UPDATE 1-Canadian retailer Dollarama's profit rises more than expected

Wed Jun 8, 2016 8:04am EDT
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June 8 (Reuters) - Canadian dollar-store operator Dollarama Inc reported a bigger-than-expected rise in first-quarter profit, helped by higher sales and margins, and slightly raised its margin forecast for the year.

The company raised its earnings before interest, taxes, depreciation and amortization (EBITDA) margin forecast for fiscal 2017 to 21.0-22.5 percent from 20.5-22.0 percent.

Dollarama, which sells items for up to C$3, said items priced higher than C$1.25 accounted for 60.5 percent of sales in the first quarter ended May 1, up from 55.8 percent a year earlier.

That helped the retailer boost its gross margin to 37 percent in the quarter from 36 percent a year earlier.

The Montreal-based company's profit rose 28.4 percent to C$83.2 million ($65.7 million), or 68 Canadian cents per share.

That beat analysts average estimate of 63 Canadian cents, according to Thomson Reuters I/B/E/S.

Dollarama's sales rose 13 percent to C$641 million. Same-store sales growth, however, slowed to 6.6 percent from 6.9 percent.

The retailer said it opened eight new stores in the first quarter.

Up to Tuesday's close of C$92.59, Dollarama's shares had risen nearly 30 percent in the past 12 months. ($1 = C$1.2673) (Reporting by Manish Parashar in Bengaluru; Editing by Savio D'Souza)