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Dollarama Inc. DOL-T has thrived in an environment of soaring inflation and rising borrowing costs. How will the discount retailer fare as this backdrop fades?

This year, the stock has sailed through everything, rewarding investors with gains of 30 per cent year-to-date as investors jumped on a concept that looked invulnerable to headwinds.

“Our value promise in a high-inflation environment is even more relevant as consumers juggle the pressure on their wallets and adjust their spending strategies,” Neil Rossy, Dollarama’s chief executive, said during a call with analysts this week.

The latest financial results for the Montreal-based company – which sells items priced at $5 or less – show that this is far more than a defensive play that can appeal to consumers struggling through tough times.

Dollarama said that earnings rose to 70 cents a share for the three months ended Oct. 30, up from 61 cents in the same period last year. That marked a year-over-year increase of 14.8 per cent.

Revenue rose 14.9 per cent. And sales at stores open for at least a year, or same store sales, increased by 10.8 per cent.

It was hard to find fault with these numbers, given all the handwringing over consumer spending amid a looming recession. Mark Petrie, an analyst at CIBC Capital Markets, singled out the company’s same-store sales growth as a “blowout.”

“Dollarama is clearly benefiting as a destination for value in a highly inflationary environment,” Mr. Petrie said in a note.

The upbeat performance stands in contrast to some of the problems emerging at a number of other retailers, where signs of a slowing economy are showing up in financial results.

The latest: Lululemon Athletica Inc. on Thursday evening reported surging inventories in its latest quarter, raising concerns about potential price markdowns at the high-end apparel company. The share price sank 13 per cent on Friday, and dragged down other retailers.

Dollarama investors could face a challenging environment of a decidedly different sort: Many economists believe that inflation has crested. The Bank of Canada signalled this week that it may be nearing the point at which it will stop hiking interest rates, while long-term bond yields are declining from recent highs in anticipation of subsiding inflation.

So much for Dollarama’s appeal to stressed consumers stretching their dollars.

Still, Dollarama has shown amazing resilience. The share price has outperformed the S&P/TSX Composite Index by 70 percentage points over the past three years, suggesting that its steadily expanding network of well-organized stores is a winner through good times and bad.

In his call with analysts this week, Mr. Rossy outlined a path for future expansion.

Dollarama is slowly rolling out additional products priced up to $5 as it increases its variety of offerings and attempts to grab market share from traditional retailers. The company has agreed to purchase additional property near its current distribution centre in Quebec, providing a logistics base for more stores.

And Mr. Rossy reinforced the company’s longer-term growth aspirations: He sees a total of 2,000 Dollarama stores operating in Canada by 2031, up 37 per cent from the current total at the end of October.

In South America, where Dollarama owns a 50.1-per-cent equity interest in the Dollarcity chain, the chief executive raised his growth expectations in the region to 850 stores by 2029, up from a target of 600 previously. That is more than double the current footprint of 395 stores in Colombia, Guatemala, El Salvador and Peru.

Irene Nattel, an analyst at RBC Dominion Securities, expects that even this new target could prove conservative.

“In our view, Dollarama’s investment in the Latin American partnership is a low-risk opportunity to extend the long-term growth runway in a region underpenetrated in the dollar store format and not yet being exploited by North American peers,” Ms. Nattel said in a note.

That said, Dollarama’s zooming share price is reflecting a lot of optimism already: The stock traded at more than 30 times estimated earnings on Thursday, when the price hit a fresh record high. That’s in line with its average price-to-earnings ratio of 29 over the past three years, but certainly not cheap.

As well, cautious investors should note that GRI Investments Inc., a private corporation controlled by the Rossy family, announced on Friday that it had agreed to sell 557,324 shares, representing about 18 per cent of its Dollarama holdings. The Rossy Foundation, a charitable organization, announced that it had agreed to sell 1,197,268 shares, or 24 per cent of its holdings.

Are these insiders selling near the top? Perhaps. But Dollarama has been on a roll for years, and seems unlikely to surrender its momentum for long.

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