Dollarama (TSX:DOL:CA) dropped 1.9%, down for a third straight day, on the surprise departure of its chief financial officer.
The exit of CFO JP Towner, highly regarded by investors, is a “clear loss, but we remain constructive on this high-quality name,” Wells Fargo analysts led by Edward Kelly wrote in a July 11 note.
Towner is leaving later this year to pursue a different career opportunity as the company conducts a search process for a new CFO.
“While DOL has been a strong performer, a surprising CFO departure always raises questions,” Wells Fargo said.
“We also note that JP has done a very good job in the role, in our view, and is seen as a high-quality executive by investors. While his tenure with DOL was relatively brief (external hire and in the seat for just over two years), we view the departure as a loss,” the firm said. “We have no reason to believe there is some deeper issue here, especially given the strength of recent results.”
Last month, the Canadian discount retailer reported better-than-expected Q1 results with EPS of C$0.63 comparing to the expected C$0.59. Revenue also came in higher at C$1.29B versus the expected C$1.24B in revenue.
Dollorama (DOL:CA) “seems to be successfully capturing trade-down,” Wells Fargo noted. “Playing defense is difficult right now but DOL remains a standout.”