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Dollarama has reported increases in sales and net earnings for the third quarter of fiscal 2019 compared with the same period last year.

Sales were up 6.6 per cent to $864.3 million, compared with $810.6 million in Q3 of fiscal 2018. Gross margin was 38.9 per cent of sales, slightly below the 40.1 per cent recorded in the same period last year. Net earnings increased to $133.5 million, above the $130.1 million recorded in the third quarter of 2018.

Comparable store sales grew 3.1 per cent in the quarter, over and above the 4.6 per cent growth posted in the same quarter in 2018. This growth consisted of a 4.0 per cent rise in average transaction size over and above the 4.5 per cent growth in average transaction size in Q3 fiscal 2018, which was slightly offset by a 0.9 per cent fall in number of transactions.

Dollarama opened 14 new stores, ahead of the ten new stores it opened in Q3 2018, and has opened a total of 43 new stores in fiscal 2019.

The growth in same store sales reflects Dollarama’s “compelling value proposition, further reinforced by our strategic decision earlier this year to carefully manage price increases in the current competitive retail environment,” said president and CEO Neil Rossy. “The strength of our operations and the efficiency of our simple, growth-oriented business model are further demonstrated by our solid performance across our key operating metrics, our robust earnings and our sustained ability to return substantial capital to our shareholders.”

Other results:

  • EBITDA grew 3.5 per cent to $214.6 million, or 24.8 per cent of sales, compared to 25.6 per cent of sales;
  • Operating income grew 3.0 per cent to $195.0 million, or 22.6 per cent of sales, compared to 23.3 per cent of sales; and
  • Diluted net earnings per common share increased by 7.9 per cent to $0.41 from $0.38.

Dollarama noted that while it competes with other dollar stores, it competes even more closely with variety and discount stores, convenience stores and mass merchants, many of them operating stores in the same locations and offering product ranges that closely reflect Dollarama’s.

The company also noted a range of other factors impacting financial results: “We expect continuing pressure resulting from a number of factors including, but not limited to: merchandise costs, currency exchange fluctuations, instability in the global economy, tariff disputes, consumer debt levels and buying patterns, economic conditions, interest rates, fuel prices, utilities costs, weather patterns, market volatility, customer preferences, labour costs, inflation, catastrophic events, competitive pressures and insurance costs,” the company said, noting that oil price fluctuations also play a volatile role in the mix, with both increases and decreases having down sides.

WATCH: Dollarama’s stock valuation, financial results and future prospects.

 

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