Globe & Mail Dollarama Inc.reported a 24-per-cent increase in profit in the fourth quarter, as Canadians feeling the sting of inflation continue to visit discount retailers to purchase everyday needs such as food, cleaning products, and personal care items.
The Montreal-based company also boosted its quarterly dividend by 29.9 per cent, to 9.2 cents per common share.
While people are buying less items during each trip to Dollarama, they are shopping there more frequently, partly as they look for lower prices on products the company refers to as “consumables.” Dollarama’s comparable store sales – an important metric that tracks sales growth not tied to opening new locations – grew by 8.7 per cent in the quarter ended Jan. 28, compared to the same period the prior year.
That has been an ongoing trend over the past two years as prices have risen and people have looked for ways to cut back. The fourth-quarter growth added to a 15.9-per-cent comparable sales increase in the same period the year before. For the full fiscal year ended Feb. 2, store traffic was up 12.3 per cent.
Dollarama reported net earnings of $323.8-million of $1.15 per share in the fourth quarter, compared to $261.3-million or 91 cents per share in the same period the prior year. Total sales grew by 11.3 per cent to $1.6-billion in the quarter.
The cost of shipping products into the country has also continued to decline from the peaks of the pandemic, helping to expand Dollarama’s gross profit margin to 46.3 per cent of sales, compared to 44.6 per cent in the prior year. The company also reported its logistics costs were lower, though the cost of store labour is going up.
For the full year ended Feb. 2, Dollarama’s sales increased by 16.1 per cent to nearly $5.9-billion. The company opened 65 new stores in Canada over the course of the year, increasing its total to 1,551 locations. Dollarama plans to maintain its pace of expansion, opening 60 to 70 additional stores this year.
The company reported full-year comparable sales growth of 12 per cent. Dollarama is forecasting comparable sales growth to slow somewhat in the year ahead, to a range of 3.5 to 4.5 per cent.
Dollarama reported $1-billion in net earnings for the full year, or $3.57 per share, compared to $801.9-million or $2.77 per share in the prior year.