DOLLARAMA REPORTS FISCAL 2025 FIRST QUARTER RESULTS
- 5.6% comparable store sales(1) growth and 22.2% increase in diluted net earnings per share to
$0.77 -
Dollarama Mexico - Long-term store target for Dollarcity increased from 850 stores by 2029 to 1,050 by 2031 in current four markets of operation
Fiscal 2025 First Quarter Results Highlights Compared to Fiscal 2024 First Quarter Results
- Sales increased 8.6% to 1,405.8 million
- Comparable store sales grew 5.6%, over and above 17.1% growth in the corresponding period of the previous year
- EBITDA(1) increased 14.0% to
$417 .7 million, representing an EBITDA margin(1) of 29.7%, compared to 28.3% - Operating income increased 16.0% to
$322.0 million , representing an operating margin(1) of 22.9%, compared to 21.4% - Diluted net earnings per common share increased 22.2% to
$0.77 , compared to$0.63 - 18 net new stores opened, compared to 21 net new stores
- 1,281,166 common shares repurchased for cancellation for
$145.5 million
"As anticipated, we are seeing a progressive normalization in comparable store sales, with growth primarily driven by persistent higher than historical demand for core consumables and other everyday essentials. As Canadian consumers continue to seek out compelling value for their hard-earned money, we will remain focused on executing on our value and convenience promise," said Neil Rossy, President and CEO.
"Like
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(1) Refer to the section entitled "Non-GAAP and Other Financial Measures" of this press release for the definition of these items and, where applicable, their reconciliation with the most directly comparable GAAP measure. |
Fiscal 2025 First Quarter Financial Results
Sales for the first quarter of fiscal 2025 increased by 8.6% to
Comparable store sales for the first quarter of fiscal 2025 increased by 5.6%, consisting of an 8.7% increase in the number of transactions and a 2.8% decrease in average transaction size, over and above comparable store sales growth of 17.1% in the corresponding period of the prior fiscal year. The increase in comparable store sales was driven primarily by strong customer demand for consumables.
Gross margin(1) was 43.2% of sales in the first quarter of fiscal 2025, compared to 42.2% of sales in the first quarter of fiscal 2024. Gross margin as a percentage of sales was higher primarily as a result of lower inbound shipping costs, mainly driven by the positive impact of renewed contracts with carriers, as well as lower logistics costs.
General, administrative and store operating expenses ("SG&A") for the first quarter of fiscal 2025 increased by 11.0% to
EBITDA totalled
The Corporation's 50.1% share of Dollarcity's net earnings for the period from
Net financing costs were
Net earnings increased by 20.0% to
Dollarcity Store Count and New Long-term Store Target
During its first quarter ended
Following an updated evaluation of the market potential for Dollarcity stores in its current markets of operation, comprised of
______________________________ |
(1) Refer to the section entitled "Non-GAAP and Other Financial Measures" of this press release for the definition of these items and, where applicable, their reconciliation with the most directly comparable GAAP measure. |
Normal Course Issuer Bid
During the first quarter of fiscal 2025, 1,281,166 common shares were repurchased for cancellation under the Corporation's normal course issuer bid for a total cash consideration of
Dividend
On
Publication of Fiscal 2024 ESG Report
Our fiscal 2024 ESG Report and accompanying SASB Index is in complement to our previous ESG disclosure and related documents, all available in the Sustainability section of www.dollarama.com, and should be read in conjunction with our regulatory filings.
