-strapped Canadians,” she said in a note to investors. The quarter’s results reinforce the narrative that management is focused on productivity and efficiency, she wrote.

Asked by an analyst whether Rossy is worried customers who “traded down” to Dollarama to cope with price increases will “trade up” if inflation eases more, the chief executive brushed off concerns. “When they’re trading down, consumers tend to look at Dollarama as a solution … and when the market and the economy are strong, there are just more dollars to spend,” he said. “The most important thing is that we convert them into believers in Dollarama’s value and convenience so that they keep coming back regardless.”

Rossy’s confidence is baked into the company’s outlook, which now forecasts comparable-store sales for its full year to grow 11% to 12%, up from earlier expectations for growth of 10% and 11%.

To view the full results, visit the Dollarama website.

Source: Globe and Mail
Source: CBC

Empire Company Profit Down, Sales up in Q2

Empire Company Limited reported a profit of $181.1 million in its second quarter, fiscal 2024, down from $189.9 million in the same quarter in 2022. Sales increased in the quarter to $7.75 billion, up from $7.64 billion in last year’s second quarter.

“While higher interest rates and overall economic uncertainty are impacting customer purchasing behaviours, the fundamentals of our business remain strong” said Michael Medline, President & CEO, Empire. “We continue to attract more customers in our stores, our promotions are constantly improving, and we continue to protect our margins. We have a clear strategy to deliver against and our team is executing with focus and precision.”

Empire says discount drove sales for the quarter, which ended November 4, 2023, increased by 1.4%, although the company noted it experienced “positive growth across the business.”

Empire says it plans to continue expanding its store network through investments in renovations, conversions and new stores and will focus on expanding its discount channel and its private label brand. It plans to invest capital in its store network and plans to renovate approximately 20% to 25% of its network over the next three years. Capital investment include sustainability initiatives such as refrigeration system upgrades, heating, ventilation and air conditioning system upgrades and other energy efficiency initiatives.

To view the full results, visit the Empire website.

Source: Grocery Business

Costco Posts Upbeat First-Quarter Results on Strong Demand for Cheaper Groceries

Costco Wholesale topped Wall Street estimates for quarterly sales and profit, as more customers turned to its stores to shop for cheaper groceries and essentials, sending its shares up about 2% after the bell.

Costco has increased its sales and market share thanks to its strategy of maintaining low prices on basic essentials as well as a devoted membership base that benefits from incentives offered like a yearly 2% reward on qualified purchases at its warehouses. The company has also seen sales surge for its consumable categories like fresh food and sundries as well as private-label brand Kirkland Signature, as persistent inflation and higher borrowing costs pinches household budgets.

CFO Richard Galanti on a post-earnings call said the company saw some non-food categories like televisions and appliances show an improvement during the quarter. Galanti also said that Costco saw better-than-expected Black Friday and Cyber Monday sales, echoing sentiment from other retailers like Foot Locker that have signalled optimism over holiday season sales.

“Costco’s performing very well relative to the rest of the retail sector,” Telsey Advisory Group analyst Joseph Feldman said, adding that it is well positioned in the market by catering to middle-to-upper-income consumers.

Costco saw its total paid household members rise by 7.6% in the quarter, while its membership fee revenues jumped 8.2% to $1.08-billion. “We’re happily surprised that we are continuing to drive people in on an increasing basis,” Galanti said.

The company’s gross margins rose 43 basis points to 11.04% as it saw shipping costs ease from their peak in 2022. The membership-only retailer also announced a special cash dividend on its common stock of $15 per share payable on Jan. 12.

Total revenues rose 6.1% to $57.8-billion in the first quarter, compared with analysts’ estimates of $57.72-billion, according to LSEG data. Costco reported a per-share profit of $3.58, above expectations of $3.42.

To view the full results, visit the Costco website.

Source: Globe and Mail
Source: Reuters