Why Dollarama Inc. stock is plunging sharply – September 17, 2018

I’ve not liked the Dollarama stock for a very long time now and the reason for this is that their earnings were based on being a dollar store, well with higher minimum wages, trade wars and Canada’s ever-increasing reliance on foreign-made goods, Dollarama Inc. is a prime example of inflation on the rise. Dollarama Inc. is now a bargain store and not a dollar store, I can’t remember the last time I went into Dollarama and saw an item that wasn’t Candy or a birthday card that was exactly a Dollar. This, of course, has led to their past customer’s price shopping, what Dollarama is becoming is a convenience store and that can’t be good for business.

Making matters for Dollarama Inc. is that they now accept credit cards. Walmart has often tried to sue Visa because Visa eats away at Walmarts profits, well now Dollarama is in this boat also, going forward they’re going to get stuck playing the balancing act, which is an indication to me that in time their business model is either going to have to evolve or faced extinction.

This is often the case with most Canadian businesses whose retail structure is based on the current protectionist regulatory environment. In Ontario for example, the introduction to the new higher minimum wage laws has forced Dollarama Inc to make cutbacks to staff hours. These new minimum wage hikes on businesses also limit the flexibility of a Dollaroma, whose business is based on items that sell near to a $1. So I expect changes to Dollarama in the near future. In many U.S States, their Dollar Stores often sell foods you’d see in a grocery store. We’ll see what types of actions Dollarama takes going forward.

Interesting times ahead.