Tariff tensions don't appear to be weighing on Dollarama Inc. sales yet, but executives at the discount goods retailer are bracing for that to potentially change because consumers are "fragile."
The Montreal-based business reported Wednesday that its first-quarter sales increased by 8.2 per cent to $1.52 billion. Its profit during the period ended May 4 soared by 27 per cent to $273.8 million, up from $215.8 million a year earlier.
Dollarama chief financial officer Patrick Bui framed the increases as a sign that shoppers still see his retailer as providing value, even while they're more generally cutting back on discretionary purchases.
But given the "unpredictable trade environment", he is taking nothing for granted.
"When you go back to February and March, we all saw the data on consumer confidence and it was at an all-time low," he said on an earnings call with analysts.
"As we moved through the quarter, we did see a resilient consumer in the back half ... but we do sense the consumer being fragile and with all the uncertainty in the market, it's very hard to see how that will evolve."
Bui's remarks came roughly a week after the U.S. doubled Canadian steel and aluminum tariffs to 50 per cent. This week saw officials from the U.S. and China to London to try to reach some semblance of a truce after the world's two biggest economies spent recent months volleying eye-popping duties at one another before reaching a 90-day détente.
Dollarama, which sources goods from all over the world, has previously said it sees the tariffs as being "manageable" for its business but "consumer confidence will be a major challenge."
It stuck with that messaging Wednesday, when it indicated it has been "working extremely hard" to boost consumer confidence by holding its prices for as long as possible.
"Price adjustments are always a last resort for us," CEO Neil Rossy said on the same call as Bui, while pledging to maintain Dollarama's existing price point range.
As part of those efforts Dollarama executives visited China in April, when tariffs between the country and the U.S. were intensifying.
At first, Dollarama was able to use the drama to negotiate some advantages with FOB — a shipping term that's short for Free on Board and refers to agreements between buyers and sellers dictating, when the ownership and liabilities of goods transfer between them.
However, "the vendors were reticent to pass on any discounts or to sell any of the goods that were being held for their American customers," Rossy said.
"They were waiting to see what would happen and possibly change with U.S. policies and they were right to do so because U.S. policies changed," he said referring to the 90-day reprieve. "In the end they shipped their goods, and it was pretty much back to business as usual."
His comments were made a few hours after the retailer released its latest financial results, showing its first-quarter profit amounted to 98 cents per diluted share, up from 77 cents per diluted share a year earlier.
Excluding an unrealized gain from a derivative on equity-accounted investment, Dollarama said it would have earned 95 cents per diluted share in its most recent quarter.
The increase came as comparable store sales for the quarter increased by 4.9 per cent, including a 3.7 per cent increase in the number of transactions and a 1.2 per cent increase in average transaction size.
The quarter covered a period when it announced Dollarama announced it will buy Australian discount retailer, the Reject Shop.
The deal valued at $233 million is expected to see Dollarama expand the Australian acquisition's footprint to about 700 stores by 2034.
Rossy expects the transaction to close by the end of July, assuming it lands necessary Australian approvals.
This report by The Canadian Press was first published June 11, 2025.
Companies in this story: (TSX:DOL)
Tara Deschamps, The Canadian Press
