Mr. Neil Rossy reports

DOLLARAMA REPORTS FOURTH QUARTER AND FISCAL YEAR 2024 RESULTS

Dollarama Inc. has released its financial results for the fourth quarter and fiscal year ended Jan. 28, 2024 (fiscal 2024) and issued guidance for the fiscal year ending Feb. 2, 2025 (fiscal 2025).

Fiscal 2024 fourth quarter results highlights compared with fiscal 2023 fourth quarter results:

• Sales increased 11.3 per cent to $1,639.2-million, compared with $1,473.2-million.
• Comparable store sales grew 8.7 per cent, over and above 15.9-per-cent growth in the corresponding period of the previous fiscal year.
• EBITDA (earnings before interest, taxes, depreciation and amortization) increased 19.5 per cent to $558.9-million, representing an EBITDA margin of 34.1 per cent, compared with 31.7 per cent.
• Operating income increased 21.8 per cent to $464.7-million, representing an operating margin of 28.3 per cent, compared with 25.9 per cent.
• Diluted net earnings per common share increased by 26.4 per cent, from 91 cents to $1.15

Fiscal 2024 results highlights compared with fiscal 2023 results:

• Sales increased 16.1 per cent to $5,867.3-million, compared with $5,052.7-million.
• Comparable store sales grew 12.8 per cent, over and above a 12-per-cent growth the previous year.
• EBITDA increased 22.2 per cent to $1,861.2-million, representing an EBITDA margin of 31.7 per cent, compared with 30.1 per cent.
• Operating income increased 25.5 per cent to $1,495.7-million, representing an operating margin of 25.5 per cent, compared with 23.6 per cent.
• Diluted net earnings per common share increased by 29 per cent, from $2.76 to $3.56.
• Sixty-five net new stores opened, same as prior year, bringing total store count to 1,551.
• A total of 7,125,730 common shares repurchased for cancellation for $655.9-million.

"In fiscal 2024, we met or exceeded our guidance for all our key performance metrics, including higher-than-expected comparable store sales, translating into a 29-per-cent increase in EPS. Our strong financial and operational performance demonstrates the enduring strength of our business model and that our compelling value proposition continues to resonate with consumers, including in an uncertain economic context," said Neil Rossy, president and chief executive officer of Dollarama.

"Looking ahead to fiscal 2025, we expect to generate strong comparable store sales growth of between 3.5 per cent to 4.5 per cent, over and above an exceptional two years of double-digit growth, by staying true to our value and convenience promise to Canadian consumers," Mr. Rossy concluded.

Fiscal 2024 fourth quarter financial results

Sales for the fourth quarter of fiscal 2024 increased by 11.3 per cent to $1,639.2-million, compared with $1,473.2-million for the fourth quarter of the fiscal year ended Jan. 29, 2023 (fiscal 2023). This increase was driven by growth in the total number of stores over the past 12 months (from 1,486 on Jan. 29, 2023, to 1,551 on Jan. 28, 2024) and comparable store sales growth.

Comparable store sales for the fourth quarter of fiscal 2024 increased by 8.7 per cent, consisting of an 11.2-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 15.9 per cent for the fourth quarter of fiscal 2023. The increase in comparable store sales is primarily attributable to higher sales across all product categories, including continued higher-than-historical demand for consumables.

Gross margin was 46.3 per cent of sales in the fourth quarter of fiscal 2024, compared with 44.6 per cent of sales in the fourth quarter of fiscal 2023. Gross margin as a percentage of sales was higher primarily as a result of lower inbound shipping costs, as well as lower logistics costs.

General, administrative and store operating expenses (SG&A) for the fourth quarter of fiscal 2024 increased by 13.1 per cent to $237.1-million, compared with $209.6-million for the fourth quarter of fiscal 2023. SG&A represented 14.5 per cent of sales for the fourth quarter of fiscal 2024, compared with 14.2 per cent of sales for the fourth quarter of fiscal 2023, reflecting higher store labour costs.

EBITDA was $558.9-million, or 34.1 per cent of sales, for the fourth quarter of fiscal 2024, compared with $467.7-million, or 31.7 per cent of sales, in the fourth quarter of fiscal 2023.

The corporation's 50.1-per-cent share of Dollarcity's net earnings for the period from Oct. 1, 2023, to Dec. 31, 2023, was $32.8-million, compared with $19.8-million for the same period last year. The corporation's investment in Dollarcity is accounted for as a joint arrangement using the equity method.

Net financing costs increased by $1.4-million, from $34-million for the fourth quarter of fiscal 2023 to $35.4-million for the fourth quarter of fiscal 2024. The slight increase is mainly due to a higher average borrowing rate, as well as higher average debt levels from lease liabilities, partially offset by an increase in interest income resulting from higher invested capital due to the timing of the issuance and repayment of fixed-rate notes.

Net earnings were $323.8-million, or $1.15 per diluted common share, in the fourth quarter of fiscal 2024, compared with $261.3-million, or 91 cents per diluted common share, in the fourth quarter of fiscal 2023.

Fiscal 2024 financial results

Sales in Fiscal 2024 increased by 16.1 per cent to $5,867.3-million, compared with $5,052.7-million in fiscal 2023. This increase was driven by growth in the total number of stores over the past 12 months (from 1,486 on Jan. 29, 2023, to 1,551 on Jan. 28, 2024) and increased comparable store sales.