Outlook (2)
The Corporation's financial annual guidance ranges for fiscal 2025 issued on
(as a percentage of sales except net new store |
|
Fiscal 2025 |
|
Guidance |
|
Net new store openings |
|
60 to 70 |
Comparable store sales |
|
3.5% to 4.5% |
Gross margin |
|
44.0% to 45.0% |
SG&A |
|
14.5% to 15.0% |
Capital expenditures |
|
|
These guidance ranges are based on several assumptions, including the following:
- The number of signed offers to lease and store pipeline for the remainder of fiscal 2025, the absence of delays outside of our control on construction activities and no material increases in occupancy costs in the short- to medium-term
- Approximately three months visibility on open orders and product margins
- Continued positive customer response to our product offering, value proposition and in-store merchandising
- The active management of product margins, including through pricing strategies and product refresh, and of inventory shrinkage
- The Corporation continues to account for its investment in Dollarcity as a joint arrangement using the equity method
- The entering into of foreign exchange forward contracts to hedge the majority of forecasted merchandise purchases in USD against fluctuations of CAD against USD
- The continued execution of in-store productivity initiatives and realization of cost savings and benefits aimed at improving operating expense
- The absence of a significant shift in labour, economic and geopolitical conditions, or material changes in the retail environment
- No significant changes in the capital budget for fiscal 2025 for new store openings, maintenance and transformational capital expenditures, the latter mainly related to IT projects
- The absence of unusually adverse weather, especially in peak seasons around major holidays and celebrations
Many factors could cause actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the foregoing forward-looking statements, including the fiscal 2025 guidance and the underlying assumptions. These statements, including the various underlying assumptions, are forward-looking and should be read in conjunction with the cautionary statement on forward-looking statements.
_________________________________ |
(2) To be read in conjunction with the "Forward-Looking Statements" section of this press release. |
Forward-Looking Statements
Certain statements in this press release about our current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "predicts", "likely" or "potential" or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements.
Forward-looking statements are based on information currently available to management and on estimates and assumptions made by management regarding, among other things, general economic and geopolitical conditions and the competitive environment within the retail industry in
These factors are not intended to represent a complete list of the factors that could affect the Corporation or Dollarcity; however, they should be considered carefully. The purpose of the forward-looking statements is to provide the reader with a description of management's expectations regarding the Corporation's and Dollarcity's financial performance and may not be appropriate for other purposes. Readers should not place undue reliance on forward-looking statements made herein. Furthermore, unless otherwise stated, the forward-looking statements contained in this press release are made as at
Virtual Shareholder Meeting and First Quarter Results Conference Call
About
Selected Consolidated Financial Information
|
|
13-Week Periods Ended |
|
||
(dollars and shares in thousands, except per share amounts) |
|
2024 |
|
2023 |
|
|
|
$ |
|
$ |
|
Earnings Data |
|
|
|
|
|
Sales |
|
1,405,772 |
|
1,294,549 |
|
Cost of sales |
|
798,496 |
|
748,807 |
|
Gross profit |
|
607,276 |
|
545,742 |
|
SG&A |
|
217,166 |
|
195,598 |
|
Depreciation and amortization |
|
90,162 |
|
85,638 |
|
Share of net earnings of equity-accounted investment |
|
(22,090) |
|
(13,125) |
|
Operating income |
|
322,038 |
|
277,631 |
|
Net financing costs |
|
36,523 |
|
36,685 |
|
Earnings before income taxes |
|
285,515 |
|
240,946 |
|
Income taxes |
|
69,672 |
|
61,073 |
|
Net earnings |
|
215,843 |
|
179,873 |
|
|
|
|
|
|
|
Basic net earnings per common share |
