Inflation: Dallama welcomes new consumers

Daralama will focus on early ordering of inventory. (Photo: Canadian Press)

Value retailer Dollarama(TSX:DOL) is winning new customers as Canadian shoppers increasingly shift from more expensive stores to “dollar” stores amid strong inflation.

The store chain Friday is attracting consumers from “all walks of life,” including high-income households, as rising costs of living put pressure on budgets.

“I think there will probably be a (transition) due to the inflationary environment and the pressure on all portfolios,” Dorama President and CEO Neil Rossey said on a conference call with analysts.

“It’s a great opportunity to retain some of the customers who may not have come to our store.”

The company’s strong sales and earnings in recent quarters speak to “especially strong demand for basic necessities” and excellent value, he added.

Dollarama chief financial officer JP Towner said the retailer is seeing strong sales of “major consumer products” such as food, seasonal products such as beach toys and barbecue accessories, and party supplies. said.

“We’re in an environment where we’re gaining market share through (inflation),” JP Towner said, adding that the company’s sales are supported by its growing store network.

He added that the 100-yen shop chain also performed well in the back-to-school and stationery categories this quarter.

The Montreal-based company, in a fiscal year that posted a profit of $193.5 million (M$) in the second quarter, compared its sales projections for stores that have been open for at least one year to 14,620 in the second quarter. raised from $10,000. same quarter last year. Its sales increased by 18.2% in his one year period.

Dollarrama’s earnings per share were 66 cents for the quarter ended July 31, compared with 48 cents a year earlier.

Quarterly revenue fell to $1.22 billion from $1.03 billion a year earlier, but sales of stores that were open for at least a year, a key metric for the retail industry, increased 13.2%. did. The number of deals increased by 20.2%, but the average deal value decreased by 5.8%.

$5 items

RBC Dominion Securities analyst Eileen Nuttell said in a report that Dalalama beat the bank’s forecasts while stores that have been open for at least a year have outperformed expectations.

Daralama’s strong quarter is a testament to its “value positioning increasingly resonating with consumers.”

The smaller basket size, coupled with increased in-store traffic, reflects increased sales and seasonal demand for consumer products, Irene Nattel added.

Daralama has raised its 2023 comparable store sales growth forecast to a range of 6.5% to 7.5%. We previously targeted a range of 4.0% to 5.0%.

In the meantime, the company continues to add more items to the new $5 maximum price. Dorama said the higher prices allowed it to offer new products and replenish its inventory, which had to leave its stores due to inflation.

The $5 item expands the company’s product line, with new items expected in seasonal categories, decor, tableware, and other store sections.

Dollarama intends to focus on ordering inventory early to gain an advantage during the upcoming Halloween and Christmas sales, JP Towner explained.

The chain is “recalibrating” logistics costs as container prices drop from their record highs earlier this year, continued JP Towner.

“We are seeing a normalization of the supply chain environment,” he said. We are far from pre-pandemic levels, but better than we were about 6-9 months ago. ”

Brett Vandale

Value retailer Dollarama(TSX:DOL) is winning new customers as Canadian shoppers increasingly shift from more expensive stores to “dollar” stores amid strong inflation.

The store chain said Friday it is attracting consumers from “all walks of life,” including high-income households, as rising costs of living are putting pressure on budgets.

“I think there will probably be a (transition) due to the inflationary environment and the pressure on all portfolios,” Dorama President and CEO Neil Rossey said on a conference call with analysts.

“It’s a great opportunity to retain some of the customers who may not have come to our store.”

The company’s strong sales and earnings in recent quarters speak to “especially strong demand for basic necessities” and excellent value, he added.

Dollarama chief financial officer JP Towner said the retailer is seeing strong sales of “major consumer products” such as food, seasonal products such as beach toys and barbecue accessories, and party supplies. said.

“We’re in an environment where we’re gaining market share through (inflation),” JP Towner said, adding that the company’s sales are supported by its growing store network.

He added that the 100-yen shop chain also performed well in the back-to-school and stationery categories this quarter.

The Montreal-based company, in a fiscal year that posted a profit of $193.5 million (M$) in the second quarter, compared its sales projections for stores that have been open for at least one year to 14,620 in the second quarter. raised from $10,000. same quarter last year. Its sales increased by 18.2% in his one year period.

Dollarrama’s earnings per share were 66 cents for the quarter ended July 31, compared with 48 cents a year earlier.

Quarterly revenue fell to $1.22 billion from $1.03 billion a year earlier, but sales of stores that were open for at least a year, a key metric for the retail industry, increased 13.2%. did. The number of deals increased by 20.2%, but the average deal value decreased by 5.8%.

$5 items

RBC Dominion Securities analyst Eileen Nuttell said in a report that Dalalama beat the bank’s forecasts while stores that have been open for at least a year have outperformed expectations.

Daralama’s strong quarter is a testament to its “value positioning increasingly resonating with consumers.”

The smaller basket size, coupled with increased in-store traffic, reflects increased sales and seasonal demand for consumer products, Irene Nattel added.

Daralama has raised its 2023 comparable store sales growth forecast to a range of 6.5% to 7.5%. We previously targeted a range of 4.0% to 5.0%.

In the meantime, the company continues to add more items to the new $5 maximum price. Dorama said the higher prices allowed it to offer new products and replenish its inventory, which had to leave its stores due to inflation.

The $5 item expands the company’s product line, with new items expected in seasonal categories, decor, tableware, and other store sections.

Dollarama intends to focus on ordering inventory early to gain an advantage during the upcoming Halloween and Christmas sales, JP Towner explained.

The chain is “recalibrating” logistics costs as container prices drop from their record highs earlier this year, continued JP Towner.

“We are seeing a normalization of the supply chain environment,” he said. We are far from pre-pandemic levels, but better than we were about 6-9 months ago. ”

Brett Vandale

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