Comparable store sales increased 12.8 per cent for fiscal 2024, consisting of a 12.3-per-cent increase in the number of transactions and a 0.4-per-cent increase in average transaction size, over and above comparable store sales growth of 12 per cent for fiscal 2023. Strong comparable store sales reflect strong demand across all product categories, including stronger-than-historical demand for consumables, and the continued refresh of the company's product offering.

Gross margin was $2,613.4-million or 44.5 per cent of sales in fiscal 2024, compared with $2,198.2-million or 43.5 per cent of sales in fiscal 2023. Gross margin as a percentage of sales was higher due to lower inbound shipping costs.

SG&A for fiscal 2024 was $844.9-million, a 17.3-per-cent increase from $720.3-million for fiscal 2023. SG&A for Fiscal 2024 represented 14.4 per cent of sales, compared with 14.3 per cent of sales for fiscal 2023. This variance reflects higher store labour costs, partially offset by the positive impact of scaling.

EBITDA was $1,861.2-million, or 31.7 per cent of sales, for fiscal 2024, compared with $1,523.3-million, or 30.1 per cent of sales, for fiscal 2023.

The corporation's 50.1-per-cent share of Dollarcity's net earnings for the period from Jan. 1, 2023, to Dec. 31, 2023, was $75.3-million, compared with $45.4-million for the same period last year, reflecting strong financial and operational performance by Dollarcity. Refer to the section entitled "Dollarcity store count and dividend."

Net financing costs increased by $29.4-million from $115.4-million for fiscal 2023 to $144.8-million for fiscal 2024. The increase is mainly due to a higher average borrowing rate, as well as higher average debt levels from lease liabilities, partially offset by an increase in interest income resulting from higher invested capital.

Net earnings were $1,010.5-million, or $3.56 per diluted common share, for fiscal 2024, compared with $801.9-million, or $2.76 per diluted common share, for fiscal 2023.

Dollarcity store count and dividend

During its fourth quarter ended Dec. 31, 2023, Dollarcity opened 52 net new stores, compared with 45 net new stores in the same period last year. For the year ended Dec. 31, 2023, Dollarcity opened 92 net new stores, compared with 90 net new stores in the prior year. As at Dec. 31, 2023, Dollarcity had a total of 532 stores, with 311 locations in Colombia, 99 in Guatemala, 72 in El Salvador and 50 in Peru. This compares with 440 stores as at Dec. 31, 2022.

In the fourth quarter of Fiscal 2024, Dollarcity's board of directors approved the declaration and distribution of a first dividend totalling $80-million (U.S.). Dollarama's share of the dividend corresponded to $40.1-million (U.S.), reflecting its 50.1-per-cent ownership in Dollarcity. During the fourth quarter of fiscal 2024, Dollarama received $20.1-million (U.S.) ($27-million), with the balance of $20-million (U.S.) ($26.9-million) received in fiscal 2025.

Dollarama normal course issuer bid and dividend

During fiscal 2024, 7,125,730 common shares were repurchased for cancellation at a weighted average price of $92.04 per share, for a total cash consideration of $655.9-million, under the corporation's 2023 to 2024 normal course issuer bid and the normal course issuer bid previously in effect.

On April 4, 2024, the corporation announced that its board of directors approved a 29.9-per-cent increase of the quarterly cash dividend for holders of common shares, from 7.08 cents to 9.20 cents per common share. This dividend is payable on May 3, 2024, to shareholders of record at the close of business on April 19, 2024. The dividend is designated as an eligible dividend for Canadian tax purposes.

Fiscal 2025 outlook and capital allocation strategy

While the path of the economy and its impact on future consumer behaviour remains hard to predict, the corporation expects to benefit from a continued positive consumer response to the convenience and compelling value it offers, through its expansive store network and broad offering of everyday and seasonal products at low fixed price points. In fiscal 2025, the corporation expects to generate continued comparable store sales growth, over and above two years of double-digit comparable store sales growth which was fuelled, in part, by an inflationary environment for consumers.

In fiscal 2025, the company expects to maintain a strong gross margin as a percentage of sales, with the positive impact of lower inbound shipping costs anticipated through the first half of the fiscal year, partially offset by higher inventory shrinkage. SG&A as a percentage of sales is expected to continue to be pressured as a result of higher store labour and operating costs, partially offset by continuing efficiency and labour productivity initiatives. In fiscal 2025, the corporation will maintain its balanced approach to capital allocation, investing in organic growth and keeping its focus on returning capital to shareholders. The corporation also intends to maintain its pace of new store openings and investments in maintenance and transformational capital expenditures. In addition to its intent to maintain a dividend subject to quarterly approval, the corporation intends to continue allocating the majority of excess cash toward the repurchase of shares through its normal course issuer bid.

The corporation's outlook for fiscal 2025, as well as a summary of how it performed against fiscal 2024 guidance, are provided herein.

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

• The number of signed offers to lease and store pipeline for the next 12 months, the absence of delays outside of the company's 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 Dollarama's 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 inclusion of the corporation's 50.1-per-cent share of net earnings of its equity-accounted investment;
• The entering into of foreign exchange forward contracts to hedge the majority of forecasted merchandise purchases in U.S. dollars against fluctuations of Canadian dollars against U.S. dollars;
• 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 information technology projects;
• The absence of unusually adverse weather, especially in peak seasons around major holidays and celebrations.

Conference call

Dollarama will hold a conference call to discuss its fiscal 2024 fourth quarter and annual results today, April 4, 2024, at 10:30 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. The live audio webcast is 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. Its 1,551 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. Its 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 532 conveniently located stores in El Salvador, Guatemala, Colombia and Peru.

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