Dollarama reports increased profit as it attracts budget-conscious customers

Dollarama Inc.’s new chief monetary officer says shrinkage — a metric the corporate makes use of to trace stock misplaced via theft, harm and fraud — has elevated however is exhibiting indicators of plateauing.

Patrick Bui wouldn’t present numbers to analysts on a Thursday convention name asking how prevalent shrinkage was compared to prior years or what the corporate was doing to deal with, it although he mentioned the corporate had launched adjustments meant to deal with the problem and is open to choices together with a assessment of self-checkout kiosks. He painted the rise in misplaced stock on the dollar-store chain as a part of a “retail industry phenomenon.”

“(It’s) not uncommon in the industry,” he mentioned. “Managing ‘shrink’ is a high priority at Dollarama, and we’ve put in place a host of initiatives to combat shrink.”

The improve in shrinkage comes as inflation stays above the Bank of Canada’s two per cent goal and prospects are grappling with excessive costs of products.

Meanwhile, there have additionally been experiences of an increase in shoplifting that has pushed some retailers to take away self-checkout know-how and others to spice up staffing, cameras and sensors on the kiosks.

Some within the retail trade really feel self checkout contributes to shoplifting as a result of it gives extra alternatives for purchasers to steal by scanning solely a few of their merchandise on the time of buy.

In October, on the heels of Vancouver police reporting they’d made 258 arrests and recovered $57,000 in stolen merchandise kind shoplifting, the overall supervisor for loss prevention at London Drugs mentioned most retailers have seen no less than a 20 per cent improve in retail theft in recent times.

Dollarama’s uptick in shrinkage did not weigh closely on its most up-to-date quarter, which it reported Thursday.

The retailer mentioned it earned $323.8 million or $1.15 per diluted share in its fourth quarter. The outcome for the interval ended Jan. 28. was up from a revenue of $261.3 million or 91 cents per diluted share a yr earlier.

Sales for the 13-week interval totalled $1.64 billion, up from $1.47 billion a yr earlier. Comparable retailer gross sales rose 8.7 per cent because the variety of transactions rose 11.2 per cent, however the common transaction dimension fell 2.2 per cent.

As it launched such figures it additionally introduced it raised its quarterly dividend by practically 30 per cent to 9.2 cents per share, up from 7.08 cents per share.

The outcomes pushed Dollarama’s share worth up eight per cent in mid-afternoon buying and selling to $108.57.

Irene Nattel, an analyst with RBC Capital Markets, mentioned in a be aware to buyers that she took the outcomes as proof that Dollarama is “a standout in Canadian retail” as a result of the numbers mirror a “strong value position” that’s “particularly sought after in the current high inflation environment.”

Chief government Neil Rossy bolstered that view, saying the numbers point out Dollarama is seeing “strong customer demand,” which has resulted in rising retailer site visitors and extra prospects who’re making greater than $100,000 a yr, are low-income or are newly-landed immigrants.

Many have been drawn in by the broader vary of merchandise Dollarama has been capable of provide during the last decade because it steadily added larger worth factors. Its highest worth gadgets at the moment are $5.

Asked whether or not the corporate has considered what the following worth level it might introduce can be, Bui mentioned, “At this point in time, we have no plans to introduce any other price points.”

If Dollarama had been to introduce costs larger than $5, it could doubtless face competitors from a broader vary of outlets.

The firm is as an alternative targeted on navigating the excessive rate of interest and inflation surroundings that has been hampering customers.

“Looking ahead, the path of the economy remains uncertain, both for businesses and consumers,” Rossy mentioned.

“This makes it all the more difficult to predict future consumer behaviour.”

To cope, he mentioned Dollarama will give attention to fundaments like an ongoing refresh of the corporate’s merchandise.