Mr. Neil Rossy reports

DOLLARAMA REPORTS FISCAL 2024 FIRST QUARTER RESULTS

Dollarama Inc. has released its financial results for the first quarter ended April 30, 2023.

First quarter 2024 results compared with first quarter 2023 results:

• Sales increased by 20.7 per cent to $1,294.5-million, compared with $1,072.9-million.
• Comparable-store sales grew 17.1 per cent, over and above the 7.3-per-cent growth in the previous year.
• EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 22.1 per cent to $366.3-million, or 28.3 per cent of sales, compared with 28.0 per cent of sales.
• Operating income increased by 26.2 per cent to $277.6-million, or 21.4 per cent of sales, compared with 20.5 per cent of sales.
• Diluted net earnings per share increased by 28.6 per cent to 63 cents, compared with 49 cents.
• Twenty-one net new stores were opened, compared with 10 net new stores.

"Canadians from all walks of life continue to respond positively to our compelling value proposition and affordable product mix. In the context of persistent inflationary pressure, we delivered a 17-per-cent increase in comparable-store sales in the first quarter of fiscal 2024. The first quarter also marked the opening of our 1,500th Dollarama store, a significant milestone as we pursue our target of 2,000 stores across Canada by 2031," said Neil Rossy, president and chief executive officer.

Mr. Rossy added: "We were also pleased to publish our 2023 ESG [environmental, social and governance] report this morning, outlining our evolving ESG strategy, as well as our progress against our goals. The objective is to ensure that we continue delivering on our value promise to our customers and our shareholders as we advance our ESG priorities across our key pillars, from our climate strategy to our people, products and supply chain."

First quarter 2024 financial results

Sales for the first quarter of fiscal 2024 increased by 20.7 per cent to $1,294.5-million, compared with $1,072.9-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 1,431 stores on May 1, 2022, to 1,507 stores on April 30, 2023) and increased comparable-store sales.

Comparable-store sales for the first quarter of fiscal 2024 increased by 17.1 per cent, reflecting a 15.5-per-cent increase in the number of transactions and a 1.4-per-cent increase in average transaction size, compared with comparable-store sales growth of 7.3 per cent in the corresponding period of the previous fiscal year. The year-over-year increase in comparable-store sales is primarily attributable to strong demand across the company's product categories, namely consumables, seasonal items and general merchandise.

EBITDA totalled $366.3-million, or 28.3 per cent of sales, for the first quarter of fiscal 2024, compared with $300.0-million, or 28.0 per cent of sales, in the first quarter of fiscal 2023.

Gross margin remained relatively flat year over year, coming in at 42.2 per cent of sales in the first quarter of fiscal 2024, compared with 42.1 per cent of sales in the first quarter of fiscal 2023.

General, administrative and store operating expenses (SG&A) for the first quarter of fiscal 2024 increased to $195.6-million, compared with $160.6-million for the first quarter of fiscal 2023. SG&A represented 15.1 per cent of sales, compared with 15.0 per cent of sales for the first quarter of fiscal 2023. This increase in costs is primarily attributed to higher store labour costs.

The corporation's 50.1-per-cent share of Dollarcity's net earnings for the period from Jan. 1, 2023, to March 31, 2023, was $13.1-million, compared with $8.7-million for the same period last year, reflecting a strong financial and operational performance by Dollarcity. The corporation's investment in Dollarcity is accounted for as a joint arrangement using the equity method.

Financing costs increased by $12.3-million, from $24.4-million for the first quarter of fiscal 2023 to $36.7-million for the first quarter of fiscal 2024. The increase is mainly due to a higher average borrowing rate, as well as higher average debt levels.

Net earnings were $179.9-million, or 63 cents per diluted common share, in the first quarter of fiscal 2024, compared with $145.5-million, or 49 cents per diluted common share, in the first quarter of fiscal 2023.

Inventory remained stable at $937.7-million as at April 30, 2023, compared with $957.2-million as at Jan. 29, 2023.

Dollarcity store growth

During its first quarter ended March 31, 2023, Dollarcity opened eight net new stores, in line with the same period last year. As at March 31, 2023, Dollarcity had 448 stores, including 267 locations in Colombia, 91 in Guatemala, 66 in El Salvador and 24 in Peru. This compares with 440 stores as at Dec. 31, 2022.

