Canadian dollar-store operator Dollarama Inc (DOL.TO) reported a better-than-expected profit for the eighth straight quarter, as customers on average spent more at its stores, sending shares to an all-time high.

Shares of Montreal-based Dollarama rose as much as 3.4 percent to $132.34 in morning trading on the Toronto Stock Exchange on Wednesday.

Dollarama has benefited from higher prices after pushing its product price ceiling to $4 last year. About 65 per cent of its sales in the first quarter ended April 30 came from items priced above $1.25, compared with 60.5 percent a year earlier, analysts at Eight Capital said in a client note.

The company also faces a less competitive discount-retail market compared with its U.S. peers. Retailers such as Dollar Tree Inc (DLTR.O) and Dollar General Corp (DG.N) compete fiercely for market share in the United States.

Dollarama said same-store sales rose 4.6 percent in the first quarter, as the average checkout bill increased 6.1 per cent.

The company also backed its full-year forecast for gross margin and same-store sales growth.

"Given the strong performance in the traditionally weaker Q1, especially on the gross margin, we suspect (Dollarama) has the potential to revise guidance upward over the course of the year if the top-line momentum holds," analysts at Eight Capital said.

Gross margin — gross profit as a percentage of sales — improved to 37.6 per cent in the quarter from 37 per cent a year earlier. Dollarama expects gross margin of 37.5 per cent to 38.5 per cent for the year.

The retailer also said it would buy back up to 5.7 million of its shares, or about 5 per cent of its outstanding shares. The stock buyback will run up to June next year.

Dollarama's net income rose to $94.7 million or 82 Canadian cents per share in the first quarter, from $83.2 million or 68 Canadian cents per share, a year earlier.

Analysts on average had expected a profit of 79 Canadian cents per share, according to Thomson Reuters I/B/E/S.

Sales rose 10 per cent to $704.9 million, but missed analysts' expectations of $716 million.