Dol­larama wob­bles de­spite soar­ing Q3 profit, rev­enue

Stockwatch Daily - - FRONT PAGE - Mr. Neil Rossy re­ports

DOL­LARAMA INC. had year-over-year in­creases in sales, net earn­ings and earn­ings per com­mon share for the third quar­ter ended Oct. 29, 2017. Di­luted net earn­ings per com­mon share rose 25.0 per cent to $1.15.

Dur­ing the third quar­ter of fis­cal 2018, the cor­po­ra­tion opened 10 net new stores, com­pared with 18 net new stores dur­ing the cor­re­spond­ing pe­riod of the pre­vi­ous fis­cal year.

“We are pleased to an­nounce that fis­cal 2018 guid­ance has been en­hanced on gross mar­gin and general, ad­min­is­tra­tive and store op­er­at­ing ex­penses. This is at­trib­ut­able to our strong re­sults and con­sis­tent per­for­mance through the first nine months of the cur­rent fis­cal year,” said Dol­larama’s pres­i­dent and chief ex­ec­u­tive of­fi­cer, Neil Rossy. “We are fo­cused on ex­e­cut­ing our growth strat­egy and pro­vid­ing com­pelling value to our cus­tomers. We are also on track to meet our fis­cal 2018 net new store tar­get.”

Sales for the third quar­ter of fis­cal 2018 in­creased by 9.7 per cent to $810.6-mil­lion, com­pared with $738.7-mil­lion in the cor­re­spond­ing pe­riod of the prior fis­cal year. The in­crease in sales was driven by con­tin­ued or­ganic sales growth fu­elled by com­pa­ra­ble store sales growth of 4.6 per cent, over and above com­pa­ra­ble store sales growth of 5.1 per cent in the third quar­ter of fis­cal 2017, and the growth in the to­tal num­ber of stores over the past 12 months, from 1,069 stores on Oct. 30, 2016, to 1,135 stores on Oct. 29, 2017.

(See DOL Ta­ble 1 on page 35)

Com­pa­ra­ble store sales growth for the third quar­ter of fis­cal 2018 con­sisted of a 4.5-per-cent in­crease in the av­er­age trans­ac­tion size, over and above a 5.8-per-cent in­crease in the cor­re­spond­ing quar­ter of fis­cal 2017, and a 0.1-per-cent in­crease in the num­ber of trans­ac­tions.

Net earn­ings in­creased to $130.1-mil­lion, or $1.15 per di­luted com­mon share, in the third quar­ter of fis­cal 2018, com­pared with $110.1-mil­lion, or 92 cents per di­luted com­mon share, in the third quar­ter of fis­cal 2017. The in­crease in net earn­ings is mainly the re­sult of a 9.7-per-cent in­crease in sales, a stronger gross mar­gin and lower SG&A as a per­cent­age of sales. Earn­ings per share were also pos­i­tively im­pacted by the re­pur­chase of shares through the cor­po­ra­tion’s nor­mal course is­suer bid.

(See DOL Ta­ble 2 on page 35)

Div­i­dend

On Dec. 6, 2017, the cor­po­ra­tion an­nounced that the board of di­rec­tors had ap­proved a quar­terly cash div­i­dend for hold­ers of com­mon shares of 11 cents per com­mon share. The cor­po­ra­tion’s quar­terly div­i­dend will be paid on Jan. 31, 2018, to share­hold­ers of record at the close of busi­ness on Jan. 5, 2018, and is des­ig­nated as an el­i­gi­ble div­i­dend for Cana­dian tax pur­poses.

We seek Safe Har­bor.

Erika Flores con­densed this news re­lease (erikaf@stock­watch.com).

Joshua Beken­stein, Gre­gory David, Elisa D C Gar­cia, Stephen Ken­rick Gunn, Ni­cholas Ge­orge Nomi­cos, Lawrence Rossy, Neil Ge­orge Rossy, Richard G Roy, John Huw Thomas

(DOL) Shares: 111,681,559

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