Dollaram profits up despite nasty weather

Discount retailer Dollarama Inc. says sales rose by almost 12 per cent to $501.1 million in the first quarter, despite challenging weather conditions that affected consumer traffic to stores during the winter and spring.

Sales were up from $448.1 million in the year-ago period, and contributed to a net profit of $53.2 million, up from $45.6 million in the same quarter last year.

On a per share basis, the earnings for the first quarter amounted to 78 cents, up from 62 cents last year, Dollarama said Thursday.

In the quarter, 62 per cent of sales originated from products priced higher than $1, compared with 58 per cent in the corresponding quarter last year. Dollarama sells products priced up to $3, including cleaning, clothing and household items, canned and packaged foods and chocolate bars and candy.

Dollarama said the positive results were driven by the addition of new stores over the past twelve months, strong Easter sales and continued sales growth. It reported same-store sales growth of 3.3%

``We are satisfied with the growth reflected in our first quarter results given the continuing adverse impact of difficult weather conditions on store traffic this winter and spring,'' said Dollarama chairman and chief executive Larry Rossy.

``Our Easter sales were very good and, with the opening of 25 net new stores during the quarter, we remain on track to expand our store network across Canada by 70 to 80 net new stores this year,'' Rossy said in a news release.

Dollarama is Canada's leading dollar store operator with 899 locations across the country.

Desjardins analyst Keith Howlett said the company's earnings per share of 78 cents matched his estimate and beat analysts' expectations of 77 cents.

RBC Capital Markets analyst Irene Nattel noted that sales were a bit softer than expected due to the poor weather, but was upbeat about future earnings.

``We remain confident that Dollarama can deliver EPS (earnings per share) growth in the range of 20 per cent through our forecast period,'' Nattel said in a research note.