Dollarama has revised its sales forecast upward after delivering strong third-quarter results, driven by rising demand from budget-conscious Canadians. As shoppers seek affordable options, demand for various goods, from pantry staples to cleaning supplies, has surged.
Sales Forecast Adjustment
On Thursday, Dollarama announced an increase in its annual sales expectations. The company anticipates comparable sales growth between 4.2% and 4.7% for fiscal 2026. This marks an upgrade from its previous forecast of a 3% to 4% increase.
Strong Third-Quarter Performance
For the third quarter ending November 2, Dollarama reported net sales of $1.91 billion, surpassing analysts’ expectations of $1.87 billion. Earnings per share reached $1.17, exceeding projections of $1.10 per share.
Driving Factors Behind Growth
- Strong consumer demand for discounted items.
- 4.1% increase in transactions.
- 1.9% rise in average basket size.
These factors helped the company achieve a 6% increase in comparable store sales in Canada during the reported quarter.
Responding to Inflationary Pressures
Amid rising inflation in Canada, Dollarama’s CEO Neil Rossy highlighted the company’s ability to maintain growth despite economic unpredictability. The company’s cost discipline and expansion into markets like Latin America and Australia contribute to its resilience.
Industry Trends
Dollarama’s success parallels that of U.S.-based discount retailers such as Dollar Tree and Dollar General, which also reported increases in their sales and profit forecasts. This trend indicates a broader shift towards budget-friendly shopping options as consumers navigate tighter budgets.
Financial Expectations
In terms of profitability, Dollarama forecasts an annual margin in the range of 45% to 45.5%, up from an earlier target of 44.2% to 45.2%. This reflects the company’s confidence in maintaining its competitive pricing strategy while also addressing the needs of price-sensitive shoppers.
