Dollarama prices could rise, thanks to Canada-U.S. tariff dispute – National

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MONTREAL — Dollarama Inc. could also be pressured to lift costs on meals and different items imported from the U.S. due to Canada’s plans to impose tariffs in retaliation for American duties on aluminum and metal, the corporate’s CEO stated Thursday.

READ MORE: Canada hits again towards U.S. with extra tariffs — however what are they and the way do they work?

Neil Rossy stated he’s not apprehensive concerning the low cost retailer shedding its aggressive edge as a result of different Canadian retailers will face the identical pressures.

“It received’t be enjoyable for any retailer within the nation and I assume the saving grace is that it’s going to have an effect on all retailers in Canada the identical approach,” he informed shareholders on the firm’s annual assembly.

“That being stated the shopper might undergo if the adjustments are excessive however they are going to undergo throughout all retailers as a result of retailers can solely achieve this a lot.”

Rossy later informed reporters that it’s a posh activity to evaluate the potential impression on a whole lot of things, particularly if shopper items can’t be sourced from different international locations.

“So if I’m shopping for plastic-moulded gadgets I’ve choices all world wide for them. If I’m shopping for a Mars bar or a Hershey bar made in Pennsylvania I don’t actually have too many choices.”

WATCH: Putin calls U.S. tariffs on Canada ‘sanctions’

Dollarama can’t rule out elevating costs however wouldn’t achieve this on gadgets that aren’t instantly hit by increased prices with the intention to stay aggressive, Rossy stated. It additionally has no plans to extend its most value of meals gadgets past $2 or add the next class of costs past $four.

The retailer stated it has additionally tried to soak up the associated fee from an increase in minimal wages and would welcome the Ontario Progressive Conservative social gathering’s promise to not improve the extent to $15 in January ought to it’s elected Thursday.

“I feel it’s good for everybody. You by no means prefer to have inflation,” stated chief monetary officer Michael Ross.

Dollarama introduced Thursday that it plans to check its e-commerce technique to promote full containers of choose gadgets to customers in Quebec by Christmas earlier than rolling out this system throughout the nation.

READ MORE: Canada retaliates towards U.S. metal, aluminum tariffs, pronounces dollar-for-dollar ‘countermeasures’

The corporate stated there’s a wholesome urge for food for its retail mannequin in Latin America. Nevertheless it wouldn’t point out if it plans to train an choice in 2020 to purchase a majority stake in Greenback Metropolis, which operates greater than 100 smaller shops in a number of Central American international locations.

Dollarama shares fell 6.four per cent in Thursday buying and selling after the low cost retailer missed analyst expectations as cool spring climate damage gross sales of seasonal items which are a key driver of revenues in April.

Its shares misplaced $10.07 at $146.41 in afternoon buying and selling on the Toronto Inventory Trade.

WATCH: Trudeau calls Trump tariffs ‘insulting and unacceptable’

Dollarama earned $101.6 million or 92 cents per diluted share within the first quarter. That in contrast with $94.7 million or 82 cents per share in final yr’s fiscal first quarter.

Gross sales for the 13 weeks ended April 29 have been $756.1 million, up 7.three per cent from $704.9 million within the comparable interval a yr earlier.

The corporate’s adjusted earnings additionally got here in at 92 cents per share, simply in need of the 93 cents per share it was anticipated to earn on $776.6 million of revenues, in accordance with analysts polled by Thomson Reuters Eikon.

READ MORE: From pork to denims — international locations threaten tariff retaliation for U.S. metal, aluminum duties

Comparable retailer gross sales grew 2.6 per cent from final yr, whereas the variety of shops grew by 62 areas to 1,170. Excluding the impression on seasonal items corresponding to gardening gadgets, same-store gross sales have been inside its forecast of 4 to 5 per cent.

Many retailers can be proud of these numbers however traders have develop into accustomed to increased comparable gross sales from Dollarama which have ranged from 5.2 to 7.three per cent over the previous three years.

WATCH: Trudeau on tariffs, ‘In what universe is Canada…someway develop into a nationwide safety menace’ to U.S.

Analyst Irene Nattel of RBC Capital Markets stated the outcomes are finest seen as a blip on Dollarama’s constant trajectory of 15 to 20 per cent earnings per share will increase.

“We stay assured in Dollarama’s means to proceed to ship EPS compounded development approaching 20 per cent over our forecast horizon,” she wrote in a report.

Shareholders on Thursday accredited a three-for-one inventory cut up efficient June 19, designed to make the corporate’s shares extra accessible to retail traders.

The annual assembly noticed Dollarama founder Larry Rossy step down as govt chairman, though he’s anticipated to stay a mentor and proceed exhibiting up on the firm’s headquarters, stated his son Neil who’s chief govt.

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