DOLLARAMA REPORTS FISCAL 2023 FIRST QUARTER RESULTS

• 32.4% increase in diluted net earnings per share to $0.49
• 20.9% increase in EBITDA⁽¹⁾ to $300.0 million
• Sales growth of 12.4% and comparable store sales⁽¹⁾ growth of 7.3%
• Publication of Climate Strategy and 2022 ESG Update, including first-generation intensity reduction target for Scope 1 and Scope 2 GHG emissions

MONTREAL, June 8, 2022 /CNW/ - Dollarama Inc. (TSX: DOL) ("Dollarama" or the "Corporation") today reported its financial results for the first quarter ended May 1, 2022.

• Sales increased by 12.4% to $1,072.9 million
• Comparable store sales⁽¹⁾ grew 7.3%
• EBITDA⁽¹⁾ increased by 20.9% to $300.0 million, or 28.0% of sales, compared to 26.0% of sales
• Operating income increased by 24.4% to $220.0 million, or 20.5% of sales, compared to 18.5% of sales
• Diluted net earnings per share increased by 32.4% to $0.49, compared to $0.37
• 10 net new stores opened, compared to 12 net new stores
• 1,444,803 common shares repurchased for cancellation for $107.3 million

"With the lifting of COVID-19 restrictions across Canada early in the quarter, we were pleased to see a double-digit increase in customer traffic, coupled with strong demand for our affordable, everyday consumables and seasonal goods. Our strong performance across key metrics in the first quarter reflects the relevance of our business model and positive consumer response to our value proposition in a high-inflation environment," said Neil Rossy, President and CEO. "Mindful of the challenging environment in which we are operating, we will continue to rely on the levers at our disposal to mitigate ongoing supply chain and cost pressures, while providing consumers with the best relative value on the market," he added.

"I am also pleased with our continued progress over the last year on the ESG front, including the publication of our climate strategy and roadmap. We approach our sustainability commitments as a journey on which we must continuously set the bar higher. We also believe in setting measurable and achievable goals, that consider our business and operations, the unique role we play in the lives of Canadian consumers, and the expectations of our stakeholders," concluded Mr. Rossy.   

All comparative figures that follow are for the first quarter ended May 1, 2022, compared to the first quarter ended May 2, 2021. All financial information presented in this press release has been prepared in accordance with generally accepted accounting principles in Canada ("GAAP") as set out in the CPA Canada Handbook – Accounting under Part I, which incorporates International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). For a full explanation of the Corporation's use of non-GAAP and other financial measures, please refer to the section entitled "Selected Consolidated Financial Information" of this press release, under the heading "Non-GAAP and Other Financial Measures". All references to "Fiscal 2022" are to the Corporation's fiscal year ended January 30, 2022, and to "Fiscal 2023" are to the Corporation's fiscal year ending January 29, 2023.

Sales for the first quarter of Fiscal 2023 increased by 12.4% to $1,072.9 million, compared to $954.2 million for the first quarter of Fiscal 2022. This increase was driven by growth in the total number of stores over the past 12 months (from 1,368 stores on May 2, 2021, to 1,431 stores on May 1, 2022) and in comparable store sales. 

Comparable store sales for the first quarter of Fiscal 2023 increased by 7.3%, over and above 5.8% growth in the first quarter of Fiscal 2022 and consisted of a 14.4% increase in the number of transactions and a 6.2% decrease in average transaction size, reflecting a reversal in consumer shopping patterns compared to the prior year comparable period. The increase in comparable store sales is attributable to good seasonal performance and higher sales of consumables resulting in increased customer traffic across the store network year over year, whereas the same quarter last year was marked by a ban, effective April 8, 2021 and lifted after quarter-end on June 11, 2021, on the sale of non-essential goods in Ontario, where approximately 40% of the Corporation's stores are located. 

EBITDA totalled $300.0 million, or 28.0% of sales, for the first quarter of Fiscal 2023, compared to $248.2 million, or 26.0% of sales, in the first quarter of Fiscal 2022. The increase in EBITDA reflects a solid gross margin and strong SG&A performance.

Gross margin was 42.1% of sales in the first quarter of Fiscal 2023, compared to 42.3% of sales in the first quarter of Fiscal 2022. Gross margin was slightly lower this quarter due to a change in the sales mix, with stronger sales of consumables, partially offset by lower logistic costs.

General, administrative and store operating expenses ("SG&A") for the first quarter of Fiscal 2023 increased by only 1.2% to $160.6 million, compared to $158.7 million for the first quarter of Fiscal 2022. SG&A represented 15.0% of sales, compared to 16.6% of sales for the first quarter of Fiscal 2022. This improvement is primarily attributed to the fact that incremental direct costs related to COVID-19 measures for the first quarter of Fiscal 2023 were only $1.6 million, representing a 15 basis-point impact, compared to $18.3 million, representing a 190 basis-point impact, in the same period last year.

