Brett Bundale, The Canadian Press Published Wednesday, June 8, 2022 3:52 PM EDT Last Updated on Wednesday, June 8, 2022 3:52 PM EDT
The Dollarama Inc. Discount Retailer has started rolling out new prices of up to $ 5 as it adds new products and deals with others amid a change in consumer spending patterns.
The dollar store will now store goods for between $ 1 and $ 5, the company said Wednesday as it reported quarterly earnings.
The retailer recorded higher sales and profits in the quarter ending May 1, as pandemic restrictions lifted and the search for bids increased as buyers continued to face rising inflation.
Stores saw an increase in buyers and a high demand for daily consumables and seasonal products, said Dollarama President and CEO Neil Rossy.
“The first quarter reaffirms the relevance of our business model,” he said during a call to talk about the company’s latest financial results. “It also echoes the positive response from consumers to our value proposition in an environment of high inflation.”
Dollarama announced plans to raise its maximum price to $ 5 earlier this year, but customers have yet to see these prices in stores. However, Rossy noted that the higher price has allowed the company to resell popular products that had been removed from the shelves amid rising costs and introduce new products.
The company made a profit of $ 145.5 million, up from $ 113.6 million in the same quarter last year, as sales rose 12.4%.
The result came when spending patterns seemed to change during the quarter as customers bought more often, but bought less with each visit compared to a year ago.
The trend was reflected in a 14.4% increase in the number of transactions, while the size of transactions decreased by 6.2%.
The company will continue to work to mitigate the supply chain and ongoing cost pressures to provide consumers with the best relative value in the market, Rossy added.
The company continues to face delivery delays of six to eight weeks and is booking its merchandise well ahead of schedule, he said.
However, unlike in the United States, where some retailers are reducing excess inventory as consumer demand softens, the store’s products in Canadian dollars “remain relevant over time,” the director said. Dollarama financier, JP Towner.
“We have the ability, and we’ve done it for years, to pack an inventory at the end of the season that sold less than … expected,” he said. “Our products are out of fashion.”
Meanwhile, wage inflation has emerged as a problem for the retailer, especially in regions with less immigration, Towner said.
Dollarama’s profit was 49 cents per diluted share during the quarter, more than 37 cents per diluted share in the same quarter last year.
Sales for the first quarter of the company’s 2023 fiscal year 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, including 10 new clean stores that opened in its 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.
This report from The Canadian Press was first published on June 8, 2022.