Q4 Revenue: Increased by 14.8% year-over-year to nearly $1.9 billion. Fiscal 2025 Revenue: Increased by 9.3% to more than $6.4 billion. Q4 Same-Store Sales Growth (SSS): 4.9%. Full Year Same-Store Sales Growth (SSS): 4.6%. Q4 Gross Margin: 46.8% of sales. Full Year Gross Margin: 45.1% of sales. Q4 SG&A: 14.7% of sales. Full Year SG&A: 14.5% of sales. Q4 EBITDA: $670 million. Full Year EBITDA: $2.1 billion. Q4 Diluted EPS: Increased by 21.7% to $1.40. Full Year Diluted EPS: Grew 16.9% to $4.16. Dollarcity Q4 Net Earnings Contribution: $58 million. Dollarcity Full Year Net Earnings Contribution: $129.9 million. Net New Stores in Q4: 15, bringing the total to 65 for the year. Total Store Count at Fiscal Year-End: 1,616 stores. CapEx for Fiscal 2025: $195.3 million, excluding land acquisition costs. Share Buyback: Over 8.1 million shares repurchased for nearly $1.1 billion. Quarterly Cash Dividend Increase: 15% to $0.1058 per share.

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Release Date: April 03, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Dollarama Inc (DLMAF) reported a strong same-store sales growth of 4.9% in Q4, contributing to a full-year growth of 4.6%. The company opened 15 net new stores in Q4, totaling 65 new stores for the year, and plans to open 70 to 80 net new stores in fiscal 2026. Dollarcity, a subsidiary, opened 100 net new stores in 2024, and is self-funding its growth while generating excess cash for shareholders. Dollarama Inc (DLMAF) completed the acquisition of land for a new logistics center in Calgary, enhancing its logistics operations. The company announced a 15% increase in its quarterly cash dividend, reflecting strong financial performance and shareholder returns.

Negative Points

Dollarama Inc (DLMAF) faces headwinds from retaliatory tariffs on consumable goods imported from the US, impacting gross margins. The company anticipates a loss of USD10 million to USD20 million in Mexico for fiscal 2026 due to market entry and ramp-up costs. Higher labor and store operating costs, including increased recycling costs, are expected to pressure SG&A expenses. The economic outlook remains uncertain, with low consumer confidence potentially impacting discretionary spending. Dollarama Inc (DLMAF) expects gross margin pressures in fiscal 2026 due to a weaker Canadian dollar and higher shipping rates.

Q & A Highlights

Q: Can you provide details on the impact of tariffs and how they affect your product categories? A: Neil Rossy, President and CEO, explained that the majority of the goods affected by tariffs are in the consumable area. Dollarama plans to navigate this through product substitutions or pricing adjustments. Consumer confidence is a concern, as tariff discussions can impact spending habits.

Story Continues

Q: What factors could influence Dollarama's fiscal 2026 guidance, and is the $10 million to $20 million loss in Mexico your portion or 100%? A: Patrick Bui, CFO, noted that the guidance is influenced by high uncertainty, low consumer confidence, and headwinds like a weaker Canadian dollar and higher shipping rates. The $10 million to $20 million loss in Mexico is for 100% of the operations.

Q: Are there opportunities for Dollarama to benefit from overseas vendors due to tariffs? A: Neil Rossy stated that US tariffs mainly affect consumable products, which are not easily replaceable with private label products. While there might be some opportunities, the impact is limited as vendors are already operating on tight margins.

Q: What prompted the acceleration of Dollarcity's expansion into Mexico, and what are the plans for store openings there? A: Neil Rossy explained that the decision was based on the speed and efficiency of organizing logistics and real estate in Mexico. The team found suitable locations and logistics solutions quickly, allowing them to move forward with the expansion.

Q: How does Dollarama plan to handle the potential impact of Walmart's accelerated store growth in the region? A: Neil Rossy emphasized that Dollarama focuses on its own growth and competitive value proposition. While they are aware of competitors' actions, it does not change their strategy or approach to real estate selection.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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