June 14, 2019 / 11:40 AM / 5 months ago

BUZZ-Street View: Dollarama's impressive sales growth fueled by lower margins

** Canadian discount retailer Dollarama Inc on Thursday beat quarterly sales estimates and raised full-year same-store sales (SSS) forecast

** Shares surged and closed up 11.3% on the TSX

** At least 7 brokerages raised PTs

“SALES GROWTH SAVES THE DAY”

** National Bank of Canada (“outperform”, PT: C$49) says DOL delivered “constructive results” amid mixed financial performance

** Co is on track to deliver double-digit EPS growth in H2 again - NBC

** Industrial Alliance Securities (“hold”, PT: C$43) says Dollarama is still a solid operator with industry leading margins and future growth opportunities that justify a premium valuation

** Raymond James (“outperform”, PT: C$48 from C$45) says rise in traffic highlights increased consumables in the mix and response from price savvy consumers to co’s offering

** Canaccord Genuity (“hold”, PT: C$43) says although SSS was much better than expected, growth could have been due to smaller gross margin

** CIBC Capital Markets (“neutral, PT: C$48) says it is possible that co management will continue to push lower-margin, traffic-driving products, but impact will eventually moderate

** Desjardins (PT: C$49) downgrades stock to “hold” from “buy” and says despite the SSS growth in a weak retail environment, stock response to results was overdone

** BMO Capital Markets (“market perform”, PT: C$50) says it expects EPS growth from rise in SSS due to the successful multi-price point strategy and growing number of stores (Reporting by Debroop Roy in Bengaluru)

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