Dollarama expects higher sales as inflation-hit shoppers look for discounts

Dollarama, the Canadian discount retailer, has raised its forecast for annual comparable sales growth due to budget-conscious shoppers seeking affordable everyday products during periods of rising inflation. As households become more mindful of their spending, many have turned to dollar stores like Dollarama, which offers a wide range of products priced at up to $5.

The retailer anticipates Canadian comparable sales to grow between four and 4.5 per cent, an increase from its previous forecast of a three to four per cent rise. CEO Neil Rossy stated that customers continue to rely on Dollarama for dependable value amid careful spending decisions.

Comparable sales at Dollarama's Canadian stores rose 5.4 per cent in the second quarter, fueled by a 3.7 per cent increase in customer traffic. Additionally, the average transaction size grew by 1.7 per cent, reflecting the impact of inflation on consumer purchasing power.

Dollarama remains optimistic about its Australia segment but expects a net loss in fiscal 2027 as it continues to invest in business transformation initiatives. Trade tensions have added complexity to the retailer's operations, with Canada imposing retaliatory tariffs on U.S.-origin imports in response to the U.S. imposing 50 per cent tariffs on Canadian goods.

Dollarama sources 54 per cent of its Canadian procurement volume from North American vendors, while the remaining 46 per cent is directly imported from overseas suppliers, primarily in China. The company reported quarterly earnings per share of $1.29, slightly exceeding the estimated $1.25, with second-quarter sales amounting to $2.03 billion, in line with expectations.