Dollarama (TSX:DOL) recently reported a very strong quarter, but the stock has still been moving lower in recent days. The discount retailer posted revenue of $1.8 billion for the quarter ended May 3, up more than 21% from a year earlier. It also earned $302 million in net profit, an increase of more than 10%. Those are solid numbers by almost any measure.
Still, investors seem to be looking past the headline results and focusing on what could come next. Some of Dollarama’s revenue growth was helped by acquisitions, so the core business did not grow quite as quickly as the top-line figure suggests. Even so, comparable-store sales in Canada rose 5.6%, which is a healthy result.
The bigger concern is what lies ahead. Management said the company did not yet absorb significant fuel-related costs during the quarter, but those expenses are expected to show up later this year. That creates some uncertainty around future profitability, especially for a stock that already trades at a premium valuation.
There is also the ongoing turnaround effort in Australia. Dollarama is renovating roughly 400 stores there over a four-year period, and that is likely to remain a drag on earnings in the near term. For investors, that means the story is no longer just about strong Canadian sales. It is also about execution, costs, and whether the company can justify its current multiple of nearly 40 times trailing earnings.
Dollarama still looks like a strong buy for the long term, but the stock may continue to experience volatility this year. Thus far in 2026, it's down around 9%.
