Brett Bundale, Canadian Press Published Wednesday, June 8, 2022, 3:52 PM EDT Last Updated on Wednesday, June 8, 2022, 3:52 PM EDT
Discount retailer Dollarama Inc. has started introducing new price points up to $ 5 as it adds new products and complements others amid a change in consumer spending patterns.
The dollar store will now offer goods for less than $ 1 to $ 5, the company said Wednesday as it reported quarterly earnings.
The retailer reported higher sales and profits in the quarter ended May 1 as pandemic restrictions were lifted and demand for bargains increased as buyers continued to face rising inflation.
There is an increase in stores and a high demand for daily consumables and seasonal products, said Neil Rossi, president and CEO of Dollarama.
“The first quarter reaffirms the relevance of our business model,” he said during a conversation to discuss the company’s latest financial results. “This also reflects the positive response of consumers to our value proposition in a high-inflation environment.
Dollarama announced plans to raise its maximum price to $ 5 earlier this year, but customers have not yet seen those prices in stores. However, Rossi noted that the higher price has allowed the company to return to selling popular products that have been moved off the shelves amid rising costs and to introduce new products.
The company reported a profit of $ 145.5 million, compared to $ 113.6 million in the same quarter last year, with sales up 12.4 percent.
The result came as spending patterns seem to change quarterly as customers shop more often but buy less with each visit than a year ago.
The trend is reflected in a 14.4% increase in the number of transactions, while the size of transactions decreased by 6.2%.
The company will continue to work to mitigate the current supply chain and put pressure on costs to provide consumers with the best relative value in the market, Rossi added.
The company continues to face delays in delivery from six to eight weeks and pre-orders its goods much earlier than usual, he said.
However, unlike the United States, where some retailers are reducing surplus stocks as consumer demand dwindles, Canadian dollar store goods “remain relevant over time,” said Dollarama CFO JP Towner.
“We have the ability – and we’ve been doing it for years – to pack end-of-season inventory that sold less than … expected,” he said. “Our goods are not out of fashion.”
Meanwhile, wage inflation is emerging as a problem for retailers, especially in regions with less immigration, Towner said.
Dollarama’s earnings were 49 cents a discounted share for the quarter, compared with earnings of 37 cents a discounted share in the same quarter a year earlier.
Sales in the first quarter of the company’s fiscal year for 2023 amounted to 1.07 billion dollars compared to 954.2 million dollars. Comparable in-store sales rose 7.3 percent.
The Montreal-based retailer has 1,431 stores in Canada, including 10 net new stores that opened in the last quarter.
The company also owns a 50.1% stake in Dollarcity, a Latin American retailer with discounts at 358 stores in Colombia, Guatemala, El Salvador and Peru.
This report from The Canadian Press was first published on June 8, 2022.
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