Dollarama demonstrates there's big money in selling inexpensive goods

Dollarama was offering no-frills shopping before there were any No Frills grocery stores in B.C.

Founded in 1992, by Canadian entrepreneur Larry Rossy in Matane, Quebec, Dollarama has since grown to more than 1,200 stores, all corporately owned.

In addition, Dollarama has a 50.1 percent stake in Dollarcity, which has more than 200 stores in Colombia, Guatemala, and El Salvador.

Today, Dollarama reported solid second-quarter financial results.

In the three months ending on August 1, it posted total comprehensive income of $156.5 million on revenues of $1 billion.

The total comprehensive income was nearly 40 percent above what was recorded in the same quarter of 2020.

Through the first six months of this fiscal year, Dollarama's total comprehensive income reached $242.6 million on revenues of $2 billion.

There are eight Dollarama stores within Vancouver city limits and another eight in Surrey, which is B.C.'s second-largest city.

Some of these outlets have dramatically increased their offerings of groceries in recent years, creating a newer low-end challenger to established food giants like Loblaw and Sobey's.

The CEO is fourth-generation retailer Neil Rossy, who received $6.8 million in total compensation last year. That was nearly 80 percent higher than what he took home in the previous year.

While revenues were up 1.6 percent in the recent quarter compared to the same period in 2019, comparable store sales decreased by 5.1 percent year over year. That was largely attributable to a ban on the sale of nonessential products in Ontario, which is home to 40 percent of Dollarama's stores.

After the ban was lifted, comparable-store sales rose by 4.3 percent for the final 7.5 weeks of the quarter.

As of this writing, Dollarama shares are trading at $56.49 on the Toronto Stock Exchange. It's 52-week high is $60.87 and its 52-week low is $45.42. The stock price has risen by 8.45 percent so far this year.