Dollarama
Summary
- Dollarama is a Canadian value retailer offering a broad assortment of consumable products.
- Dollarama has 1,541 locations across Canada and also has an online store.
- Dollarama also owns a 50.1% interest in Dollarcity, a growing Latin American value retailer.
Dollarama (TSX: DOL, OTC: DLMAF) is a Canadian value retailer offering a broad assortment of consumable products, general merchandise and seasonal items both in-store and online. The company's 1,541 locations across Canada. Select products are also available via online store. The company's merchandise is sold at select fixed price points up to $5.00.
Dollarama also owns a 50.1% interest in Dollarcity, a growing Latin American value retailer. Dollarcity offers a broad assortment of consumable products, general merchandise and seasonal items at select, fixed price points up to US$4.00 (or the equivalent in local currency) in 480 conveniently located stores in El Salvador, Guatemala, Colombia and Peru.
Financial Highlights
Fiscal 2024 Third Quarter Results
Sales for the third quarter of Fiscal 2024 increased by 14.6% to $1,477.7 million, compared to $1,289.6 million in the corresponding period of the prior fiscal year. This increase was driven by growth in the total number of stores over the past 12 months (from 1,462 stores on October 30, 2022, to 1,541 stores on October 29, 2023) and increased comparable store sales.1
Comparable store sales for the third quarter of Fiscal 2024 increased by 11.1%, consisting of a 10.4% increase in the number of transactions and a 0.6% increase in average transaction size, over and above comparable store sales growth of 10.8% in the corresponding period of the prior fiscal year. The increase in comparable store sales is primarily attributable to higher sales across all product categories, including continued higher than historical demand for consumables.
EBITDA totalled $478.8 million, or 32.4% of sales, for the third quarter of Fiscal 2024, compared to $386.2 million, or 29.9% of sales, in the third quarter of Fiscal 2023.
Gross margin was 45.4% of sales in the third quarter of Fiscal 2024, compared to 43.3% of sales in the third quarter of Fiscal 2023. Gross margin as a percentage of sales was higher primarily as a result of lower inbound shipping costs and lower logistics costs.
General, administrative and store operating expenses ("SG&A") for the third quarter of Fiscal 2024 increased by 17.6% to $213.8 million, compared to $181.8 million for the third quarter of Fiscal 2023. SG&A represented 14.5% of sales for the third quarter of Fiscal 2024, compared to 14.1% of sales for the third quarter of Fiscal 2023. This variance reflects higher store labor costs and the timing of other operating costs.
The Corporation's 50.1% share of Dollarcity's net earnings for the period from July 1, 2023 to September 30, 2023 was $18.0 million, compared to $9.2 million for the same period last year. The Corporation's investment in Dollarcity is accounted for as a joint arrangement using the equity method.
Net financing costs increased by $6.3 million, from $30.4 million for the third quarter of Fiscal 2023 to $36.7 million for the third quarter of Fiscal 2024. The increase is mainly due to a higher average borrowing rate, as well as higher average debt levels from Fixed Rate Notes (defined hereinafter) and lease liabilities.
Net earnings were $261.1 million, or $0.92 per diluted common share, in the third quarter of Fiscal 2024, compared to $201.6 million, or $0.70 per diluted common share, in the third quarter of Fiscal 2023.
Company Overview
As on October 29, 2023, the Corporation had 1,541 stores in Canada, including 16 net new stores opened during the third quarter of Fiscal 2024, and continues to expand its network across the country. Stores average 10,469 square feet and offer a broad assortment of consumable products, general merchandise and seasonal items, including private label and nationally branded products, all at compelling values. Merchandise is sold in individual or multiple units at select, fixed price points up to $5.00. The rollout of new price points up to $5.00, which began in Fiscal 2023, remains ongoing in stores throughout the course of Fiscal 2024. The Corporation has an online store to provide additional convenience to its Canadian customers.
The Corporation also has operations in Latin America through its 50.1% equity interest in Dollarcity, a Latin American value retailer headquartered in Panama. Dollarcity offers a broad assortment of consumable products, general merchandise and seasonal items at select, fixed price points up to US$4.00 (or the equivalent in local currency) in El Salvador, Guatemala, Colombia and Peru. As at September 30, 2023, Dollarcity had a total of 480 stores with 287 locations in Colombia, 96 in Guatemala, 68 in El Salvador, and 29 in Peru.
Company History
Dollarama was founded by third-generation retailer and Canadian entrepreneur, Larry Rossy. It all started with one store, in Matane, Quebec, in 1992, and quickly grew.2
| Year | Milestone |
| 1910-1930 | In 1910, Salim Rossy opens his first S.Rossy Inc. store on Craig Street in Montreal, Quebec. |
| 1973 | George’s son, Larry Rossy, assumes leadership of the company, which now counts 20 stores. Between 1973 and 1992, he more than doubles the S. Rossy Inc. store network to 44 locations. |
| 1992-1994 | Dollarama is born. In April of 1992, in Matane, Quebec, Larry Rossy transforms one of his stores into the first Dollarama, based on a simple concept of offering all items for $1.00 or less. |
| 2001-2003 | Growing presence in other Canadian provinces In 2001, Dollarama dramatically expands its presence in Ontario through the acquisition of 60 locations following a retail chain bankruptcy. |
| 2004 | By 2004, Dollarama is growing rapidly with nearly 350 stores across six Canadian provinces. Private equity group Bain Capital invests in Dollarama through the purchase of a majority stake to support its continued growth. |
| 2009 | Offering value at more than just $1.00 In 2009, Dollarama starts offering products at three new price points: $1.25, $1.50 and $2.00. This allows the company to exceed customers’ expectations of the quality and variety of products they can purchase at Dollarama. |
| 2011-2012 | Dollarama celebrates the opening of its 700th store in Canada in 2012, and further expands its product offering with the addition of two new price points: $2.50 and $3.00. |
| 2018 | By the end of 2018, Dollarama has over 1,200 stores across Canada. |
| 2019 | In August of 2019, Dollarama acquires a 50.1% interest in Latin American value retailer Dollarcity following a six-year commercial partnership. |
| 2021-2023 | Reaching new milestones Continuing on its path of profitable growth with the aim of delivering unparalleled value to Canadians from coast to coast, in 2021, Dollarama sets a new long-term target of 2,000 stores in Canada by 2031. |
