Loonie Dive Will Force Dollarama to Become the $4-rama by End of Next Year

Dollarama, its name for years only accurate on account of it being a store that sells goods for currency known as the dollar, may soon be forced to increase its current price threshold from $3 to as much as $4.

Despite its second quarter results surpassing analyst expectations, Dollarama CEO Larry Rossy said he has no choice but to raise price points in the wake of Canada’s tanking Loonie.

“In general, we like to maintain our prices as long as we can, but this is really an exceptional time where the Canadian dollar has gone so poorly against the U.S. dollar and everything is bought in U.S. dollars. So to absorb 25 to 35 per cent (in currency swing) is almost impossible,” he said.

Additionally, China is increasingly focused on selling goods at higher price points, which affects the bulk of Dollarama’s wares. While the company used to be able to buy merchandise from China for 25 to 35 cents and sell it for $1 or $1.25, Rossy said that margin is no longer a reality.

Considering sales across Dollarama’s almost 1000 stores nationwide grew to $653.3 million from $572.6 million, absorbing the currency swing seems quite possible – especially since competing dollar stores have been able to keep prices steady.

The Montreal-based chain will also look to introduce more high-priced items (food will remain at a $2 maximum), as well as reduce product sizes to ease the pressure of price hikes.

When discussing the impending inflation, a very honest Rossy admitted that “as a consumer, I guess next year will not be a pleasant year from a purchasing point of view.”

The changes aren’t expected to kick in until the third of fourth quarter of next year, which is great news for card shoppers throughout the next Christmas, Valentine, and Easter seasons.

Oddly, Dollarama never pondered to reduce prices when the Canadian dollar was comfortably above par.