Dollarama Inc (TSX:DOL) continues to crash in price as the popular dollar store released its earnings this week which again fell short of expectations. The Q3 numbers showed same-store growth of a little over 3%, and while that's an improvement from Q2, it's still off the mark from where the company was a year ago. One quarter of the company missing sales was a warning for investors, while a second one might be confirmation that it wasn't just an anomaly.
The stock has been down more than 35% since the start of the year and without an announcement or big development, it's hard to see how the stock price won't continue to fall. What made Dollarama special was that the company was able to achieve strong growth as many retailers were struggling and some just deciding to close up shop entirely. However, it appears that reality is catching up with Dollarama and that its days of high growth might be behind it.
Given the trajectory of the stock I wouldn't be surprised for it to fall below $30 before the end of the year, especially as investors sell-off and realize their losses for the tax year. If the stock does reach that level, then it might not be a bad pickup as it may become a good value buy.
Ultimately, the dollar store will continue to have a place in the industry as shoppers look to stretch their budgets, and that’s why over the long term I wouldn’t be concerned about Dollarama’s future.
