(Montreal) Dollarama’s new CFO says shrinkage – a metric the company uses to track inventory losses due to theft, damage and fraud – has increased, but is showing signs of appeasement.
Patrick Bui did not want to provide figures to analysts during a conference call held Thursday and during which he was asked how much shrinkage was compared to previous years and what the company was doing to address that, but he said self-checkouts “could be one of the areas we look at.”
He described the increase in shrink seen at the dollar store chain as a “retail industry phenomenon.”
“It’s not uncommon in this industry,” he said. Managing shrinkage is a priority for Dollarama, and we have implemented a series of initiatives to combat shrinkage. »
The increase in shrinkage comes as inflation remains above the Bank of Canada’s 2% target and customers grapple with high product prices.
At the same time, reports are emerging of an increase in shoplifting, prompting some retailers to remove self-checkout technology and others to increase staffing, cameras and sensors installed at kiosks.
Dollarama’s rising losses did not weigh heavily on its last quarter, the results of which were published on Thursday.
The retailer increased its quarterly dividend by almost 30% after reporting its fourth-quarter profit. It also recorded an increase in sales compared to last year.
The company says it will now pay a quarterly dividend of 9.2 cents per share, up from 7.08 cents per share.
The increased payment to shareholders comes as Dollarama reported earning $323.8 million, or $1.15 per diluted share, for the quarter ended Jan. 28.
The result was up from profit of 261.3 million, or 91 cents per diluted share, a year earlier.
Sales for the 13-week period totaled 1.64 billion, up from 1.47 billion a year earlier.
Same-store sales increased 8.7% while the number of transactions increased 11.2%, but the average transaction amount decreased 2.2%.
Irene Nattel, an analyst at RBC Capital Markets, said in a note to investors that she viewed the results as proof that Dollarama is “a standout company in Canada’s retail sector” because the numbers reflect a “strong value position” which is “particularly sought after in the current environment of high inflation”.
CEO Neil Rossy supported this view, saying the numbers indicate Dollarama is experiencing “strong customer demand,” which has resulted in increased traffic in store and the number of customers who earn more than $100,000 per year, who have low income or who are newly arrived immigrants to the country.
Many have been attracted to the wider range of merchandise that Dollarama has been able to offer over the past decade, gradually increasing prices. His most expensive items now cost $5.
Asked if the company has thought about the next price band it might introduce, Bui said: “For now, we have no plans to introduce any other price bands of price “.
If Dollarama were to introduce prices above $5, it would likely face competition from more retailers.
Instead, the company is working to overcome the challenges of high interest rates and inflation that hamper consumers.
“Looking forward, the trajectory of the economy remains uncertain, both for businesses and consumers,” said Mr. Rossy. This makes it all the more difficult to predict future consumer behavior. »
To deal with the situation, he added, Dollarama will focus on fundamentals such as continually refreshing the company’s merchandise.