Dollarama Inc.
reported higher sales and earnings in the second quarter as the discount retailer expanded into two new international markets.
The company’s sales were up 10.3 per cent to $1.72 billion in the quarter ended Aug. 3, an increase it said was driven by same store sales growth in Canada, as well as additional revenue from its growing total number of stores.
This includes sales by stores acquired in its $208.8-million purchase of Melbourne-based The Reject Shop Ltd., the largest discount retailer in Australia. The transaction, completed July 21, marked Dollarama’s entry into the Asian-Pacific market with a national network of 395 stores.
The company also opened its first Dollarcity store in Mexico in the quarter, adding to its growing presence in Latin America. Dollarcity has a total of 658 stores, with locations in Colombia, Guatemala, El Salvador and Peru.
“The second quarter of fiscal 2026 marked a significant milestone in our international expansion, with entries into two new markets,” chief executive Neil Rossy said in a press release.
Rossy said work has begun in deploying the Dollarama business model in Australian stores, with a phasing-in of select company merchandise already underway. He said that once stores contain a critical mass of its products, the company will bring them under the Dollarama banner.
In Canada, Dollarama’s comparable store sales rose by 4.9 per cent, which was above the consensus of four per cent, with the number of transactions up 3.9 per cent. It opened 27 new stores in Canada in the quarter.
Rossy said strong demand for consumables were once again a key sales driver, with general and seasonal merchandise remaining stable.
Chief financial officer Patrick Bui said Canadian consumers remain fragile and cautious on discretionary spending due to continued economic uncertainty.
“We’ve seen inconsistent behaviour from the consumer. There were moments of resilience, but there were also moments of fragility,” Bui said during an earnings call.
He said the retailer is mindful that this may have an impact on same-store sales in the second half of the year, a period of historically strong seasonal sales.
Bui added that the retailer continues to expect some headwind pressure on margins through that period, namely from mixed and higher shipping costs.
The company reported a 12.4 per cent growth in net earnings to $321.5 million, which resulted in a 13.7 per cent increase in diluted net earnings per common share, to $1.16, compared to the prior fiscal year. This beats analysts’ consensus of $1.15 earnings per share.
Its earnings before interest, taxes, depreciation and amortization (EBITDA) were up 12.2 per cent to $588.5 million. This is above the 1.5 to 2.5 per cent forecast and consensus and represents an EBITDA margin of 34.1 per cent. Operating income was up by 14.3 per cent to $483.5 million.
Bui said the company’s international expansion unlocks more value for its shareholders. “We approach this while remaining mindful of the shifting macro environment and how consumers are adapting to it,” he said.
• Email: dpaglinawan@postmedia.com
Dollarama sales rise 10% as discount retailer expands to Australia, Mexico
2025-08-27 13:38:39
