By Shania S Thomas
Sept 16 (Reuters) - Canada's Dollarama raised annual comparable sales growth forecast on Wednesday, as shoppers opt for its cheaper everyday products while contending with higher costs of living and trade-related uncertainty.
As consumers look for ways to stretch their budgets, many have shifted to affordable alternatives across categories ranging from pantry staples to personal-care products, boosting traffic at dollar stores such as Dollarama, which sells merchandise at price points
of up to C$5.
"In Canada, economic conditions remain challenging, continued trade tensions and elevated living costs are pressuring consumers and weighing on the economic outlook... we expect consumers to remain thoughtful about their spending," Dollarama CEO Neil Rossy said on a post-earnings call. Its shares were up 3.5%.
The U.S. imposed 50% tariffs on $20 billion of Canadian goods in August, prompting Canada to match with levies on an equal value of U.S. imports, heightening uncertainty over the impact of rising trade costs on consumer spending and economic growth.
Dollarama, according to its latest annual report, sourced 54% of its Canadian procurement volume from North American vendors in fiscal 2026, while directly importing the remaining 46% from overseas suppliers, mostly in China, as of February 1.
The company expects to mitigate pressure from higher fuel costs in the second-half of the year by improving sourcing, merchandising and operations. Price increases would be introduced only as a last resort, executives said.
The discount retailer expects annual comparable sales in Canada to grow between 4% and 4.5%, compared with its previous forecast of a 3% to 4% rise.
Comparable sales at its Canadian stores rose 5.4% in the second quarter, driven by a 3.7% increase in customer traffic.
TD Cowen analysts said the Canada business remains "a stable a growth engine", while the company also starts to benefit from moving past peak Mexico and Australia expansion losses in fiscal 2028.
Dollarama's quarterly earnings per share of C$1.29 topped analysts' estimate, while its sales of C$2.03 billion ($1.46 billion) was largely in line.
($1 = 1.3929 Canadian dollars)
(Reporting by Shania S Thomas in Bengaluru; Editing by Shilpi Majumdar)
