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Dollarama wants to keep items priced at $2 and lower, depending on inflation
Dollarama Inc. would like to keep its products priced at $2 or less for as long as possible and as long as inflation stays low, chief executive officer Larry Rossy said Thursday.
When the disount retailer feels “a little squeezed” by inflation, it will consider raising prices but “our focus today is to stay at $2 and below,” Rossy told analysts on a conference call to discuss Dollarama’s quarterly results.
Rising costs of labour, raw materials, steel and capital have all helped push up the costs of production in China and put upward pressure on the wholesale prices Chinese companies charge their customers around the world.
Higher oil prices have also raised the cost of shipping such goods — ranging from toys and housewares to electronics — around the world.
Dollarama (TSX:DOL) also announced Thursday ahead of its annual meeting that it will pay its first dividend since becoming a publicly traded company in October 2009.
The quarterly dividend of nine cents per share will be paid Aug. 3 to shareholders of record at the close of business on June 29.
Rossy said the Montreal-based company has enough cash flow to pay down its debt and offer a dividend.
Dollarama’s profit in its fiscal first quarter ended May 1 was $30.4 million, or 40 cents per share, compared with $22.5 million, or 30 cents per share, in the same year-earlier period.
Sales rose 11 per cent to $346.3 million from $311.9 million as Dollarama added 15 stores in the quarter, bringing its total to 667 stores across Canada.
Chief operating officer Stephane Gonthier said 44 per cent of Dollarama’s products were sold for more than $1 in the quarter, compared with 34 per cent in the same quarter in 2010.
“Sales of products at these new price points have progressed as proportion of overall sales in every quarter since we introduced the strategy two years ago,” Gonthier said.