Cheap-stuff retailer feels market wrath over financials
Dollarama increases earnings to $133.54M in fiscal Q3
DOLLARAMA INC. had increases in sales, net earnings and earnings per common share for the fiscal 2019 third quarter ended Oct. 28, 2018. Diluted net earnings per common share rose 7.9 per cent to 41 cents.
During the third quarter of fiscal 2019, the corporation opened 14 net new stores, compared with 10 net new stores during the corresponding period of the previous fiscal year. As at Dec. 5, 2018, the corporation had opened 11 net new stores since the beginning of the fourth quarter of fiscal 2019, bringing the total number of net new stores opened to date in fiscal 2019 to 43. The corporation continues to expect to open 60 to 70 net new stores in the current fiscal year.
“Same-store sales grew 3.1 per cent in the third quarter compared with 2.6 per cent in the second quarter of fiscal 2019 reflecting Dollarama’s compelling value proposition, further reinforced by our strategic decision earlier this year to carefully manage price increases in the current competitive retail environment,” said president and chief exec--
utive officer Neil Rossy. “The strength of our operations and the efficiency of our simple, growthoriented business model are further demonstrated by our solid performance across our key operating metrics, our robust earnings and our sustained ability to return substantial capital to our shareholders.”
Financial and operating highlights Compared with the third quarter of fiscal 2018:
• Sales increased by 6.6 per cent to $864.3-million.
• Comparable store sales grew 3.1 per cent, over and above 4.6-per-cent growth the previous year.
• Gross margin was 38.9 per cent of sales, compared with 40.1 per cent of sales.
• EBITDA grew 3.5 per cent to $214.6-million, or 24.8 per cent of sales, compared with 25.6 per cent of sales.
• Operating income grew 3.0 per cent to $195.0-million, or 22.6 per cent of sales, com pared with 23.3 per cent of sales.
• Diluted net earnings per common share increased by 7.9 per cent to 41 cents from 38 cents.
The expansion of Dollarama’s Montreal-area distribution centre, announced in March, 2018, is proceeding as planned. Phase 1, which comprises the construction of the building extension, is slated for completion by early 2019. This will be followed by construction work within the existing facility, ahead of the integration of the new building extension. The distribution centre continues to operate at normal levels during the capacity expansion. Project completion, including the installation of fixtures and equipment, is expected to occur before the end of calendar 2019, on schedule and on budget. The range for capital expenditures for fiscal 2019 has been revised downward based on an updated schedule of progress payments for the expansion of the distribution centre. Costs in the amount of $10.0-million, initially expected to be incurred in fis-
cal 2019, will now be incurred in fiscal 2020, and as a result will be included in capital expenditures for fiscal 2020. Management does not expect this to have any impact on the commissioning date of the expanded distribution facility.
Dollar City store network growth update
The corporation continues to assess the progress of its partnership with Dollar City in Latin America. Dollar City is an independently owned and operated value retailer with operations in El Salvador, Guatemala and Colombia founded in 2009. Under an arm’s-length agreement signed in 2013, Dollarama provides consulting and sourcing services to Dollar City at cost, with a nominal markup in some cases, allowing Dollar City to benefit from Dollarama’s business expertise and purchasing scale. Dollarama will have the option to acquire a 50.1-per-cent interest in the business starting in 2020. At its latest quarter ended Sept. 30, 2018, Dollar City owned and operated 150 stores with 61 locations in Colombia, 42 in El Salvador and 47 in Guatemala. This is up from a total of 107 stores as of Dec. 31, 2017.
(See DOL Table 1 on page 44)
(See DOL Table 2 on page 44)
We seek Safe Harbor.
Mike Caswell condensed this news release ([email protected]watch.com).
Joshua Bekenstein, Gregory David, Elisa D C Garcia, Stephen Kenrick Gunn, Kristin Williams Mugford, Nicholas George Nomicos, Neil George Rossy, Richard G Roy, John Huw Thomas
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