The Corporation's 50.1% share of Dollarcity's net earnings for the period from January 1, 2022, to March 31, 2022, was $8.7 million, compared to $3.4 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 $2.3 million, from $22.1 million for the first quarter of Fiscal 2022 to $24.4 million for the first quarter of Fiscal 2023, mainly due to slightly higher average borrowings.

Net earnings were $145.5 million, or $0.49 per diluted common share, in the first quarter of Fiscal 2023, compared to $113.6 million, or $0.37 per diluted common share, in the first quarter of Fiscal 2022. Net earnings improved due to higher sales, and a higher equity pick-up from Dollarcity's net earnings, partially offset by a slightly lower gross margin.

During its first quarter ended March 31, 2022, Dollarcity opened 8 net new stores, compared to 15 net new stores in the same period last year. As at March 31, 2022, Dollarcity had a total of 358 stores, with 210 locations in Colombia, 78 in Guatemala, 60 in El Salvador and 10 in Peru. This compares to a total of 350 stores as at December 31, 2021.

During the first quarter of Fiscal 2023, 1,444,803 common shares were repurchased for cancellation under the Corporation's normal course issuer bid, for a total cash consideration of $107.3 million, at a weighted average price of $74.29 per share. As at May 1, 2022, the Corporation's adjusted net debt to EBITDA ratio was 2.74 times.

On June 8, 2022, the Corporation announced that its Board of Directors had approved a quarterly cash dividend for holders of common shares of $0.0553 per common share. This dividend is payable on August 5, 2022 to shareholders of record at the close of business on July 8, 2022. The dividend is designated as an "eligible dividend" for Canadian tax purposes.

As part of its sustainability commitments, Dollarama today published its Climate Strategy and 2022 ESG Update. This latest report includes Dollarama's first Scope 1 and Scope 2 emissions intensity reduction target of 25% by 2030 from a 2019 baseline, on a square footage basis. Dollarama also reiterated its commitment to pursue further alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

In addition, Dollarama provides annual progress updates and additional information across select material topics ranging from diversity and inclusion to responsible sourcing. It also published an updated annual Sustainability Accounting Standards Board (SASB) Index.

Intended for all stakeholders and to be read in conjunction with regulatory filings, Dollarama's Climate Strategy and 2022 ESG Update is available for download in the Sustainability section of its corporate website.

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 Canada and in Latin America, in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. 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 forward-looking statements, including the factors which are outlined in the management's discussion and analysis for the first quarter of Fiscal 2023 and discussed in greater detail in the "Risks and Uncertainties" section of the Corporation's annual management's discussion and analysis for Fiscal 2022, both available on SEDAR at www.sedar.com and on the Corporation's website at www.dollarama.com.

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 June 8, 2022 and management has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

Dollarama will hold its annual general meeting of shareholders today, June 8, 2022 at 9:00 a.m. (ET). The meeting will be conducted online only, via live audio webcast. All shareholders of record as of the close of business on April 14, 2022, regardless of geographic location, 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 Fiscal 2023 first quarter results today, June 8, 2022 at 11:00 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 at https://www.dollarama.com/en-CA/corp/events-presentations.

Dollarama is a recognized Canadian value retailer offering a broad assortment of consumable products, general merchandise and seasonal items both in-store and online. Our 1,431 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 our online store at www.dollarama.com. Our quality merchandise is sold at select fixed price points up to $5.00.

Dollarama also owns a 50.1% 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 US$4.00 (or the equivalent in local currency) in 358 conveniently located stores in El Salvador, Guatemala, Colombia and Peru.

 

 

 

The Corporation prepares its financial information in accordance with GAAP. We have included non-GAAP and other financial measures to provide investors with supplemental measures of our operating and financial performance. We believe that those measures are important supplemental metrics of operating and financial performance because they eliminate items that have less bearing on our operating and financial performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on GAAP measures. We also believe that securities analysts, investors and other interested parties frequently use non-GAAP and other financial measures in the evaluation of issuers. Our management also uses non-GAAP and other financial measures in order to facilitate operating and financial performance comparisons from period to period, to prepare annual budgets, and to assess our ability to meet our 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.

EBITDA

EBITDA represents operating income plus depreciation and amortization and includes the Corporation's share of net earnings of its equity-accounted investment.

Total debt 

Total debt represents the sum of long-term debt (including accrued interest and fair value hedge – basis adjustment), short-term borrowings under the US commercial paper program and other bank indebtedness (if any).

 

Net debt

Net debt represents total debt minus cash.

 

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.

EBITDA margin

EBITDA margin represents EBITDA divided by sales.

 

SOURCE Dollarama Inc.