Discount retailer Dollarama Inc. has begun rolling out new prices up to $5 as it adds new products and re-offers other products amid changing consumer spending patterns.
The Dollar Store will now stock between less than $1 and $5, the company said Wednesday when it reported quarterly earnings.
The retailer reported higher revenue and profit for the quarter ended May 1 as pandemic restrictions were lifted and the hunt for bargains increased as shoppers continued to face with high inflation.
Neil Rossy, President and CEO of Dollarama said:
“The first quarter reaffirmed the relevance of our business model,” he said on the company’s latest financial results call. “It also echoes the positive consumer response to our value proposition in a high inflation environment.”
Dollarama sells products for up to $5 as retailer sees fourth-quarter profit, sales increase
Dollarama announced plans to raise the maximum price to $5 earlier this year, but customers have yet to see that price in stores. However, Rossy noted that the higher prices have allowed the company to return to selling popular products that have been moved off store shelves amid rising costs and the introduction of new products.
The company posted a profit of $145.5 million, up from $113.6 million in the same quarter last year, as its sales grew 12.4%.
The result is that spending patterns seem to change during the quarter as customers shop more often but buy less per visit than they did a year ago.
This trend is reflected in the 14.4% increase in the number of transactions while the size of the transactions decreased by 6.2%.
The company will continue to work to mitigate ongoing cost and supply chain pressures in order to provide consumers with the best relative value on the market, Rossy added.
Here’s Why Dollarama Might Have To Raise Prices
The company is continuing to face shipping delays of six to eight weeks, he said, and is pre-ordering its goods much earlier than usual.
However, unlike in the US, where some retailers are reducing excess inventory as consumer demand declines, Canadian dollar store merchandise “remains relevant throughout the period.” ,” said Dollarama CFO JP Towner.
“We have the ability – and we have been doing that for many years – to pack inventory at the end of the season selling less… than expected,” he said. “Our goods are not outdated.”
Meanwhile, wage inflation has emerged as an issue for retailers, especially in areas with fewer immigrants, Towner said.
Dollarama’s earnings amounted to 49 cents per diluted share for the quarter, up from a profit of 37 cents per diluted share in the same quarter a year earlier.
The company’s revenue for the first quarter of fiscal 2023 totaled $1.07 billion, up from $954.2 million. Comparable store sales increased 7.3%.
The Montreal-based retailer has 1,431 stores in Canada, 10 of which opened in the most recent quarter.
The company also owns a 50.1% stake in Dollarcity, a Latin American discount retailer with 358 stores in Colombia, Guatemala, El Salvador and Peru.
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