UPDATE 2-Canada's Dollarama draws more shoppers, beats profit estimates

Thu Sep 1, 2016 10:51am EDT
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* Q2 EPS of C$0.88 vs est. C$0.84

* Revenue of C$729 mln beats est. of C$726.55 mln

* Shares rise as much as 2.7 pct (Adds Q2 details, industry background and share move)

Sept 1 (Reuters) - Dollarama Inc reported a better-than-expected quarterly profit as the Canadian dollar store operator's sales got a boost from more shoppers visiting its stores.

The company's results come in contrast to those from U.S. dollar store operators, who have been struggling with increased competition from Wal-Mart Stores Inc and lower food prices.

Dollarama, which raised its price ceiling to C$4 from C$3 during the second quarter ended July 31, said traffic rose 1 percent from a year earlier.

"The traffic growth was particularly telling given some investor concern heading into the quarter, given the recent performance of Wal-Mart in Canada," Raymond James analyst Kenric Tyghe wrote in a note.

Wal-Mart's Canada unit reported a much smaller rise in second-quarter same-store sales due to intense competition from companies such as Loblaw Co Ltd and Sobeys Inc, who took price cuts on some products to fend off competition.

Shares of Dollarama rose as much as 2.7 percent to C$99.48 in early trading on Thursday.   Continued...