Dollarama lifts annual sales forecast on strong demand for cheaper grocery

People are seen shopping at a supermarket in Ottawa, Canada July 13, 2022. REUTERS/Patrick Doyle/File Photo

Dec 7 (Reuters) - Dollarama Inc (DOL.TO) raised its full-year same-store sales forecast on Wednesday, as the Canadian discount store chain benefited from inflation-weary consumers shopping at its stores in search of cheaper groceries and household supplies.

While inflation in Canada has eased in recent months, consumers are still battling higher prices of groceries and gasoline, prompting more shoppers to make their purchases at discount retailers.

Montreal-based Dollarama has seen robust demand for consumables such as snack bars, chocolates and beverages, and also rolled out additional price points up to C$5 to expand the range of products.

The company's U.S. counterpart Dollar Tree Inc (DLTR.O) raised its annual net sales forecast in November, while Dollar General Corp (DG.N) said last week that its full-year same-store sales would be toward the upper end of its previous estimate. read more read more

Dollarama said it now expects comparable store-sales growth between 9.5% and 10.5% for fiscal 2023, up from prior forecast of 6.5%-7.5%.

The company also narrowed its forecast range for full-year gross margin to a range of 43.1% to 43.6%, from prior estimate of 42.9% to 43.9%.

The company's third-quarter net sales rose 14.9% to C$1.29 billion ($942.98 million), compared with analysts' average estimate of C$1.23 billion, according to IBES data from Refinitiv.

It reported a profit of 70 Canadian cents per share for the quarter ended Oct. 30, in line with Wall Street estimates.

($1 = 1.3680 Canadian dollars)

Reporting by Deborah Sophia in Bengaluru; Editing by Sherry Jacob-Phillips

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