Normal course issuer bid

During the first quarter of fiscal 2024, no common shares were repurchased for cancellation under the corporation's 2022/2023 normal course issuer bid.

Dividend

On June 7, 2023, the corporation's board of directors approved a quarterly cash dividend for holders of common shares of 7.08 cents per common share. This dividend is payable on Aug. 4, 2023, to shareholders of record at the close of business on July 7, 2023. The dividend is designated as an eligible dividend for Canadian tax purposes.

Publication of 2023 ESG report

Dollarama has published its comprehensive 2023 ESG report, titled "Serving Canadians with Purpose." This latest report provides a comprehensive overview of the corporation's ESG strategy and evolving priority issues, as identified through its continuing assessment process and stakeholder engagement. It also provides an annual update on key data, goals and initiatives. The corporation's 2023 ESG report was prepared in alignment with the Sustainability Accounting Standards Board (SASB) standards relevant to its industry sectors and with an increasing number of recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD) framework.

Intended for all stakeholders and to be read in conjunction with regulatory filings, Dollarama's 2023 ESG report and supporting documents are available for download on the company's website.

Outlook

The corporation's financial annual guidance ranges for fiscal 2024 issued on March 29, 2023, as well as other previously disclosed assumptions on which these ranges are based, remain unchanged (see an attached table).

These guidance ranges are based on several assumptions, including the following:

• The number of signed offers to lease and store pipeline for the next nine months and the absence of delays outside of the company's control on construction activities;
• No material increases in occupancy costs in the short to medium term;
• Continued positive customer response to the company's product offering, value proposition and in-store merchandising;
• Approximately three months of visibility on open orders and product margins;
• The active management of product margins, including through pricing strategies and refreshing some of the product offering;
• The continued stabilization of the company's supply chain and logistics environment;
• The inclusion of the corporation's share of net earnings of its equity-accounted investment;
• The entering into of foreign exchange forward contracts to hedge the majority of forecasted purchases of merchandise in United States dollars against fluctuations of the Canadian dollar against the U.S. dollar;
• The continued execution of in-store productivity initiatives and the 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 competitive environment;
• No significant changes in the capital budget for fiscal 2024 for new-store openings, maintenance capital expenditures and transformational capital expenditures, the latter being mainly related to information technology projects and which budget excludes the purchase price for the previously announced property acquisition;
• The successful execution of the company's business strategy;
• The absence of pandemic-related restrictions impacting consumer shopping patterns or incremental direct costs related to health and safety measures;
• The absence of unusually adverse weather, especially in peak seasons around major holidays and celebrations.

Virtual shareholder meeting and first-quarter results conference call

Dollarama will hold its annual general meeting of shareholders today at 9 a.m. ET. The meeting will be conducted on-line only, via live audio webcast. All shareholders of record as of the close of business on April 13, 2023, will be able to listen to the live audio webcast and submit questions. However, only registered shareholders and duly appointed proxyholders (including non-registered shareholders who have duly appointed themselves as proxyholder) will be able to vote at the meeting.

Dollarama will also hold a conference call to discuss its first quarter 2024 results today at 11 a.m. ET. Financial analysts are invited to ask questions during the call. Other interested parties may participate in the call on a listen-only basis.

Both live audio webcasts are accessible through Dollarama's website.

About Dollarama Inc.

Dollarama is a recognized Canadian value retailer offering a broad assortment of consumable products, general merchandise and seasonal items, both in store and on-line. Dollarama's 1,507 locations across Canada provide customers with compelling value in convenient locations, including metropolitan areas, mid-sized cities and small towns. Select products are also available, by the full case only, through the company's on-line store. Dollarama's quality merchandise is sold at select fixed price points up to $5.

Dollarama also owns a 50.1-per-cent interest in Dollarcity, a growing Latin American value retailer. Dollarcity offers a broad assortment of consumable products, general merchandise and seasonal items at select fixed price points up to $4 (U.S.) (or the equivalent in local currency) in 448 conveniently located stores in El Salvador, Guatemala, Colombia and Peru.

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