News Briefs

MONTREAL - Dollarama Inc. recorded another strong quarter as inflationary pressures continue to drive consumer demand for consumable products at the discount retailer.

The Montreal-based retailer raised its comparable-store sales growth guidance Wednesday as it reported that its third-quarter profit and sales were up compared with a year ago.

During a call with analysts, Dollarama's chief financial officer J.P. Towner said the retailer saw a third consecutive quarter of "higher than historical demand'' for consumable products, a category that includes food as well as items such as laundry detergent that can only be used once.

"Canadians from all walks of life continue to seek value in lower prices on the goods they need,'' he said.

The company cited current economic conditions as a significant factor in the demand from new customers as food prices have increased faster than overall price growth figures through much of the year, peaking with 11.4 per cent increase in August.

During the call, Dollarama's chief executive officer Neil Rossy said convenient store locations and low costs will retain the discount retailer's new customer base.

"Our value promise and a high inflation environment is even more relevant as consumers juggle the pressure on their wallets and adjust their spending strategies,'' said Rossy.

As Dollarama, traditionally known for prices between $1.25 and $2.50, continues to stock additional items up to $5, Rossy said the rollout has gone as planned and the company has yet to receive negative feedback regarding the higher prices.

Rossy said while the company would like to have a $1 offering for each category, in some cases it is not possible due to the cost of raw materials and higher prices from domestic vendors.

"I can't control, even though I would love to, what our vendors come in with as far as cost,'' he said.

The chief executive said the company will continue "fighting the fight'' in regard to purchasing and managing the cost, especially that of domestically purchased goods.

The financial pressures placed on Dollarama are the same as every other Canadian retailer, said Rossy.

The discount retailer opened 18 new store locations in its third quarter for a year-to-date total of 41 net new stores.

"We expect a busy Q4 on the real estate front and remain on track to reach our full-year target of 60 to 70 net new stores,'' said Rossy.

Dollarama announced Wednesday that it had signed a deal to buy three contiguous industrial properties in Mount Royal, Que., near its centralized logistics operations and next to its distribution centre for $87.3 million.

The company plans to redevelop the site to support its future logistics and warehousing needs.

"This will provide us with additional flexibility to support our long-term logistics needs as we pursue our target of 2,000 Dollarama stores in Canada by 2031,'' Rossy said.

RBC Dominion Securities Inc. analyst Irene Nattel said in a report that the company's third-quarter results reflect Dollarama's "strong value positioning for consumers, particularly sought after in the current high inflation environment.''

Dollarama reported earnings of $201.6 million or 70 cents per diluted share for the 13-week period ended Oct. 30, compared with a profit of $183.4 million or 61 cents per share in the same quarter last year.

In its guidance for the year, Dollarama says it now expects comparable-store sales growth for its current financial year to be in a range of 9.5 to 10.5% compared with earlier expectations for a range of 6.5 to 7.5%.

The company also narrowed its guidance for its annual gross margin as a percentage of sales to a range of 43.1 to 43.6% compared with earlier expectations for a range of 42.9 to 43.9%.

Sales for the quarter totalled $1.29 billion, up from $1.12 billion a year earlier.

Comparable-store sales rose 10.8% as the number of transactions climbed 10.3% and the average transaction size gained 0.4%.

-The Canadian Press

THUNDER BAY, ONT. - The doors were locked and closure signs were posted on two Circle K stores in Thunder Bay's south end last week.

Both the Northern Avenue/May Street and Simpson Street/Pacific Avenue stores were shuttered.

Greg Mitchell, manager of security and loss prevention with Circle K, Central Canada Division, says the move to close the stores was a marketing decision.

"As we continue to refine the Circle K experience for our customers to ensure a consistent experience from store to store, we sometimes make strategic decisions to close or sell stores that no longer fit well with the direction of the brand based on store size, configuration, trade area, local market strategy or other related factors,'' he said.

