Article Date 14/09/2018

Image from : Peter J. Thompson/National Post files

Dollarama enters unfamiliar territory - a sales slowdown and a stock plunge

Source The Montreal Gazette

Dollarama Inc. is hitting a slow patch. The Montreal-based dollar store, which has gotten investors used to a regular stream of good news, lowered its forecast for comparable store sales this year after a second-straight quarter of below-expectations growth. It now expects sales to rise about 2.5 per cent to 3.5 per cent, down from a previous range of 4 per cent to 5 per cent.

The sales forecast cut is "problematic," according to Raymond James Financial Inc. analyst Kenric Tyghe. Dollarama's earnings per share for the fiscal second quarter also missed estimates by a penny.

The company, which is adding stores throughout Canada, blamed part of the slowdown on a decision to minimize price increases. At the same time, it increased its gross-margin forecast, helped by lower-than-expected inflation on products imported from China and measures to control costs.

Dollarama shares, which have soared almost 1,700 per cent since the company went public in 2009, was down 18 per cent to $44.59 in Toronto Thursday afternoon, the biggest decline since December.

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