Dollarama Inc. plans to build even more stores in Canada, hiking its long-term growth target to reach 2,200 locations by 2034.
The Montreal-based discount retailer, which currently operates 1,601 stores across the country, had previously set a goal of having 2,000 locations by 2030. The new plan, announced on Wednesday, followed “an updated evaluation of the market potential for Dollarama stores across Canada,” according to a press release.
In recent years, Dollarama has typically opened 60 to 70 new locations per year. And sales have been growing, particularly in recent years as consumers feeling the sting of inflation have flocked to discount retailers.
Dollarama also reported on Wednesday that its third-quarter sales grew by 5.7 per cent compared to the same period the previous year, to nearly $1.6-billion. Sixty new stores in the previous 12 months drove revenue growth, as did rising sales at existing stores.
To support its expanded operations, the company is also planning to build a new warehouse and distribution centre in Calgary, an approximately $500-million investment. Dollarama currently has a centralized distribution centre that is based in the Montreal area; the new facility will handle logistics closer to its stores in Western Canada. The company has agreed to purchase a parcel of land for $46.7-million, and expects to commission the new facility by the end of 2027. Construction is expected to cost roughly $450-million.
Cautious consumers are shopping at Dollarama stores more often, although they are buying slightly less on average during each visit: on Wednesday the company reported a 5.1-per-cent increase in transactions during the third quarter ended Oct. 27, and a 1.7-per-cent decrease in the average size of those purchases.
Comparable sales – an important industry metric that tracks sales growth not tied to new store openings – rose by 3.3 per cent. That was compared to a quarter in the prior year when comparable sales rose by 11.1 per cent.
Sales grew despite the fact that people splurged less than usual in preparation for Hallowe’en this year. Sales of seasonal products were down, according to the company, while shoppers continue to buy more “consumable” items such as food and household products.
Consumables come with tighter profit margins than other merchandise. Combined with higher logistics costs, that led to a slight decrease in the company’s gross profit margin, which fell to 44.7 per cent of sales in the quarter, compared to 45.4 per cent in the same period last year.
Dollarama’s net earnings grew to $275.8-million or 98 cents per share in the quarter, up 5.6 per cent compared to $261.1-million or 92 cents per share in the same period the prior year.
