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Mar 30, 2017

Dollarama to start accepting credit cards; posts 17% quarterly profit rise

A pedestrian walks past a Dollarama store in Ottawa, Ontario, Canada, September 1, 2016.

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Dollarama Inc's (DOL.TO) quarterly profit beat analysts' estimates as the average amount customers spent at its stores increased, sending the Canadian discount retailer's shares to a record high in early trading on Thursday.

The Montreal-based company said the rise in sales was aided by a 7.8 per cent increase in the average checkout bill, which is likely to be the biggest Dollarama has ever reported, according to analysts at Buckingham Research Group.

Dollarama, which increased its price ceiling to $4 last year, said total sales also benefited from newer products offered in the fourth quarter.

The retailer also revised its long-term target to 1,700 stores from 1,400 stores, over the next 8-10 years across Canada, which has a less competitive discount-retail landscape compared with the United States.

The announcement also comes at a time when North American retailers, such as J.C. Penney (JCP.N) and Macy's (M.N), are shutting stores, hurt by online competitors.

Dollarama opened 26 new stores in the fourth quarter.

The retailer said it would accept credit cards as a method of payment in all of its stores from the second quarter of fiscal 2018.

The company also increased its quarterly dividend to 11 Canadian cents per share from 10 Canadian cents.

Dollarama's same-store sales rose 5.8 pe rcent in the quarter ended Jan. 29, compared with a 7.9 percent rise a year earlier.

Net income rose to $146.1 million, or $1.24 per share, in the quarter, from  $124.8 million, or  $1 per share, a year earlier.

Analysts on average estimated income of $1.11 per share, according to Thomson Reuters I/B/E/S.

Sales jumped 11.5 per cent to $854.5 million, beating analysts' average estimate of C$846.9 million.

Dollarama's shares rose as much as 7.5 per cent to a record high of  $107.23 in early trading.