Dollarama beats quarterly profit view on lower costs, stable demand (updated)

Dollarama

11/09/2024 12:37

(Recasts first paragraph, adds background from paragraph 2,
details in paragraph 4,8)
       Sept 11 (Reuters) - Dollarama  DOL.TO  beat
second-quarter profit estimates on Wednesday, helped by lower
costs and stable demand for low-priced essentials like
groceries.
    Consumers grappling with rising living costs have
relentlessly bargain-hunted and traded down to cheaper
alternatives.
    In addition, lower costs of inbound shipping and logistics
helped the dollar-store company counter lingering challenges
related to shrink, in which inventory is either lost, stolen or
damaged. 
    The Montreal, Quebec-based company's gross margin rose to
45.2% in the quarter ended July 28 from 43.9%, a year ago.
    The company also reiterated its fiscal 2025 comparable sales
forecast of a rise in the 3.5%-4.5% range.
    U.S. dollar stores like Dollar General  DG.N  and Dollar
Tree  DLTR.O  have been trying to lift demand as larger rivals
such as Target  TGT.N , Walmart  WMT.N  and PDD Holding's
 PDD.O  e-commerce platform Temu competed for customer dollar.
    This also meant off-price retailers such as TJX  TJX.N  and
Ross Stores  ROST.O  reported a sequential rise in customer
traffic at the cost of higher-end department store operators
like Macy's  M.N .
    Dollarama's net sales rose 7.4% to C$1.56 billion ($1.15
billion) compared to a year ago. Analysts estimated net sales of
C$1.57 billion, according to LSEG data.
    The company posted net earnings per share of C$1.02 compared
with 86 Canadian cents a year ago. Analysts, on average,
expected a profit of 97 Canadian cents.

($1 = 1.3577 Canadian dollars)

 (Reporting by Anuja Bharat Mistry in Bengaluru; Editing by
Janane Venkatraman)
 ((AnujaBharat.Mistry@thomsonreuters.com;))