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(Updates to include conference call details, market reaction)
By Solarina Ho
TORONTO, April 12 (Reuters) - Shares of Dollarama Inc hit a record high on Friday after the Canadian dollar-store operator reported a stronger-than-expected jump in profit and sales and raised its dividend by 27 percent.
Dollarama shares jumped 5.2 percent to C$67.97 on the Toronto Stock Exchange. Earlier, the stock touched a record C$68.64.
The retailer's board approved an increase in the quarterly dividend to C$0.14 per share from C$0.11.
Helped by the sale of more items priced above C$1.00, net income increased to C$77.1 million ($76.3 million), or C$1.04 a share, in the fiscal fourth quarter, ended Feb. 3, from C$63.6 million, or 84 Canadian cents, a year earlier.
Sales climbed 20 percent to C$561.9 million, with products priced at more than C$1.00 making up 56 percent of sales. The quarter included 14 weeks, compared with 13 a year earlier. The 14th week accounted for C$32.1 million in sales.
Analysts had expected earnings of C$1.02 a share on sales of C$546.3 million, according to Thomson Reuters I/B/E/S.
Dollarama operates 785 stores across Canada, including 24 opened during the fourth quarter. It said same-store sales rose 4.6 percent in the quarter despite poor weather in December and January. Customers spent more during each visit, while the number or transactions held steady.
For the full year, sales at stores open for at least a year rose 6.5 percent with a 2.1 percent increase in the number of customer transactions.
The company said it was too early to comment on how stores situated near Target Corp stores, which began opening their doors in Canada in March, were performing.
While Target's entry will increase competition, some Canadian retailers say stores located near new Target outlets could benefit from increased traffic.
In its move into Canada, Target took over most of the leases held by Hudson's Bay Co's discount banner, Zellers, while the remainder were sold to other companies, including Wal-Mart Stores, or returned to landlords.
"So far so good and as far as Wal-Mart goes where they've taken over Zellers, the effects have been positive. So I expect the Target effect to be as positive, but you have to wait," Dollarama Chief Executive Larry Rossy said during a conference call with analysts.
"We would have to wait six months to a year to really get the effects of a Target versus Zellers."
The company said it plans to open 75 to 80 new stores in fiscal 2014.
$1=$1.01 Canadian Additional reporting by Krithika Krishnamurthy in Bangalore; Editing by Jeffrey Hodgson and; Peter Galloway