Discount retailer Dollarama Inc. reported Wednesday strong sales growth for its second quarter ended July 28, 2024.
Fiscal 2025 Second Quarter Highlights Compared to Fiscal 2024 Second Quarter Results
- Sales increased by 7.4 per cent to $1,563.4 million, compared to $1,455.9 million
- Comparable store sales increased by 4.7 per cent, over and above 15.5 per cent growth in the corresponding period of the previous year
- EBITDA increased by 14.7 per cent to $524.3 million, representing an EBITDA margin of 33.5 per cent, compared to 31.4 per cent
- Operating income increased by 15.3 per cent to $422.9 million, representing an operating margin of 27.0 per cent, compared to 25.2 per cent
- Diluted net earnings per common share increased by 18.6 per cent to $1.02, compared to $0.86
- 14 net new stores opened, compared to 18 net new stores
- 2,104,691 common shares repurchased for cancellation for $263.1 million
“For the second quarter of fiscal 2025, we generated strong results across the board as comparable store sales continue to normalize. Canadian consumers continue to recognize and rely on our compelling value as they deploy their discretionary spending prudently in a challenging economic environment. Our strong traffic trends quarter after quarter also confirm that the breadth of our product offering is allowing us to meet the needs of our consumers,” said Neil Rossy, President and CEO, in a news release.
Bruce Winder, a retail analyst and author, said Dollarama posted a textbook positive quarter as all key metrics were solid.
“As Canadians continue to gravitate to value, Dollarama provides a safe harbour for savings on basics and consumables. I don’t see that changing anytime soon,” he said.
“Unlike US dollar stores, which are struggling, Dollarama caters to savers across numerous economic segments with at least some disposable income during these tough times.
“A great Canadian success story.”
George Minakakis, Founder and CEO of Inception Retail Group, said it is a straightforward consumer model.
“Dollarama is a brand that creates consumer value and will continue to grow,” he said.
“I have always admired this brand’s strategic and operational focus. Its success is based on consistency, reliability, variety, and convenience.
“This growth is driven by the recognition that a consumer shift has occurred over the last two decades – 60 per cent or more now wait for their next paycheque to balance their households.
“The old middle class is now the “Resilient Class,” always adapting to the economy, and Dollarama fills that need.”
Michael Kehoe, Broker of Record with Fairfield Commercial Real Estate, said Dollarama is firing on all cylinders and the solid Q2 sales results and strong overall store traffic and sales performance quarter after quarter are a good news story in a challenging Canadian retail environment.
“Canadian consumers are spending cautiously, focusing on the basics with limited disposable income and continue to gravitate to value and the Dollarama retail juggernaut is leading the way,” he said.
“I have noted that the firm has added 58 new stores over that past year, 14 in Q2 alone and the profile and quality of the new locations is textbook commercial real estate leasing impressive.
“The appeal of Dollarama is broadening to more consumer segments across the land led by its diverse retail offerings and extensive store network at almost 1583 stores at the end of July 2024. The company is definitely taking a larger bite out of national market and is the quintessential Canadian success story.”
The company said sales for the second quarter of fiscal 2025 increased by 7.4 per cent to $1,563.4 million, compared to $1,455.9 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 1,525 stores on July 30, 2023, to 1,583 stores on July 28, 2024) and increased comparable store sales.
“Comparable store sales for the second quarter of fiscal 2025 increased by 4.7 per cent, consisting of a 7.0 per cent increase in the number of transactions and a 2.2 per cent decrease in average transaction size, over and above comparable store sales growth of 15.5 per cent in the corresponding period of the prior fiscal year. The increase in comparable store sales reflects sustained customer demand for consumables offset by softer demand for spring-summer assortment, compared to the same period last year,” it said.
“Gross margin reached 45.2 per cent of sales in the second quarter of fiscal 2025, compared to 43.9 per cent of sales in the second quarter of fiscal 2024. The increase is mainly due to the positive impact of lower contractual rates with carriers and lower logistics costs.
“Net earnings increased by 16.3 per cent to $285.9 million, compared to $245.8 million in the second quarter of fiscal 2024. Diluted net earnings per common share increased by 18.6 per cent from $0.86 per diluted common share to $1.02 per diluted common share, in the second quarter of fiscal 2025.
During its second quarter ended June 30, 2024, Dollarcity opened 23 net new stores, compared to 10 net new stores in the same period last year. As at June 30, 2024, Dollarcity had 570 stores with 338 locations in Colombia, 101 in Guatemala, 74 in El Salvador and 57 in Peru. This compares to 532 stores as at December 31, 2023.
Full financial results can be found here.
Related:
How Dollarama is Becoming a Player in the Canadian Grocery Landscape [Op-Ed]
Overcoming the hidden financial burden of back-to-school expenditures on Canadian families (Opinion)
Always Bargains at Dollarama Locations across Canada