Dollarama sees room for further growth

MONTREAL — Dollarama Inc. will start to accepting credit cards across all of its stores this year, the retailer said on Thursday, as it posted stronger-than-expected results that sent its stock surging.

The Montreal-based company also raised its estimate of how many of its stores Canada can support within a decade to 1,700 from 1,400. It had 1,095 stores as of Jan. 29.

“This provides us with a comfortable runway for continued organic growth in Canada, consistent with the current store format, real estate quality and capital payback period,” Dollarama CEO Neil Rossy said Friday.

The company said it’s time to stop insisting that customers pay either by cash or debit card — which usually don’t charge merchants the same processing fees as credit card transactions.

Rossy said Dollarama will begin to accept Visa, MasterCard and American Express in all of stores across Canada by the end of its second quarter, which ends mid-summer.

Chief financial officer Michael Ross added that pilot tests show that sales growth will offset the cost of allowing credit cards, but added it will take a year to know whether it can do better than break even.

“Right now, it’s too early to say.” Ross said.

Ross also said it’s too early to predict what will happen to Dollarama’s margins as the store count approaches 1,700 locations, but insisted it will adjust to ensure each location pays for itself within two to three years after opening.

For the 2017-18 financial year, Dollarama expects to add 60 to 70 stores to its network — similar to the 65 added in 2016-17

But a revised outlook for 2017-18 on Thursday included slightly higher ranges for its margins compared with estimates issued in December.

Dollarama (TSX:DOL) also raised its quarterly dividend by 10 per cent to 11 cents per common share, following a strong end to its 2016-17 financial year.

The retailer earned $146.1 million or $1.24 per diluted share for the quarter ended Jan. 29, up from $124.8 million or $1.00 per diluted share a year earlier.

Sales for what was the company’s fourth quarter improved to $854.5 million compared with $766.5 million in the same quarter a year ago.

Analysts had expected a profit of $1.11 per share, according to Thomson Reuters.

By Thursday afternoon Dollarama’s stock was up almost 10 percent at $109.43.

Several analysts released reports suggesting Dollarama stock has room to rise higher, including RBC Dominion Securities — which increased its previous price target by $3 to $129 per share.

RBC retailing analyst Irene Nattel wrote that “in our view DOL remains the leading retailer in our universe of coverage, and we maintain a constructive view on the stock.”

But Nattel added that the risks facing Dollarama include the potential for ”increased competition, minimum wage rate increases, a sustained decline in the Canadian dollar, and sustained product cost inflation.”

Just Posted

New Alberta dental fee guide calls for 8.5% reduction in fees

A new dental fee guide has been announced in Alberta that the… Continue reading

Lacombe ready to light the night

The Christmas spirit comes to Lacombe Thursday night with the start of… Continue reading

Opioid prescriptions up across country, but daily doses dispensed down: report

TORONTO — The overall number of prescriptions for opioids has increased over… Continue reading

Notley pleads with political foes, allies to support Alberta pipeline projects

OTTAWA — Alberta Premier Rachel Notley issued warnings to all political parties… Continue reading

Uber isn’t saying how many Canadians were affected by year-old hack

TORONTO — Uber is owning up to a year-old security breach that… Continue reading

VIDEO: Replay Red Deer: Nov. 19

Watch news highlights from the week of Nov. 13

Creationist will speak at home-schooling convention in Red Deer

Ken Ham has debated Bill Nye on the Earth’s origins

Update: Innisfail girl found

A 15-year-old missing Innisfail girl has been located safe and sound. Police… Continue reading

Cost to fix Phoenix pay system to surpass $540 million, auditor general says

The federal government’s chronic salary struggles will take more time and more… Continue reading

Red Deer Christmas Bureau to help 1,300 children this year

Demand is high, but Red Deer always provides

CP Holiday train makes stops in Central Alberta

The popular train will feature entertainment from Colin James and Emma-Lee

Kittens rescued after allegedly being tossed from vehicle

Couple finds abandoned kittens new home through Facebook

VIDEO: ‘Party bus’ goes up in flames in Vancouver

Fire crews responded to the late night blaze

Chicken crosses B.C. road, stops traffic

Rooster makes early morning commuters wait in Maple Ridge

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month