The Globe and Mail reports in its Wednesday, March 25, edition that Dollarama says the Iran war will boost costs. The Globe's Susan Krashinsky Robertson writes that chief executive officer Neil Rossy said during a call to discuss fourth quarter results, "I don't believe that any retailer will escape the reality of global economics."
The conflict worsens ongoing consumer uncertainty, as inflation strains household budgets, along with rising unemployment and trade tensions, creating a difficult economic environment.
Dollarama released a forecast predicting its comparable sales growth could slow slightly in the coming year. Short-term higher costs related to the Middle East conflict are built into Dollarama's guidance for its gross profit margins in this fiscal year, which it predicts to fall between 45 per cent and 45.5 per cent. But if the conflict drags on or deepens, it may have negative consequences for profit margins and for the wider economy, chief financial officer Patrick Bui said during Tuesday's call.
While the scale of the impact is still uncertain, costs for raw materials, production and shipping are all being affected by increased oil prices, and that will trickle down the supply chain, Mr. Rossy said.
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