(Montreal) A loyalty program is unlikely to see the light of day at Dollarama in the medium term. For now, the Montreal retailer says it has little interest in its customers’ data.
“The dollar store industry is not the best segment to implement a loyalty program,” Dollarama CEO Neil Rossy said Wednesday during a conference call with analysts held on the sidelines of the quarterly results presentation. . Our loyalty program is to offer the best value for money. It works well. »
Loyalty programs allow businesses to collect data from their customers to analyze their consumption habits and offer more targeted promotions. They also serve as an incentive to encourage consumers to make more purchases from the same retailer.
For its part, Dollarama conducts surveys to better understand the habits of its customers, but the company does not collect their data. “Our priority is to improve the data analysis capabilities that we already have,” explained Neil Rossy. This is transaction data, not consumer data. We have a lot of data and we want to make the most of it. »
Expansion in Latin America
Dollarama management also said it plans to open more stores than expected in Latin America through Dollarcity, of which it owns 50.1% of the shares.
Dollarama expected the number of Dollarcity stores to reach the threshold of 600 by 2029. This target increases to 850. Dollarcity has 395 stores and is well established in El Salvador, Guatemala, Colombia and Peru.
The increase in the target established in 2019 is attributable to the company’s entry into the Peruvian market in 2021 and the densification of the company’s footprint in other countries, “mainly in Colombia”, summarizes Neil Rossy.
Martin Landry, of the firm Stifel/GMP, believes that the activities of Dollarcity could represent an important part of Dollarama. “Over time, we believe that Dollarcity has the potential to become bigger than Dollarama,” said this analyst.
In Canada, Dollarama is maintaining its goal of reaching 2,000 stores by 2031. The company had 1,462 as of early November.
Greater popularity of food
Dollarama’s third quarter (ended October 30) was marked by an increase in food sales, amid soaring food prices.
Neil Rossy argues that consumer habits have remained relatively similar for all other item categories, but food sales are increasing. “The fact that people are looking for bargains with perishables explains the comparable sales we have obtained. »
Same-store sales, a key metric for measuring existing store revenue growth, rose 11%. Total sales, for their part, increased by 15%, to 1.29 billion.
“With a 10% increase in traffic and a 0.4% increase in the basket, there is no doubt that our proposal remains attractive in an inflationary environment,” said Chief Financial Officer Jean-Philippe Towner.
If the margins of the food segment are a little lower, net profits increased by 10%, to 202 million. Diluted net earnings per share, however, jumped 15% to 70 cents, which is precisely in line with analysts’ expectations.
Dollarama also unveiled a sharp increase in its inventories, which reached 1 billion, compared to 600 million a year ago.
This increase would be attributable to an unblocking of the supply chain which leads to a reduction in transport times, explains Mr. Towner. “We have rebuilt our stocks. I think we are at a stock threshold that is in line with our expectations. »
Dollarama shares rose 5% on Wednesday to $84 on the Toronto Stock Exchange. The stock hit a new high during the session.
