By Adriano Marchese

Dollarama delivered stronger-than-expected first-quarter profit and sales as value-seeking shoppers visited its stores and spent more per trip, helping the Canadian discount retailer grow comparable sales despite economic uncertainty.

Comparable-store sales at the Canadian dollar-store chain increased by 4.9% thanks to a 3.7% increase in transactions and a 1.2% bump in basket size. The company said strong demand for consumables, for everything from food and beverages to household cleaning supplies, as well as for its seasonal offering, remained the biggest drivers.

Gross margin surprised to the upside, hitting 44.2% compared with analyst expectations of 43.3%, according to Scotiabank analyst John Zamparo. He noted that the improvement came despite a product mix shift toward lower-margin consumables, a weaker Canadian dollar and earlier concerns about logistics costs.

"This demonstrates both the benefits of scaling" - higher same-store sales - "and also Dollarama's pricing power," Zamparo said.

Shares jumped in early morning trading Wednesday, rising nearly 11% to 194.22 Canadian dollars ($142.04). The stock is up 38% year-to-date and more than 54% in the last 52 weeks.

Dollarama reported continued momentum at Dollarcity, its majority-owned Latin American business. Dollarama's 60.1% share of Dollarcity's net earnings came to C$40.3 million, up from C$22.1 million for its 50.1% share a year earlier. Sales at Dollarcity rose nearly 13% as store count expanded to 644 from 547.

Chief Executive Neil Rossy said expansion efforts in Latin America are on track, with the first Dollarcity locations in Mexico set to open imminently.

Altogether, sales in the quarter rose 8.2% to C$1.52 billion, beating forecasts for a rise to C$1.5 billion, according to FactSet.

Net income came to C$273.8 million, or C$0.98 a share, up from C$215.8 million, or C$0.77 a share, in the comparable quarter a year earlier. Analysts were expecting a more modest rise to C$0.83 a share.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

June 11, 2025 10:22 ET (14:22 GMT)

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