UPDATE 1-Dollarama profit beats on higher sales, lower expenses

Wed Sep 11, 2013 10:00am EDT
 
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(Updates with analyst comment, market expectations, additional
details, market reaction)
    By Solarina Ho
    TORONTO, Sept 11 (Reuters) - Canada's largest dollar-store
operator, Dollarama Inc, reported a
better-than-expected 20 percent rise in second-quarter profit,
bolstered in part by lower expenses, more traffic and new store
openings.
    The results helped lift Dollarama's stock 4.7 percent to   
C$77.56 shortly after the market opened in Toronto.
    Net income rose to C$59.8 million ($57.8 million), or 82
Canadian cents per share, for the quarter that ended Aug. 4,
from C$49.8 million, or 66 Canadian cents, a year earlier.
 
    Analysts had expected earnings of 78 Canadian cents a share,
according to Thomson Reuters I/B/E/S.
    The Montreal-based company's revenue rose 16 percent to    
C$511.3 million. Sales at stores open for at least 13 months
rose 6.2 percent in the quarter as both the number of shoppers
and the average value of the purchases during a trip increased.
    Lower selling, general and administrative expenses as a
percentage of sales also contributed to the stronger profit, and
stood at 17.9 percent, down from 18.3 percent during the same
year-ago quarter.
    Peter Sklar, an analyst with BMO Capital Markets called the
results positive in a note to clients, citing the decrease in
expenses and growth in traffic. Favorable weather conditions and
a weaker comparable quarter helped traffic figures, he said.
    The company, which is in the process of seeking a new chief
operating officer to replace Stephane Gonthier, opened 22 new
stores in the quarter, bringing the total number to 828 across
Canada.
    Last month, the company announced Gonthier was leaving to
run U.S.-based chain 99c Only Stores.
    ($1 = $1.0356 Canadian)

 (Additional reporting by Krithika Krishnamurthy in
Bangalore;editing by Sofina Mirza-Reid)