Dollarama Sees 10.8% Spike in Comparable-Store Sales

Canadian value retailer Dollarama Inc. has reported its financial results for the third quarter ended Oct. 30.

Q3 sales for the company rose by 14.9% to CAD $1,289.6 million, compared with CAD $1,122.3 million in the prior fiscal period. This increase was driven by growth in the total number of stores over the past 12 months (from 1,397 stores on Oct. 31, 2021, to 1,462 stores on Oct. 30, 2022) and in comparable-store sales. 

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Comparable-store sales experienced a 10.8% spike, consisting of a 10.3% increase in the number of transactions and a 0.4% increase in average transaction size.

Operating income increased by 11.5% to CAD $302.7 million, or 23.5% of sales.

Meanwhile, Q3 EBITDA totaled CAD $386.2 million, or 29.9% of sales, as opposed to last year’s CAD $347.0 million, and diluted net earnings per common share increased by 14.8% to CAD 70 cents from CAD 61 cents.

"Our strong performance across our key metrics year to date speaks to our commitment to providing the best year-round value on the everyday products we offer, combined with a convenient and consistent shopping experience. As inflationary pressure on the consumer persists, we expect strong demand for consumable products to continue stimulating top-line growth through to the end of the fiscal year. We aim to stay true to our compelling value proposition and to meet and exceed the expectations of our customers from coast to coast," said Neil Rossy, president and CEO of Dollarama.

The retailer also experienced a big jump in inventory to CAD $1,007 million, from last year’s CAD $599 million. The year-over-year increase is attributed to higher in-transit inventory as the company works to rebuild its inventory, the purchasing of seasonal goods earlier than historically in the context of global supply chain disruptions, and store network growth and higher comparable-store sales.

Dollarama recently entered into an agreement to acquire three contiguous industrial properties in the Town of Mount Royal in Quebec for a total cash consideration of CAD $87.3 million. The properties are strategically situated near the company’s centralized logistics operations and adjacent to its distribution center. Dollarama intends to redevelop the site to support future logistics needs as it pursues its network growth objective of 2,000 stores in Canada by 2031. The transaction is expected to close in the first half of fiscal 2024.

Looking ahead, Dollarama expects the following for fiscal 2023:

• To open 60 to 70 net new stores
• Gross margin as a percentage of sales of between 43.1% and 43.6%
• SG&A as a percentage of sales of between 13.8% and 14.3%
• To deploy CAD $160 million to CAD $170 million in capital expenditures
• To actively repurchase shares under its normal-course issuer bid

Montreal-based Dollarama has 1,462 locations across Canada. Merchandise is sold at select fixed price points up to CAD $5. The company also owns a 50.1% interest in Dollarcity, a growing Latin American value retailer. Dollarama is No. 66 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.