Dollarama Reports Q2 Profit and Sales up; Hikes Sales Forecast as Shoppers Seek Inflation Relief
Even as inflation continues to rankle consumers, Dollarama Inc.’s chief executive says the launch of a new $5 price point has been “well accepted” by shoppers. Neil Rossy insisted that customers’ willingness to pay a bit more for items stems from his company’s careful timing around increases and focus on ensuring any higher price points are still driving “great relative value.”
“We don’t like to add price points until we really feel pressured,” he said on a call with analysts. “Each time we do that, because we wait so long and we spend so much time preparing, it’s been well accepted.”
Dollarama launched $5 items in 2022 as inflation soared, positioning it as a way to boost the retailer’s product assortment and help the company manage cost pressures. The rollout will continue in 2024. The cost of goods still remains stubbornly high, especially in the grocery category where Dollarama competes, and as a result, Rossy has noticed consumers are taking up “value-seeking behaviour.”
Value chains, including Dollarama, have been among the biggest beneficiaries of the shift toward bargain hunting. Dollarama reported that sales have been increasing across its product categories, and demand for “consumables” such as food and household cleaning products has been higher than historical levels.
The retailer shared that it earned $245.8 million or 86 cents per diluted share for the quarter ended July 30, up from a profit of $193.5 million or 66 cents per diluted share in the same quarter last year. Sales for the quarter totalled $1.46 billion, jumping 19.6% from last year. Comparable store sales for the quarter rose 15.5% as the number of transactions climbed 12.9% and the average transaction size increased 2.3%.
In its fiscal full-year outlook, the company raised its expectations for comparable store sales growth to between 10.0% and 11.0%. The company had said in March that it expected comparable store sales growth for the year between 5.0%and 6.0%.
Dollarama had 1,525 stores at the end of its most recent quarter, up from 1,444 a year earlier. It plans to have 2,000 stores operating in Canada by 2031. Though many real estate firms report an increase in vacancies, Rossy said, “real estate is something that we must always chase down and stay on top of and manage.”
“We’ve always wanted to open the bulk of our new store openings at the beginning of the year and that has always been something that escaped us even though we’ve tried,” he said. “Even though we’ve always wanted to and failed in the past, we’ve succeeded this year and we’re all very proud of.”
RBC analyst Irene Nattel was also impressed. “Results reflect Dollarama’s strong value positioning for consumers, particularly sought after in the current high inflation environment, and overall financial results reinforce management focus on productivity and efficiency,” she said in a note to investors.
To view the full results, visit the Dollarama website.
Source: Globe and Mail
Source: The Star
Source: Dollarama
Empire Reports First-Quarter Profit and Sales up from Year Ago
Empire Co. Ltd. earned $261.0-million in its latest quarter, up from $187.5-million in the same quarter in 2022, boosted by the sale of its 56 gas stations in Western Canada to Shell Canada, the grocer said. The profit amounted to $1.03 per share for the quarter ended Aug. 5, up from a profit of 71 cents per share in 2022, said the grocer, which owns Sobeys, Safeway and other banners.
Sales in what was Empire’s first quarter totalled $8.08-billion, up from $7.94-billion in the same quarter in 2022. Same-store sales were up 3.0%, while same-store sales, excluding fuel, were up 4.1%.
Empire chief executive Michael Medline said the company’s 2024 financial year is off to a good start. “Despite the ongoing volatility that the market continues to face, the results we delivered in Q1 demonstrate our team’s ability to consistently execute, regardless of the economic environment,” Medline said in a statement.
Empire, along with the other two biggest grocers Metro and Loblaw, has been under intense scrutiny ever since inflation took off. Food inflation has outpaced headline inflation for months, and the grocers have at times been accused of profiting off of inflation. They have denied these allegations, including before a parliamentary committee studying food inflation.
Empire completed the sale of its gas stations in Western Canada to Shell for $100-million during the quarter. The retailer said the deal boosted its quarterly results by $71.5-million. Empire also took a $7.1-million restructuring charge in the quarter and recorded a $400,000 insurance recovery related to a cybersecurity incident in November 2022.
Adjusted net earnings were $196.2-million, up 4.6% from $187.5-million. On an adjusted basis, Empire said it earned 78 cents per share in its latest quarter, up from an adjusted profit of 71 cents per share in 2022. The average analyst estimate had been for an adjusted profit of 75 cents per share, based on estimates compiled by financial markets data firm Refinitiv.
The company continues to execute on its strategy to maximize revenue in its full-service stores, which are losing traffic to discount banners, said RBC analyst Irene Nattel in a note. Empire reported double-digit sales growth in its discount stores, like other retailers have, as customers sought to save on groceries and household essentials.
Source: Globe and Mail
Source: The Star
