Five Dollarama? Dollar Discount Chain Starts Stocking Higher Priced Products

As the discount store chain previously announced, Dollarama Inc (TSX: DOL) has started including products priced up to $5.00 on its shelves. The move coincides with its fiscal Q1 2023 earnings release headlined by a quarterly revenue of $1.07 billion, up from Q1 2022’s $954.2 million.

The company is attributing the increase to the growth in its number of stores in the past 12 months, from 1,368 to 1,431 stores.

While the company enjoyed a resurgence of its customer traffic following the easing of COVID-19 restrictions, it is now bracing for impact as the current market climate worsens with increasing inflation.

“We are gradually gaining additional flexibility with the introduction of price point up to $5, but never at the expense of our value proposition,” said CEO Neil Rossy in the earnings call. “The rollout of new price points is now underway with items making their way to stores in the coming days.”

Alongside this, the firm said it is bringing back products “that were appreciated by customers in the past, but were discontinued because of cost increases.” New products are also in the pipeline but the firm admits these are mostly “at the highest price points.”

The gross margin for the quarter came in at 42.1%, a decrease from last year’s 42.3%, attributable to stronger sales of lower-margin consumables.

The firm ended the quarter with $145.5 million in net earnings compared to $113.6 million last year. This translates to $0.49 earnings per share.

At quarter’s end, the company’s cash balance ended at $71.6 million. The balances of the current assets and current liabilities came in at $786.8 million and $978.9 million, respectively.

Dollarama last traded at $73.49 on the TSX.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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