|
|
|
|
|
Diluted net earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
Basic |
|
278,707 |
|
284,811 |
|
Diluted |
|
279,686 |
|
286,179 |
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
Year-over-year sales growth |
|
8.6 % |
|
20.7 % |
|
Comparable store sales growth (1) |
|
5.6 % |
|
17.1 % |
|
Gross margin (1) |
|
43.2 % |
|
42.2 % |
|
SG&A as a % of sales (1) |
|
15.4 % |
|
15.1 % |
|
EBITDA (1) |
|
417,743 |
|
366,269 |
|
Operating margin (1) |
|
22.9 % |
|
21.4 % |
|
Capital expenditures |
|
46,267 |
|
47,083 |
|
Number of stores (2) |
|
1,569 |
|
1,507 |
|
Average store size (gross square feet) (2) (3) |
|
10,430 |
|
10,417 |
|
Declared dividends per common share |
|
|
|
|
|
|
|
|
As at |
||||
|
(dollars in thousands) |
|
|
|
|
||
|
|
|
$ |
|
$ |
||
|
Statement of Financial Position Data |
|
|
|
|
||
|
Cash and cash equivalents |
|
292,602 |
|
313,915 |
||
|
Inventories |
|
888,022 |
|
916,812 |
||
|
Total current assets |
|
1,242,585 |
|
1,309,093 |
||
|
Property, plant and equipment |
|
963,673 |
|
950,994 |
||
|
Right-of-use assets |
|
2,043,791 |
|
1,788,550 |
||
|
Total assets |
|
5,489,033 |
|
5,263,607 |
||
|
Total current liabilities |
|
593,414 |
|
677,846 |
||
|
Total non-current liabilities |
|
4,468,093 |
|
4,204,913 |
||
|
Total debt (1) |
|
2,255,292 |
|
2,264,394 |
||
|
Net debt (1) |
|
1,962,690 |
|
1,950,479 |
||
|
Shareholders' equity |
|
427,526 |
|
380,848 |
||
|
|
|
|
|
|
(1) |
Refer to the section entitled "Non-GAAP and Other Financial Measures" of this press release for the definition of these items and, where applicable, their reconciliation with the most directly comparable GAAP measure. |
|
|||||
(2) |
At the end of the period. |
|
|||||
(3) |
The Corporation revised its prior years square footage information to align with its current and updated methodology. |
|
Non-GAAP and Other Financial Measures
The Corporation prepares its financial information in accordance with GAAP. Management has included non-GAAP and other financial measures to provide investors with supplemental measures of the Corporation's operating and financial performance. Management believes that those measures are important supplemental metrics of operating and financial performance because they eliminate items that have less bearing on the Corporation's operating and financial performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on GAAP measures. Management also believes that securities analysts, investors and other interested parties frequently use non-GAAP and other financial measures in the evaluation of issuers. Management also uses non-GAAP and other financial measures to facilitate operating and financial performance comparisons from period to period, to prepare annual budgets and to assess their ability to meet the Corporation's future debt service, capital expenditure and working capital requirements.
The below-described non-GAAP and other financial measures do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers and should be considered as a supplement to, not a substitute for, or superior to, the comparable measures calculated in accordance with GAAP.
(A) Non-GAAP Financial Measures
EBITDA
EBITDA represents operating income plus depreciation and amortization and includes the Corporation's share of net earnings of its equity-accounted investment. Management believes EBITDA represents a supplementary metric to assess profitability and measure the Corporation's underlying ability to generate liquidity through operating cash flows.
|
|
13-Week Periods Ended |
||
(dollars in thousands) |
|
2024 |
|
2023 |
|
|
$ |
|
$ |
A reconciliation of operating income to EBITDA is included below: |
|
|
|
|
|
|
|
|
|
Operating income |
|
322,038 |
|
277,631 |
Add: Depreciation and amortization |
|
95,705 |
|
88,638 |
EBITDA |
|
417,743 |
|
366,269 |
Total debt
Total debt represents the sum of long-term debt (including unamortized debt issue costs, accrued interest and fair value hedge – basis adjustment), short-term borrowings under the US commercial paper program and other bank indebtedness (if any). Management believes Total debt is a measure that facilitates the understanding of the Corporation's corporate financial position in relation to its financing obligations.
