By Adriano Marchese
Dollarama is bracing for softer demand in Canada, a sign that the tougher economic backdrop is now weighing even on budget-conscious consumers.
The Canadian discount chain expects comparable store sales in Canada to rise between 3% and 4% in fiscal 2027, compared with 4.2% in the prior year.
FactSet-polled analysts expect same-store sales of 3.8%.
Rising economic uncertainty, most recently fueled by the U.S.-Israel conflict with Iran and the resulting spike in oil and gas prices, has been squeezing household budgets in recent weeks. Historically, Dollarama benefits when more shoppers trade-down or seek value in their day-to-day shopping.
The cooldown marks a shift in tone from the previous quarter when Chief Financial Officer Patrick Bui told analysts in a December call that economic performance in Canada was improving in the second half of fiscal 2026, prompting an upgrade for that year.
Shares fell Tuesday morning and were down 4.4% at C$178.47.
The company expects to open 60 to 70 new stores in fiscal 2027, compared with 75 in the previous year. Gross margin is expected to be between 45% and 45.5%, compared with 45.6% in fiscal 2026. Capital expenditures are also expected to rise to between C$420 million to C$470 million, up from C$252.6 million.
In the final 13-week quarter ended Feb. 1, Dollarama reported a 12% jump in sales to 2.1 billion Canadian dollars ($1.53 billion), topping analyst expectations.
In Canada, comparable store sales, determined on a 13-week basis, increased by 1.5%, compared to 4.9% growth in the fourth quarter of the previous year. Excluding the effects of the calendar shift, growth would have been 3.5%.
Net income came to C$392.5 million, or C$1.43 a share, up from C$391 million, or C$1.40 a share, in the prior-year period, which included an extra week in the quarter.
Write to Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
03-24-26 0956ET
