As Dollarama Inc. reported fourth-quarter profit and sales gains, as well as a dividend hike, one analyst says the biggest question regarding the retailer is if it can sustain its pace of growth. 

The Montreal-based retailer reported its fourth-quarter earnings on Thursday, with profit coming in at $323.8 million, up from $261.3 million a year earlier. Graeme Kreindler, an analyst with NewGen Asset Management Limited, said in an interview with BNN Bloomberg on Thursday that Dollarama has reported strong same-store sales growth for the past two years. 

“The question is can this pace continue, especially now that we're past or we think we're past the peak inflation (and) starting to get some more stability there,” he said. 

“How much room is there to generate more traffic for Dollarama? How much room is there to push more price for Dollarama? And the quarter was a good result that beat expectations. But more importantly, fiscal 2025 guidance came in stronger than expectation.” 

Sales for the quarter reached $1.64 billion, up from $1.47 billion during the same period last year. During the fourth quarter, Dollarama also saw comparable store sales rise 8.7 per cent as total transactions rose 11.2 per cent, while average transaction size was 2.2 per cent lower. 

The company also increased its dividend by just under 30 per cent to 9.2 cents per share from 7.08 cents per share. 

Dollarama shares finished trading nearly 10 per cent higher on Thursday after the retailer reported its fourth-quarter earnings. 

“I think what you're seeing this morning is a bit of a restoration in that confidence (in) that Dollarama model continues to be durable, albeit now reset at a more historical pace but still very, very strong,” Kreindler said. 

With files from The Canadian Press.