MONTREAL, Feb. 5, 2013 /CNW Telbec/ - Dollarama Inc. ("Dollarama" or the
"Corporation") (TSX: DOL) announced today that it has, through a
wholly-owned subsidiary, entered into an agreement to share its
business expertise and provide sourcing services (the "Agreement") to
Dollar City, a Central American dollar store chain looking to expand
its activities in Central America, Colombia, Peru and Ecuador
(the "Region"). Dollar City currently operates 15 locations in the
Region.
"Dollarama is as much an importer as it is a retailer. Our business
isn't just based on growing our network of stores; it's also based on
the continued development of our low-cost direct sourcing platform,"
said Larry Rossy, Chairman and CEO of Dollarama.
As per the terms of the Agreement, Dollarama will share its business and
operational expertise with Dollar City as well as leverage its direct
sourcing and importing expertise to provide their growing network of
stores with a compelling product offering. Dollarama will not be taking
on any operational responsibilities with respect to Dollar City or
making any capital commitments. The Agreement has a term of eight years
and contains key financial performance indicators at specified
milestones throughout the term. It also includes an option to acquire a
majority interest in Dollar City as of the beginning of the seventh
year of the term.
"Dollarama's unique dollar store concept and compelling product offering
continues to be very successful with Canadian consumers. Our objective
is to test the potential of the Latin American market in a way that
minimizes risk, capital and time investment and we believe that we have
found the right strategic approach and the right partners to achieve
this," added Mr. Rossy.
While Dollarama does not expect the Agreement to have a material
operational or financial impact on the Corporation in the medium term,
it believes that the Latin American market holds long-term potential.
Latin America: An Attractive Retail Environment for the Long Term
Latin America is the world's second-largest emerging market, with a
gross domestic product (GDP) of US$5.6 trillion, representing
approximately 9 percent of global GDP, and more dynamic growth rates
compared to developed regions such as the U.S. and Canada. The spending
habits of Latin America's young and increasingly urban population of
over 589 million people are similar to those of North Americans, with a
high level of penetration of U.S. imports and North American brands.
This dynamic is also observed in Central America and Andean Pact
countries where Dollar City operates which, coupled with its smaller
scale, makes the Region a strategic entry point into Latin America.
The retail landscape in many regions of Latin America, including Central
America and Andean Pact countries, is increasingly modern, with a
growing presence of global retailers with global brands. Despite the
presence of many global retailers and a retail landscape similar to
North America's, the dollar store market is underdeveloped and
underserved, providing for significant growth potential.
"As we continue to explore opportunities to extend the reach of our
concept, Latin America stands out as an increasingly attractive market.
This collaboration with Dollar City will provide us with a timely
window and a strategic entry point to participate in the long-term
potential of this dynamic emerging market. Furthermore, we believe that
our product offering can be easily adapted to appeal to local tastes as
well as offer consumers tremendous value," added Mr. Rossy.
Focus Remains on Canadian Growth Strategy
Dollarama remains focused on the execution of its Canadian growth
strategy, driven by the densification of underpenetrated markets. The
Canadian market continues to have significant growth potential which
Dollarama plans to capture with its usual disciplined approach to site
selection and product sourcing as well as a focus on execution.
"We are committed to unlocking the significant untapped value that is
available in the Canadian retail market and expanding our footprint,
with 80 new locations set to open in fiscal 2014. While we look forward
to this new endeavour in Latin America, we remain focused on
strengthening our leading market position here in Canada," concluded
Mr. Rossy.
Conference Call Details
Dollarama's Chief Executive Officer, Mr. Larry Rossy, and Chief
Operating Officer, Mr. Stéphane Gonthier, will hold a conference call
today, at 2:00 p.m. EST to discuss this business venture. They will be
joined on the call by Mr. Michael Ross, Chief Financial Officer and
Secretary, and Mr. Neil Rossy, Chief Merchandising Officer. In
addition to the Corporation presentation on the call, there will be a
question and answer session at which investors and financial analysts
are invited to ask questions. Media may participate in the call on a
listen-only basis.
