DOLLARAMA REPORTS FISCAL 2026 SECOND QUARTER RESULTS

Executive Summary

• Dollarama Inc. reported fiscal 2026 second-quarter results, highlighting a 10.3% increase in total sales to $1,723.8 million and a 12.4% rise in net earnings to $321.5 million.
• The quarter marked the completion of the acquisition of Australia's largest discount retailer, The Reject Shop Limited (TRS), which contributed $25.7 million in sales during the post-acquisition period (July 22–August 3, 2025).
• The company announced a quarterly cash dividend of $0.1058 per common share and reported the repurchase of 932,046 common shares for $174.8 million under its Normal Course Issuer Bid.

Key Details

• Financial Performance (Q2 Fiscal 2026 vs. Q2 Fiscal 2025):
  • Sales: Increased 10.3% to $1,723.8 million (from $1,563.4 million).
  • Net Earnings: Increased 12.4% to $321.5 million (from $285.9 million).
  • Diluted EPS: Increased 13.7% to $1.16 (from $1.02).
  • EBITDA: Increased 12.2% to $588.5 million, with an EBITDA margin of 34.1% (vs. 33.5%).
  • Operating Income: Increased 14.3% to $483.5 million, with an operating margin of 28.0% (vs. 27.0%).
  • Gross Margin: 45.5% of sales (vs. 45.2%).
  • SG&A: Increased 13.3% to $241.2 million, representing 14.0% of sales (vs. 13.6%).
• TRS Acquisition Details:
  • Completed on July 21, 2025, via wholly owned subsidiary Dollarama International Inc.
  • Total consideration: A$233.6 million ($208.8 million).
  • Price per share: A$6.68 gross, resulting in a net cash consideration of A$5.91 per share after deducting a fully franked dividend of A$0.77.
  • TRS contributed 395 stores to the network.
  • Australian segment sales for the post-acquisition period (July 22–Aug 3, 2025) were $25.7 million.
  • Australian segment EBITDA contribution was $3.3 million.
  • Australian segment net loss was $261,000 for the period.
• Dollarcity (Latin America) Updates:
  • Dollarama’s share of net earnings from equity-accounted investments (CARS and ICM) was $38.3 million (vs. $22.7 million prior year).
  • Dollarcity opened 14 net new stores in Q2, bringing the total to 658 stores across Colombia, Guatemala, El Salvador, Peru, and Mexico.
  • Dollarcity sales grew 16.4%, driven by comparable store sales growth and store count expansion.
  • CARS declared a cash dividend of US$62.5 million; Dollarama’s share is US$37.6 million ($51.8 million CAD), expected in Q3.
  • Dollarama made an initial capital contribution of US$18.0 million ($24.5 million CAD) to ICM for expansion in Mexico.
• Share Repurchases:
  • 932,046 common shares repurchased for cancellation.
  • Total cash consideration: $174.8 million.
  • Weighted average price: $187.55 per share.
• Dividends:
  • Board approved a quarterly cash dividend of $0.1058 per common share.
  • Payable on November 7, 2025, to shareholders of record on October 10, 2025.
• Fiscal 2026 Outlook (Canadian Segment Only):
  • Net New Store Openings: 70 to 80.
  • Comparable Store Sales: 3.0% to 4.0%.
  • Gross Margin: 44.2% to 45.2%.
  • SG&A: 14.2% to 14.7%.
  • Capital Expenditures: $285.0 million to $330.0 million.
  • Note: Guidance does not include the Australian segment due to ongoing evaluation of TRS operations.
• Balance Sheet Highlights (as of Aug 3, 2025):
  • Cash and Cash Equivalents: $687.2 million.
  • Total Debt: $2,879.8 million.
  • Net Debt: $2,192.6 million.
  • Shareholders' Equity: $1,456.3 million.
  • Adjusted Net Debt to EBITDA Ratio: 2.05x.

Notable Quotes

• "The second quarter of fiscal 2026 marked a significant milestone in our international expansion, with entries into two new markets. We completed our acquisition of Australia's largest discount retailer, and we celebrated the opening of Dollarcity's first store in Mexico," said Neil Rossy, President and CEO of Dollarama.
• "Our complementary international platforms strengthen and diversify our long-term growth strategy, with our successful Canadian business serving as the foundation that fuels our broader ambitions. Strong Comparable store sales growth in Canada, both in the second quarter and year to date, highlights the strength of our business model, the relevance of our value proposition for Canadian consumers and the team's impeccable execution," concluded Mr. Rossy.