The popularity of the Dollarama discount chain among inflation-challenged budget consumers continues to delight its executives and shareholders.
“We have just ended a year on a particularly positive note, with an exceptional business performance in the fourth quarter. These strong results reflect the continued positive consumer response to our [in-store] value proposition, which is strengthening in the context of high inflation,” said Neil Rossy, President and CEO of Dollarama, during the the discussion with financial analysts on Wednesday, after the announcement of strong growth in results at the end of the 2022-2023 financial year.
Essentially, in its fourth quarter ending Jan. 29, following the important holiday season for retailers, Dollarama posted sales up 20% to 1.47 billion and nearly 16% more specific to comparable store sales (open for more than a year).
Strong sales growth drove quarterly operating profit up 20% to $381.4 million and net earnings per share (diluted) up 23% after the impact of large share buybacks in Scholarship by Dollarama.
At the end of the year, Dollarama crossed the $5 billion threshold in total sales, up 16.7% year-on-year, and 12% in same-store sales.
Full-year operating profit rose 21% to $1.19 billion, and net earnings per share (diluted) jumped 26.6% after the impact of share buybacks.
Dollarama’s Board of Directors decided to reward its shareholders by granting them a 28% increase in the amount of the quarterly dividend. It will thus increase from 5.5 cents to 7 cents per share as of May. Particular fact: this strong increase in dividend occurs in parallel with share buybacks for a total of 689 million that have been carried out by Dollarama for a year.
“We don’t have a formal dividend policy, but when we have strong earnings per share growth, we want to keep a level of payout [to shareholders] that makes sense to maintain a balanced capital allocation,” answered the President of Dollarama to an analyst’s question on the increase in the dividend.
Dollarama remains on course for its annual objective of around 60 new stores in its network, which is already present across Canada.
To support the sustained growth of its business activities, Dollarama is investing nearly $90 million in the expansion of its main distribution center in Montreal.
At this rate of expansion, combined with the impact of inflation and the slowing economy on consumer spending, Dollarama management nevertheless anticipates a decline in same-store sales growth: 12% l last year around 5% to 6% this year.
Dollarama expects a slight improvement in its core profitability, with a gross profit margin expected to be around 44% of sales, compared to the level of 43.5% achieved last year.
“The exceptionally strong comparable store sales growth of 15.9% last quarter at Dollarama reflects its strong consumer value positioning, which is particularly sought after in the current high inflation environment. Meanwhile, Dollarama’s overall financial results reinforce management’s focus on productivity and efficiency gains. »
“Dollarama’s year-end results and expectations for the new year reflect continued encouraging trends in growth and profit margin. As the economy navigates an inflationary period, and the possibility of a recession, I believe Dollarama is well positioned to benefit from the trade-down environment among consumers. »
Durant son 4e trimestre:
During its full fiscal year:
Number of stores: 1486 in Canada (65), 440 at Dollarcity in Latin America (90)
