Canada's Dollarama forecasts annual sales largely below estimates

March 24 (Reuters) - Dollarama DOL.TO forecast 2027 sales largely below Wall Street estimates on Tuesday, aligning with its American peers in preparing for muted consumer spending amid rising trade-related uncertainties.

Canadian consumers are struggling with strained household budgets impacted by higher inflation, rising crude oil prices due to the Iran war, and higher grocery prices, leaving lower-income consumers cautious about non-essential spending, hurting sales at retailers.

U.S. dollar stores like Dollar Tree DLTR.O and Dollar General DG.N earlier this month also forecast muted annual sales, hurt by weaker demand in the face of tight spending.

Larger rivals such as Walmart WMT.O, Target TGT.N and Kroger KR.N have already slashed prices on essentials including groceries to lure in increasingly value-conscious shoppers.

About 53% of the products Dollarama sells were procured from North American vendors, while other overseas imports accounted for 47% of total procurement, according to the company's 2025 annual report.

Its fourth-quarter gross margin was 45.5% of sales, down from 46.8%, a year ago, driven by a lower gross margin in Australia.

Dollarama last year bought Australia's discount chain The Reject Shop, in a move to expand business outside Canada.

The Canadian discount retailer expects annual comparable sales to grow in the range of 3% to 4%, compared with analysts' expectation of a 3.90% rise, according to data compiled by LSEG.

However, Dollarama, which sells most of its products for between C$1 and C$5, beat sales estimates during the holiday quarter, despite a winter storm hurting peak-season store traffic.

The company reported net sales of C$2.10 billion ($1.53 billion) in the quarter ended February 1, compared with analysts' average estimate of C$2.08 billion.

($1 = 1.3738 Canadian dollars)