(dollars in thousands) |
As at |
||
A reconciliation of long-term debt to total debt is included below: |
|
|
|
Senior unsecured notes (the "Fixed Rate Notes") bearing interest at: |
$ |
|
$ |
Fixed annual rate of 5.165% payable in equal semi-annual instalments,
maturing |
450,000 |
|
450,000 |
Fixed annual rate of 2.443% payable in equal semi-annual instalments,
maturing |
375,000 |
|
375,000 |
Fixed annual rate of 5.533% payable in equal semi-annual instalments,
maturing |
500,000 |
|
500,000 |
Fixed annual rate of 1.505% payable in equal semi-annual instalments,
maturing |
300,000 |
|
300,000 |
Fixed annual rate of 1.871% payable in equal semi-annual instalments,
maturing |
375,000 |
|
375,000 |
Fixed annual rate of 5.084% payable in equal semi-annual instalments,
maturing |
250,000 |
|
250,000 |
|
|
|
|
Unamortized debt issue costs, including |
(8,467) |
|
(9,049) |
Accrued interest on the Fixed Rate Notes |
14,704 |
|
21,460 |
Fair value hedge – basis adjustment on interest rate swap |
(945) |
|
1,983 |
Total debt |
2,255,292 |
|
2,264,394 |
Net debt
Net debt represents total debt minus cash and cash equivalents. Management believes Net debt represents a measure to assess the financial position of the Corporation including all financing obligations, net of cash and cash equivalent.
(dollars in thousands) |
|
As at |
||
|
|
2024 |
|
2024 |
|
|
$ |
|
$ |
A reconciliation of total debt to net debt is included below: |
|
|
|
|
|
|
|
|
|
Total debt |
|
2,255,292 |
|
2,264,394 |
Cash and cash equivalents |
|
(292,602) |
|
(313,915) |
Net debt |
|
1,962,690 |
|
1,950,479 |
(B) Non-GAAP Ratios
Adjusted net debt to EBITDA ratio
Adjusted net debt to EBITDA ratio is a ratio calculated using adjusted net debt over consolidated EBITDA for the last twelve months. Management uses this ratio to partially assess the financial condition of the Corporation. An increasing ratio would indicate that the Corporation is utilizing more debt per dollar of EBITDA generated.
(dollars in thousands) |
|
As at |
||
|
|
2024 |
|
2024 |
|
|
$ |
|
$ |
A calculation of adjusted net debt to EBITDA ratio is included below: |
|
|
|
|
|
|
|
|
|
Net debt |
|
1,962,690 |
|
1,950,479 |
Lease liabilities |
|
2,331,341 |
|
2,069,229 |
Unamortized debt issue costs, including |
|
8,467 |
|
9,049 |
Fair value hedge - basis adjustment on interest rate swap |
|
945 |
|
(1,983) |
Adjusted net debt |
|
4,303,443 |
|
4,026,774 |
|
|
|
|
|
EBITDA for the last twelve-month period |
|
1,912,640 |
|
1,861,166 |
Adjusted net debt to EBITDA ratio |
|
2.25x |
|
2.16x |
|
|
|
|
|
EBITDA margin
EBITDA margin represents EBITDA divided by sales. Management believes that EBITDA margin is useful in assessing the performance of ongoing operations and efficiency of operations relative to its sales.
(dollars in thousands) |
|
13-Week Periods Ended |
||
|
|
2024 |
|
2023 |
|
|
$ |
|
$ |
A reconciliation of EBITDA to EBITDA margin is included below: |
|
|
|
|
|
|
|
|
|
EBITDA |
|
417,743 |
|
366,269 |
Sales |
|
1,405,772 |
|
1,294,549 |
EBITDA margin |
|
29.7 % |
|
28.3 % |
(C) Supplementary Financial Measures
Gross margin |
Represents gross profit divided by sales, expressed as a percentage of sales. |
Operating margin |
Represents operating income divided by sales, expressed as a percentage of sales. |
SG&A as a % of sales |
Represents SG&A divided by sales. |
Comparable store |
Represents sales of |
Comparable store |
Represents the percentage increase or decrease, as applicable, of comparable store sales |
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