CEO Neil Rossy said the company’s goal is not to pass on any higher costs from tariffs to consumers through price increases.Christinne Muschi/The Canadian Press
After consumer confidence hit historic lows earlier this year, buying patterns this spring have revealed a more resilient Canadian shopper, Dollarama Inc. DOL-T executives said on Wednesday.
But retailers are remaining cautious, as the U.S. administration’s move to upend traditional trading relationships has introduced significant uncertainty.
“We still think the consumer is, overall, fragile,” Dollarama chief financial officer Patrick Bui said during a conference call to discuss the company’s first-quarter earnings. Predicting how consumer behaviour will evolve in that environment is difficult, he added.
Dollarama beat analysts’ estimates for sales and profit growth, as shoppers visit discount stores more frequently to cut back on expenses.
On Wednesday, the Montreal-based discount retailer reported its sales grew by 8.2 per cent from the same period last year, to $1.52-billion. That exceeded analysts’ expectations of $1.5-billion, according to the consensus estimate from S&P Capital IQ.
The growth was partly driven by strong sales of “consumables,” such as food and household products – a trend that has boosted Dollarama’s performance consistently in recent years as Canadian consumers have looked for relief from rising prices for everyday necessities. The retailer also saw improved sales of seasonal products, particularly related to Easter.
Dollarama has also been affected by countertariffs that Canada imposed on some U.S. imports, in response to President Donald Trump’s sweeping tariffs on Canadian goods.
The impact is being felt mostly in name-brand consumable products. However, the company’s goal is not to pass on any higher costs from tariffs to consumers through price increases, chief executive officer Neil Rossy said on Wednesday’s call.
“Price adjustments are always a last resort for us,” he said.
Dollarama’s sales growth also came from the company’s continuing push to open more locations. The retailer opened 22 new stores in Canada during the quarter, taking its total to 1,638 locations as of early May. Dollarama has said it intends to open 70 to 80 new stores this year.
Comparable sales – an important metric that tracks sales growth not attributed to new store openings – were up 4.9 per cent in the quarter, which ended May 4. That compared with growth of 5.6 per cent in the same period a year ago.
Foot traffic rose at stores, and customers bought more each visit: the company reported a 3.7-per-cent increase in the number of transactions, and 1.2-per-cent growth in the size of transactions on average.
Net earnings grew to $273.8-million or 98 cents per diluted common share, compared with $215.8-million or 77 cents in the first quarter last year. The results surpassed analysts’ estimates of $233.3-million or 84 cents, according to S&P Capital IQ.
The earnings growth partly reflected a $10.4-million gain related to an accounting adjustment on Dollarama’s option to purchase additional equity in Latin American discount retailer Dollarcity.
Dollarama already owns a 60.1-per-cent share in Dollarcity, after increasing its stake in the company last year, with an additional 10-per-cent equity interest. Excluding the fair-value adjustment, Dollarama’s earnings grew to 95 cents per share.
Dollarcity, which operates stores in Colombia, Guatemala, El Salvador and Peru, had previously announced plans to expand into Mexico in 2026. Those plans are now proceeding ahead of schedule, and the first location will open in the country in the coming weeks, Mr. Rossy said.