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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.
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.