This analyst has not been the biggest fan (hence his Neutral rating and $100 target prior to this) but that should certainly change following these results. GLTA
FQ4 First Look: Strong SSS Lead The Way; F25 Outlook Solid
Dollarama reported excellent Q4 results led by same-store sales (SSS)
growth of 8.7% and +11.2% growth in customer traffic. EPS of $1.15 is up
27% Y/Y and ahead of our estimate of $1.05 and consensus of $1.04.
Disinflation, sales mix and consumer caution weighed on basket size (down
2.2%) though this was easily offset by the excellent traffic growth. Margin
results were both healthy and supported by the leverage from strong SSS
growth. GM% benefitted from lower freight and logistics costs and was 20
bps ahead of our forecast, while SG&A was 90 bps below our estimate and
up only 13% from last year (vs. 18% the last two quarters).
Dollarcity also posted excellent results and contributed $32.8MM to EBITDA,
ahead of our $29.1MM estimate and up 66% from last year. It opened 52
stores in Q4 and 92 for the year, well ahead of the 60-70 range provided by
management. Dollarcity also declared a dividend for the first time and DOL
will receive US$40.1MM (half in Q4, half in F25).
Management also introduced its F25 outlook and ranges, which are generally
in line with expectations. Expected SSS growth of 3.5%-4.5% compares to
consensus of 3.7%, while GM% is forecast at 44%-45% (consensus 45%)
and SG&A at 14.5%-15% (consensus 15%). Management maintained its
typical guide of 60-70 new stores, with capex and in the range of $175MM-
$200MM.
Management will host a webcast at 10:30 a.m. ET; access using this link.
The table in Exhibit 1 summarizes FQ4 results, our estimates, and
consensus.