Mitchell explained they made the business decision to close their two Thunder Bay south side Circle K stores based on an ongoing strategic review of their local operations in Thunder Bay.

"We'll look forward to serving our valued local customers in the area and continue to look for opportunities to bring the Circle K experience to convenient new locations as we continue growing our brand in the area,'' he said.

Meanwhile, there is no talk of any other convenience or variety store business set to open in either location.

WINNIPEG - Food delivery app SkipTheDishes has named Howard Migdal as its new chief executive officer.

The Winnipeg-based company says Migdal, who previously served as Skip's chief operating officer, will replace Kevin Edwards.

Edwards led the company for the last five years and is due to retire.

He took over as CEO from Skip's founders in 2018 with a mandate to grow the company, but spent much of his tenure focused on navigating the COVID-19 pandemic and launching Skip Express Lane convenience and grocery stores.

Migdal was one of the co-founders of GrubCanada, a national food delivery platform, and has 16 years of experience in the food business.

He has worked for Skip for four years, starting as its managing director of Canadian operations.

-The Canadian Press

OTTAWA - Statistics Canada says retail sales fell 0.5 per cent to $61.1 billion in September led by a drop in sales at gas stations along with food and beverage stores.

However, the agency says its initial estimate for October pointed to a gain of 1.5% for the month, though it cautioned the figure would be revised.

For September, Statistics Canada says sales at gas stations fell 2.4% as prices fell, while sales at motor vehicle and parts dealers were relatively unchanged.

Sales at food and beverage stores dropped 1.3% in September, as supermarkets and grocery store sales fell 1.6 per cent and convenience stores lost 1.5%. Sales at building material and garden equipment and supplies dealers fell 2.0%.

Core retail sales - which exclude sales at gasoline stations and motor vehicle and parts dealers - fell 0.4% in September.

In volume terms, retail sales fell 0.1% per cent in September.

-The Canadian Press

A Tim Hortons branded chicken noodle soup base was recalled in Alberta and southwestern Ontario because it contained insects.

In an emailed statement, Tim Hortons said Thursday the recall does not impact canned soups sold in grocery stores, only the soup base that was made and sold to a few isolated restaurants. It said there were no reported illnesses.

The Canadian Food Inspection Agency (CFIA) said the recalled product was available to purchase in those provinces up to and including Oct. 20.

The agency said the soup base, which weighs 3.54 kilograms per unit, was sold to hotels, restaurants and institutions.

Tim Hortons said the incident only impacted a few isolated Tim Hortons restaurants, but the company proactively asked all restaurant owners that received product from the supplier in question to dispose of their product.

The company said the impacted batches were removed from restaurants, destroyed and replaced with new product from another supplier.

Chicken noodle soup base in other provinces, as well as canned Tim Hortons soup sold in grocery stores, are manufactured by another supplier and were therefore not affected, Tim Hortons said.

The recall involves products with best-before dates between March 13, 2023 and April 30, 2023.

The CFIA said not to use, sell, serve or distribute the product.

Tim Hortons said it is investigating the issue and believes relatively few guests were impacted, but added it will only restart production with the manufacturer once it's confident this problem will not happen again.

-The Canadian Press

MONTREAL - Metro Inc. says it will not accept cost increases from its suppliers over a three-month period in order to keep grocery prices stable during the holidays.

The grocer says this is a long-standing practice at Metro to avoid retail price changes during the busiest time of the year.

Marie-Claude Bacon, a spokeswoman for the Montreal-based company, says this applies to Metro's private-label brands and national brand products and runs from Nov. 1 to Feb. 5.

Metro's comments come a day after Loblaw Companies Ltd. said it would freeze prices on all its No Name products until next year as double-digit food inflation sends grocery bills spiralling.

Loblaw said it locked in prices of the popular house brand, which includes more than 1,500 grocery items, until Jan. 31, 2023.

However, Metro's comments suggest it's not without precedent for grocers to hold the line on prices during the holiday shopping season.

-The Canadian Press