Dollarama Inc. enjoyed a 21 per cent year-over-year boost in sales in its latest quarter as the discount retailer scooped up consumers seeking cheaper products amid high inflation.
In the quarter ended April 30, the company said strong demand held up across the board, from consumables to seasonal items and general merchandise, resulting in a profit boost of 23 per cent from a year earlier.
For same-store sales, the number of transactions grew nearly 16 per cent while purchase sizes also nudged up.
"We had a good Easter," said chief executive Neil Rossy. "But there's a slight move away from the consumables, in fact, a little bit towards the traditional mix."
Consumables, which saw a spike in recent quarters, is a category that includes food as well as items ranging from batteries to laundry detergent.
Summer sales are looking bright despite some hurdles, Rossy said Wednesday.
"It's unseasonably chilly still in many parts of the country along with other natural disasters, unfortunately, which are challenging many areas of the country ... But the customer has started to move towards our summer offering," he told analysts on a conference call.
Dollarama's real estate footprint is increasing as well. It opened 21 net new stores in its first quarter, part of a ribbon-cutting spree that grew the company to 1,507 locations across the country as of April 30 versus 1,431 a year earlier — an 11 per cent expansion. Dollarama hopes to reach 2,000 stores in Canada by 2031.
Same-stores sales jumped by 17 per cent year over year, an "impressive" pace — the fastest in at least five years — said analyst Martin Landry of Stifel GMP.
"The strong same-store-sales appears to be driven by volume rather than price, an excellent sign and suggesting that Dollarama continues to gain market share," Landry said in a note to investors.
"Consumers continue to turn to Dollarama for consumables in addition to everyday household items and seasonal products," added RBC Dominion Securities analyst Irene Nattel.
On Wednesday, the company reported earnings of $179.9 million in its latest quarter, up from $145.5 million in the same period the year before.
The profits amounted to 63 cents per diluted share for the quarter ended April 30, up from 49 cents per diluted share a year earlier.
Sales totalled $1.29 billion, up from $1.07 billion in the same quarter last year.
Analysts on average had expected a profit of 59 cents per share and $1.25 billion in sales, according to estimates compiled by financial markets data firm Refinitiv.