Montreal-based dollar store chain retailer Dollarama reached a milestone at the end of the third quarter of 2015, surpassing 1,000 store locations nationally. The company says that it plans to eventually operate about 1,400 Canadian stores.
Dollarama now operates 1,005 Canadian locations, having opened between 70 and 80 in the year 2015. Sales increased 6.4% during the third quarter ended Nov 1, 2015, up from a 5.9% increase the year prior. New store openings and same store sales increases saw Dollarama grow sales by 13% to $664.5 million, with net income rising to $100.1 million and earnings per share increasing 41.8% to 78 cents, from 55 cents the year prior.
An increase in average transaction is credited, partially, for driving same-store sales growth. Almost 60% of sales came from items priced higher than $1.25. The retailer will increase its highest price point to up to $4 in the second quarter of 2017, it says — up from 2009’s per-item high of $2. “We have done very well so far this year with managing the significant deterioration of the Canadian dollar through the use of foreign exchange contracts in order to hedge the cost of merchandise paid for in U.S. dollars. Certainly our pricing strategy has contributed to some of the uplift seen in the gross margin so far in Fiscal 2016” said Dollarama CEO Larry Rossy.
Dollarama is preparing to test accepting credit cards in British Columbia early next year at more than 80 stores. “What we’re looking for is to improve the shopping experience of our customers while stimulating more sales to offset the costs,” said CFO Michael Ross. Higher-priced items, and resulting higher margins, may facilitate this move. Dollarama currently accepts cash and debit cards for payment.