Dollarama Inc Beats Sales Expectations as Inflation Rises

Budget retailer outperforms bigger rivals

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Budget retailer Dollarama Inc. surpassed sales expectations in the first quarter as COVID-19 restrictions eased and high inflation fueled stronger demand for affordable goods.

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The Montreal-based company reported Wednesday that revenue in its first quarter ended May 1 was up more than 12 percent to $1.07 billion. Analysts had expected revenue of just over $1.03 billion.

Diluted net earnings per share grew 32.4 percent to 49 cents, from 37 cents a year earlier.

“Our strong first quarter performance in key metrics reflects the relevance of our business model and the positive response from consumers to our value proposition in a high inflation environment,” said Neil Rossy, president and CEO, in a statement.

The broad retail sector and economic influences

The discount store has outperformed some larger competitors like Walmart as inflation pushes consumers to look for lower prices. The consumer price index rose 6.8 percent in April compared to a year ago, with the cost of food and shelter rising the most.

Dollarama also faced higher input costs, announcing in the last quarter that it would start selling a number of items at a new higher price of $5, compared to $4.

Financial

Earnings before interest, taxes, depreciation and amortization rose nearly 21 percent in the first quarter from $248 million to $300 million.

Comparable store sales, a measure used for existing stores that have not opened new, rose 7.3 percent.

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