Dollarama ((TSE:DOL)) has held its Q4 earnings call. Read on for the main highlights of the call.
Dollarama’s recent earnings call painted a picture of robust growth and strategic expansion, tempered by some challenges. The sentiment was largely positive, with strong same-store sales growth and significant store expansion efforts underscoring the company’s optimistic outlook. However, the call also acknowledged headwinds such as tariffs, higher operating costs, and expansion-related losses in Mexico.
Strong Same-Store Sales Growth
Dollarama reported impressive same-store sales growth of 4.9% in Q4 and 4.6% for the full fiscal year 2025. This performance highlights the strong demand for Dollarama’s products and the company’s ability to attract and retain customers.
Significant Store Expansion
In fiscal 2025, Dollarama opened 65 new stores, including 15 in the fourth quarter alone. The company plans to continue this momentum by opening 70 to 80 new stores in fiscal 2026, capitalizing on opportunities created by other retailers exiting the market.
Dollarcity’s Impressive Growth
Dollarcity, a key part of Dollarama’s international strategy, opened 100 net new stores in 2024, bringing its total to 632. This expansion is supported by strong financial performance, allowing for self-funding growth and cash returns to shareholders.
Record High Share Buyback
Dollarama executed a record share buyback in fiscal 2025, repurchasing over 8.1 million shares for nearly $1.1 billion. This move underscores the company’s commitment to returning value to shareholders.
Acquisition in Australia
Dollarama announced a definitive agreement to acquire Australia’s largest discount retailer, marking a significant expansion into a new market. This acquisition is expected to close in the second half of calendar 2025.
Increased Dividend
Reflecting confidence in its financial health, Dollarama’s Board approved a 15% increase in the quarterly cash dividend, signaling strong future prospects.
Impact of Tariffs and Trade Environment
The company is navigating challenges from counter tariffs on US imports and uncertainties from the ongoing trade war, which could impact consumer confidence and spending.
Higher Operating Costs
Dollarama anticipates higher labor costs and increased store operating expenses, including recycling costs, which may pressure profit margins.
Mexico Expansion Costs
The company’s expansion into Mexico is expected to result in a loss of US$10 million to US$20 million in fiscal 2026, due to market entry and ramp-up costs.
Forward-Looking Guidance
Looking ahead, Dollarama forecasts same-store sales growth of 3% to 4% for fiscal 2026, amidst a challenging economic environment. Gross margins are expected to face pressure from a weaker Canadian dollar and higher shipping rates, with a projected range of 44.2% to 45.2%. SG&A expenses are anticipated to be between 14.2% and 14.7% of sales. Capital expenditures will range from $185 million to $210 million, driven by new store openings. Despite these challenges, Dollarama remains committed to its NCIB program and maintaining a dividend, with the financial flexibility to support strategic investments.
In conclusion, Dollarama’s earnings call reflects a company poised for growth, with strong same-store sales and strategic expansions. While challenges such as tariffs and higher operating costs present hurdles, the company’s optimistic outlook and strategic initiatives position it well for future success.