June 10, 2015 / 12:43 PM / in 3 years

UPDATE 2-Dollarama profit beats as shoppers loosen purse strings

* Q1 shr C$0.50 vs est C$0.47

* Co expects to introduce products at higher price points

* Plans to add 70-80 net new stores in Canada in 2016

* Shares rise as much as 3.5 pct (Adds background, details from conference call, CFO comments)

By Darshana Sankararaman

June 10 (Reuters) - Canadian dollar-store operator Dollarama Inc reported a higher-than-expected quarterly profit on Wednesday as customers spent more per visit, boosting the company’s same-store sales.

The retailer, which sells items for up to C$3, is also considering introducing higher priced products, though these are not expected to be priced above C$4 in the foreseeable future, Chief Financial Officer Michael Ross told Reuters.

The average check-out bill at Dollarama’s stores rose 5.9 percent in the first quarter, with about 73.2 percent of sales being generated from items priced above C$1, compared with 63.2 percent in the same quarter last year, the Montreal-based retailer said.

Dollarama and other Canadian retailers have been facing stiff competition from U.S. retailers such as Wal-Mart Stores Inc, which have been expanding their presence in the region.

Dollarama’s shares rose as much as 3.5 percent to C$3.50 in afternoon trading on Wednesday.

The retailer said same-store sales rose 6.9 percent in the first quarter ended May 4, more than double the 3.3 percent rise last year.

The number of transactions rose 1 percent, reversing from a fall of 0.4 percent in the first quarter of 2014.

Dollarama opened 17 stores in the quarter, taking its total number of stores to 972.

The company maintained its margin forecast of 36-37 percent for the year, in line with its first-quarter margins of 36 percent.

Dollarama said it continues to target adding 70-80 net new stores in Canada for the year.

The company’s net income rose to C$64.8 million ($53 million), or 50 Canadian cents per share, from C$53.2 million, or 39 Canadian cents per share, a year earlier.

Analysts on average had expected earnings of 47 Canadian cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 13 percent to C$566.1 million, beating the average estimate of $563.7 million.

Dollarama’s shares, which have risen nearly 20 percent this year, closed at C$70.89 on the Toronto Stock Exchange on Tuesday.

$1 = 1.23 Canadian dollars Additional reporting by Anet Joseline Pinto in Bengaluru; Editing by Ted Kerr and Simon Jennings

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