September 11, 2014 / 12:38 PM / in 3 years

UPDATE 2-Dollarama profit rises as stores increase, customers spend more

(Adds CFO comments; updates shares)

By Manya Venkatesh

Sept 11 (Reuters) - Canadian dollar-store operator Dollarama Inc reported a 15 percent rise in quarterly profit as its number of stores increased and customers spent more per visit.

The company, which sells items priced up to C$3, said it expected positive same-store sales for the rest of the year despite increasing competition.

Dollarama’s same-store sales rose 4.2 percent in the second quarter and its number of transactions increased 1.1 percent.

Competition in the Canadian market has been intensifying with the arrival of big U.S. retailers such as Wal-Mart Stores Inc and Target Corp.

“We haven’t seen any large structural changes around us from our competitors to lead us to believe we cannot continue to generate positive same-store sales,” Dollarama’s Chief Financial Officer Michael Ross told Reuters on Thursday.

Dollarama said the average spending by customers per trip rose 3.1 percent as the company sold more items priced higher than C$1.

Its number of stores increased to 917 as of Aug. 3 from 828, a year earlier. The company said it expected to open 70-80 more stores this year.

Even as dollar store chains in the United States look to consolidate, Dollarama said it had no plans to acquire rivals.

“ ... It’s a matter of growing organically and continuing doing what we’ve done well in the past,” Ross said.

Top U.S. dollar store operators Dollar General Corp and Dollar Tree Inc are locked in a takeover battle for Family Dollar Stores Inc, as they look to corner a bigger share of the highly competitive U.S. market.

Ross said the outcome of the takeover battle was not expected to affect Dollarama.

The company also said it would issue as dividend one share for each share held. Dollarama had 66.9 million shares outstanding as of Aug. 3, according to a regulatory filing.

Dollarama reported a net income of C$68.9 million ($62.6 million), or C$1.03 per share, for the quarter ended Aug. 3, in line with the average analyst estimate.

Revenue rose 12 percent to C$572.6 million.

Analysts on average had expected revenue of C$578.9 million, according to Thomson Reuters I/B/E/S.

Dollarama’s shares were little changed at C$93.91 in afternoon trading on the Toronto Stock Exchange. Up to Wednesday’s close, the stock had risen more than 18 percent in the past 12 months. ($1 = C$1.10) (Editing by Kirti Pandey)

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