Dollarama Inc. may be forced to raise prices on meals and different items imported from the U.S. due to Canada’s plans to impose tariffs in retaliation for American duties on aluminum and metal, the corporate’s CEO mentioned Thursday.
Neil Rossy mentioned he isn’t frightened concerning the low cost retailer shedding its aggressive edge as a result of different Canadian retailers will face the identical pressures.
“It will not be enjoyable for any retailer within the nation and I assume the saving grace is that it’ll have an effect on all retailers in Canada the identical method,” he advised shareholders on the firm’s annual assembly.
“That being mentioned the shopper may endure if the adjustments are excessive however they are going to endure throughout all retailers as a result of retailers can solely achieve this a lot.”
Rossy later advised reporters that it is a complicated activity to assess the potential influence on a whole bunch of things, particularly if client items cannot be sourced from different nations.
“So if I am shopping for plastic-moulded gadgets I’ve choices all all over the world for them. If I am shopping for a Mars bar or a Hershey bar made in Pennsylvania I do not actually have too many choices.”
Dollarama cannot rule out elevating prices however would not achieve this on gadgets that are not instantly hit by larger prices so as to stay aggressive, Rossy mentioned. It additionally has no plans to enhance its most value of meals gadgets past $2 or add the next class of prices past $4.
The retailer mentioned it has additionally tried to take in the associated fee from an increase in minimal wages and would welcome the Ontario Progressive Conservative social gathering’s promise not to enhance the extent to $15 in January ought to it be elected Thursday.
“I believe it is good for everybody. You by no means like to have inflation,” mentioned chief monetary officer Michael Ross.
Dollarama introduced Thursday that it plans to take a look at its e-commerce technique to promote full bins of choose gadgets to shoppers in Quebec by Christmas earlier than rolling out this system throughout the nation.
The corporate mentioned there is a wholesome urge for food for its retail mannequin in Latin America. However it would not point out if it plans to train an possibility in 2020 to purchase a majority stake in Greenback Metropolis, which operates greater than 100 smaller shops in a number of Central American nations.
Dollarama shares fell 6.Four per cent in Thursday buying and selling after the low cost retailer missed analyst expectations as cool spring climate harm gross sales of seasonal items which might be a key driver of revenues in April.
Its shares misplaced $10.07 at $146.41 in afternoon buying and selling on the Toronto Inventory Trade.
Dollarama earned $101.6 million or 92 cents per diluted share within the first quarter. That in contrast with $94.7 million or 82 cents per share in final yr’s fiscal first quarter.
Gross sales for the 13 weeks ended April 29 have been $756.1 million, up 7.three per cent from $704.9 million within the comparable interval a yr earlier.
The corporate’s adjusted earnings additionally got here in at 92 cents per share, simply in need of the 93 cents per share it was anticipated to earn on $776.6 million of revenues, in accordance to analysts polled by Thomson Reuters Eikon.
Comparable retailer gross sales grew 2.6 per cent from final yr, whereas the variety of shops grew by 62 places to 1,170. Excluding the influence on seasonal items akin to gardening gadgets, same-store gross sales have been inside its forecast of 4 to 5 per cent.
Many retailers would be pleased with these numbers however buyers have change into accustomed to larger comparable gross sales from Dollarama which have ranged from 5.2 to 7.three per cent over the previous three years.
Analyst Irene Nattel of RBC Capital Markets mentioned the outcomes are greatest considered as a blip on Dollarama’s constant trajectory of 15 to 20 per cent earnings per share will increase.
“We stay assured in Dollarama’s potential to proceed to ship EPS compounded development approaching 20 per cent over our forecast horizon,” she wrote in a report.
Shareholders on Thursday permitted a three-for-one inventory cut up efficient June 19, designed to make the corporate’s shares extra accessible to retail buyers.
The annual assembly noticed Dollarama founder Larry Rossy step down as government chairman, though he’s anticipated to stay a mentor and proceed displaying up on the firm’s headquarters, mentioned his son Neil who’s chief government.