As U.S. dollar stores falter, one Canadian retailer finds success

Despite the recent struggles of Dollar General and Dollar Tree, there is one discount retailer producing solid earnings in North America.

Canada’s Dollarama, which is based in Montreal, on Wednesday reported sales of grocery items helped carry it through an impressive second quarter for fiscal year 2025.

Dollarama said comparable-store sales grew 4.7% year over year, while overall sales increased 7.4% to just over $1.55 billion. The sales boost consisted of a 7% year-over-year increase in the number of transactions.

Dollarama’s stock price rose 8% on Wednesday following the news as the retailer beat expectations.

“We generated strong results across the board as comparable-stores sales continue to normalize,” said Neil Rossy, president and CEO of Dollarama. “Canadian consumers continue to recognize and rely on our compelling value as they deploy their discretionary spending prudently in a challenging economic environment.”

EBITDA totaled just over $524 million, representing an EBITDA margin of 33.5% compared to a margin of 31.4% in Q2 2024.

Net earnings increased 16.3% year over year to $285.9 million.

For fiscal year 2025, Dollarama expects comparable-store sales to increase 3.5% to 4.5% year over year.

Dollarama has over 1,400 locations in Canada and employs over 24,000.

In the U.S., the outlook is not as bright for Goodlettsville, Tenn.-based Dollar General, which cut its earnings projections for the rest of the year following a soft second quarter.

Operating profit dropped 20.6% year over year to $555 million, while same-store sales increased just 0.5%.

The retailer blamed the lagging effects of inflation, and said the trouble started to hit in late July and a pattern developed, with the softest sales falling during the last week of each month.

“This pattern suggests that our customers are less able to stretch their budgets through the end of the month,” Todd Vasos, CEO of Dollar General, told analysts during the Q2 call, according to a transcript from financial-services site AlphaSense.

Dollar General shopper research revealed customers are feeling worse off financially than they did six months ago, and more than 60% claim they have had to sacrifice on purchasing basic necessities due to the higher cost of products.

Dollar Tree also stumbled through its second quarter, but the results were not as bad.

However, the Chesapeake, Va.-based dollar store is still tempering expectations for the rest of the fiscal year.

Dollar Tree’s same-store net sales were down 0.7% year over year company-wide while consolidated sales increased just 0.7% according to earnings reported on Sept. 5.

Operating income dropped 29.4% year over year to $203.1 million.

“As we have seen for several quarters now, demand for Family Dollar’s core lower-income customer remains weak,” Dollar Tree CEO Mike Creedon said during the Q2 earnings call. “Dollar Tree has a broader customer base that includes more middle- and upper-income households, and beginning this quarter we started to see inflation, interest rates, and other macro pressures have a more pronounced impact on the buying behavior of these customers.”

Dollar Tree said it expects to deliver comparable-store net sales growth in the low single digits for the rest of the year.