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(Deborah Baic/The Globe and Mail)
(Deborah Baic/The Globe and Mail)

Dollarama profit climbs 11 per cent Add to ...

Dollarama Inc. continues to see a big payoff from its policy of selling items that cost more than $1.

The Montreal-based discount-store giant says 58 per cent of sales in the first quarter ended May 5 were for items priced higher than $1, up from 51 per cent for the same period last year.

The company also posted a slight increase in debit-card payments, to 40 per cent of sales in the quarter from 39 per cent.

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Dollarama introduced items priced at more than $1 four years ago when it set the top price at $2. Last year, it boosted that to $3.

The retailer has also introduced debit-card payment over the past few years.

Transaction sizes in the quarter improved in the quarter on higher price point items, Dollarama said Wednesday in comments accompanying its financial results.

But the company -- usually reliable in meeting or beating analysts’ expectations -- fell short of first-quarter estimates.

Net profit per share in the first quarter increased 10.7 per cent to $45.6-million or 62 cents per share from $42.6-million or 56 cents in the year-earlier period. The analysts’ consensus estimate was 67 cents.

Sales increased 12.6 per cent to $448.1-million from $398-million. Analysts were expecting sales of $449-million in the latest quarter.

The increase was fuelled by store expansion to 806 outlets last month from 721 units in the same period last year, as well as organic sales growth helped by comparable-store sales growth of 3.7 per cent in the first quarter, the company said. That was far below the 8.1-per-cent growth posted in the year-earlier period.

Dollarama said it had stronger comparable-store sales despite difficult weather conditions in February and March compared to the much more favourable conditions in the prior year.

“We are pleased with our first quarter financial and operating results. Our business continues to deliver improved sales and earnings as we remain focused on providing great value to our customers from our growing number of conveniently located stores,” Dollarama chairman and chief executive officer Larry Rossy said in a news release.

“For fiscal 2014, we are committed to opening a minimum of 89 net new stores thereby maintaining the increased pace of new store openings established in Fiscal 2013.”

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