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Dollarama's Expected Higher Profits in Q3

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Andrew R. Michaud

• December 12, 2023

Dollarama, the Canadian dollar-store operator, is anticipated to announce increased profits and revenue in its fiscal third quarter. This comes as Canadian consumers continue to prioritize value in everyday items amidst the rising cost of living. The company's quarterly results are set to be released on Wednesday. Here are the key details:

Profit per Share

According to a poll of analyst forecasts on FactSet, Dollarama's earnings per share (EPS) are expected to climb to 86 Canadian cents (63 cents) from C$0.70 a year ago.

Revenue

Revenue is projected to rise to C$1.48 billion from C$1.29 billion.

In the quarter, the company's shares have exhibited a 9% increase and were recently trading at C$98.75.

What to Watch

Investors will be closely monitoring any changes to Dollarama's pricing categories and how customers are adjusting to higher price points. Research by National Bank of Canada analyst Vishal Shreedhar indicates an increase in sales within the company's higher price categories.

Given ongoing concerns about the cost of living in Canada, shoppers have been approaching purchases more cautiously. Investors will be watching to see how consumer spending trends, such as value-seeking and purchase choice, played out in the quarter. Shreedhar states in a report, "Our review of retailer commentary indicates a carryover of themes from prior quarters."

As sales strength continues, Shreedhar expects favorable guidance revisions.