To participate on, or listen to the call, please dial (514) 392-1478 or
(866) 223-7781 and indicate that you would like to participate in the
Dollarama conference call.
This conference call will be recorded and available for replay beginning
two hours after the end of the call and will be available through
March 5, 2013. To access the replay, please dial (514) 861-2272 or
(800) 408-3053, then the access number 2273658#.
About Dollar City
Dollar City is a Central America-based dollar store chain. It is
operated by a well-established and reputable group of investors with extensive management and business experience in Latin
America. Dollar City currently owns and operates 15 stores in El
Salvador and Guatemala and is looking to expand its activities in the
other countries of Central America, Colombia, Peru and Ecuador.
About Dollarama
Dollarama is Canada's leading dollar store operator, with 761 locations
across the country. Our stores provide customers with compelling value
in convenient locations, including metropolitan areas, mid-sized cities
and small towns. Dollarama aims to provide customers with a consistent
shopping experience, offering a broad assortment of everyday consumer
products, general merchandise and seasonal items. Products are sold in
individual or multiple units at select fixed price-points up to $3.00.
Forward-Looking Statements
Certain statements in this press release about our current and future
plans, expectations and intentions, results, levels of activity,
performance, goals or achievements or any other future events or
developments constitute forward-looking statements. The words "may",
"will", "would", "should", "could", "expects", "plans", "intends",
"trends", "indications", "anticipates", "believes", "estimates",
"predicts", "likely" or "potential" or the negative or other variations
of these words or other comparable words or phrases, are intended to
identify forward-looking statements. Forward-looking statements are
based on information currently available to us and on estimates and
assumptions made by us in light of our experience and perception of
historical trends, current conditions and expected future developments,
as well as other factors that we believe are appropriate and reasonable
in the circumstances, but there can be no assurance that such estimates
and assumptions will prove to be correct. Many factors could cause our
actual results, level of activity, performance or achievements or
future events or developments to differ materially from those expressed
or implied by the forward-looking statements, including, without
limitation, the following factors, which are discussed in greater
detail in the "Risks and Uncertainties" section of the Corporation's
management's discussion and analysis (MD&A) for Fiscal 2012 and in its
continuous disclosure filings (available on SEDAR at www.sedar.com): future increases in operating and merchandise costs, inability to
sustain assortment and replenishment of our merchandise, increase in
the cost or a disruption in the flow of imported goods, disruption of
distribution infrastructure, inventory shrinkage, inability to renew
store, warehouse, distribution center and head office leases on
favourable terms, inability to increase our warehouse and distribution
center capacity in a timely manner, seasonality, market acceptance of
our private brands, failure to protect trademarks and other proprietary
rights, foreign exchange rate fluctuations, potential losses associated
with using derivative financial instruments, level of indebtedness and
inability to generate sufficient cash to service our debt, interest
rate risk associated with variable rate indebtedness, competition in
the retail industry, current economic conditions, failure to attract
and retain qualified employees, departure of senior executives,
disruption in information technology systems, unsuccessful execution of
our growth strategy, holding company structure, adverse weather,
natural disasters and geo-political events, unexpected costs associated
with our current insurance program, litigation, product liability
claims and product recalls, and environmental and regulatory
compliance.
These factors are not intended to represent a complete list of the
factors that could affect us; however, they should be considered
carefully. The purpose of the forward-looking statements is to provide
the reader with a description of management's expectations regarding
the Corporation's financial performance and may not be appropriate for
other purposes; readers should not place undue reliance on
forward-looking statements made herein. Furthermore, unless otherwise
stated, the forward-looking statements contained in this press release
are made as of February 5, 2013, and we have no intention and undertake
no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law. The forward-looking statements contained in
this press release are expressly qualified by this cautionary
statement.
SOURCE: DOLLARAMA INC.
