Dollarama: A show of strength

As Canadian consumers cut back on spending, Dollarama is increasingly establishing itself as a haven for purchasing power. This is reflected in its strong quarterly results, which saw the stock gain 10% yesterday on the Toronto Stock Exchange. It is clear that discount models remain attractive in times of uncertainty. Unless, of course, Dollarama is just a particularly effective company.

Dollarama started its 2026 fiscal year – which was delayed – with a bang. Q1 sales rose 8.2% to CAD 1.52bn. Demand remains strong for everyday consumer products (48% of sales). Same-store sales grew 4.9%, following an already impressive 5.6% increase in the same period a year earlier. The momentum is well distributed: the number of transactions climbed (+3.7%), as did the average basket size (+1.2%).

The seasonal segment, which accounts for 13% of the mix, benefited from careful execution around key periods (Easter, summer). The variety and price positioning of the offering continue to appeal to consumers.

In recent weeks, we have discussed the situation in the US discount retail market on numerous occasions in our columns. We have seen here that Dollar General is much more optimistic and solid than its competitor Dollar Tree , which will have to restructure after the sale of its Family Dollar subsidiary. Canada's Dollarama clearly falls into the category of top performers.

Beyond sales growth, it is profitability that has impressed. Margins and profits remain very solid. The group is continuing its excellent work in controlling costs (materials, transport, overheads), which is helping to make Dollarama one of the most consistent players on the market in terms of its financial results.

Dollarama is now at an all-time high. Its performance in recent years has been nothing short of exceptional, given the difficulties of operating in such a market (competition, weak sales, inflation, etc.). The development of Dollarcity, the Latin American brand, is continuing successfully. The stake in Dollarcity (60.1% of the capital) now contributes significantly to earnings (+82.4% year-on-year). The subsidiary's network has reached 644 stores and geographical expansion is gathering pace, particularly in Mexico, where the first stores are set to open soon.

In addition, the ongoing acquisition of The Reject Shop in Australia opens up a new avenue for geographic diversification.

Dollarama has confirmed its annual forecasts: comparable sales growth of 3% to 4%, an expected gross margin of between 44.2% and 45.2%, and the opening of 70 to 80 new stores.

The Canadian company is now trading at more demanding multiples. However, the quality of its fundamentals, visibility on growth, and the opening of new markets largely justify this revaluation.