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MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Dollarama Inc    DOL   CA25675T1075

DOLLARAMA INC

(DOL)
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Delayed Quote. Delayed Toronto Stock Exchange - 07/19 04:15:03 pm
48.59 CAD   +0.06%
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Dollarama : raises full-year same-store sales forecast, shares gain 10%

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06/13/2019 | 02:02pm EDT
A Dollarama store is pictured in Toronto, Ontario

(Reuters) - Canadian discount retailer Dollarama Inc beat quarterly revenue estimates and raised its full-year comparable sales forecast on Thursday, as the company held back on aggressive price hikes, sending its shares surging 10%.

Dollarama, whose products are priced between C$1 and C$4, has been keeping price increases to a minimum as it tries to fend off rivals such as Walmart Inc's Canada unit and Dollar Tree Inc.

The Montreal-based company has also been trying to reduce checkout time at stores and investing to expand its bulk-ordering online business.

These initiatives powered a 5.8% jump in same-store sales in the first quarter ended May 5, much higher than analysts' average estimate for a 2.9% rise, according to IBES data from Refinitiv.

The company cited strong demand for its Easter products among reasons for the higher same-store sales.

Average transaction size rose 4.9%, while total number of transactions climbed 0.9% during the reported quarter.

Dollarama, which offers everything from kitchen ware to clothing accessories, said it now expects full-year same-store sales to grow between 3% and 4%. This compares with its previous forecast of a 2.5% to 3.5% rise.

"We like the industry's gear toward a value-conscious consumer, notably during a softer macro environment, which will increase the allure of bargain hunting," said Camilla Yanushevsky, an analyst with CFRA Research, raising her price target by C$15 to C$50.

The smaller price increases again weighed on Dollarama's gross margin, which fell to 42.1% from 43.8% a year earlier.

But on a post-earnings call Chief Financial Officer Michael Ross said the company expects to sell more higher-margin products in the second half of the year, while also getting a boost from Halloween and Christmas sales.

Total sales increased 9.5% to C$828 million, above analysts' average estimate of C$813.05 million.

Net income rose 2 percent to C$103.5 million in the three months ended May 5, from C$101.5 million, or 31 Canadian cents, a year earlier.

Profit of 33 cents per share slightly missed analysts' estimate of 34 Canadian cents per share.

The results come against the backdrop of a lackluster fiscal 2019. Dollarama missed same-store sales estimates in three quarters, while reporting an in line growth in one. Shares slumped about 38% in 2018.

Dollarama also said it would pause share repurchases to maintain its leverage ratio, a move BMO Capital Markets called "uncharacteristic" as the company has a history of consistent share buybacks.

The company's shares trading at C$46.71, their highest in over 10 months, and adding to their 30% gains so far this year.

By Debroop Roy

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Financials (CAD)
Sales 2020 3 792 M
EBIT 2020 896 M
Net income 2020 585 M
Debt 2020 2 018 M
Yield 2020 0,39%
P/E ratio 2020 26,1x
P/E ratio 2021 22,6x
EV / Sales2020 4,56x
EV / Sales2021 4,28x
Capitalization 15 284 M
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Technical analysis trends DOLLARAMA INC
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TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 13
Average target price 50,35  CAD
Last Close Price 48,56  CAD
Spread / Highest target 23,6%
Spread / Average Target 3,68%
Spread / Lowest Target -7,33%
EPS Revisions
Managers
NameTitle
Neil George Rossy President, Chief Executive Officer & Director
Stephen K. Gunn Chairman
Johanne Choinière Chief Operating Officer
Michael Ross Chief Financial Officer
Joshua Bekenstein Independent Director
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