MONTREAL, Dec. 5, 2013 /CNW Telbec/ - Dollarama Inc. (TSX: DOL)
("Dollarama" or the "Corporation") today reported an increase in sales
and an improvement in net earnings for the third quarter ended November
3, 2013. The quarter was characterized by continued growth in the store
network and solid comparable store sales growth.
Financial and Operating Highlights
(All comparative figures below and in the "Financial Results" section
that follows are for the third quarter ended November 3, 2013 compared
to the third quarter ended October 28, 2012. All financial information
presented in this news release has been prepared in accordance with
generally accepted accounting principles in Canada ("GAAP") as set out
in the Handbook of the Canadian Institute of Chartered Accountants -
Part 1 which incorporates International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board.
Throughout this news release, EBITDA, total debt and net debt, which
are referred to as "non-GAAP measures", are used to provide a better
understanding of the Corporation's financial results. For a full
explanation of the Corporation's use of non-GAAP measures, please refer
to footnote 1 of the "Selected Consolidated Financial Information"
section of this news release.)
Throughout this news release, all references to "Fiscal 2013" are to the
Corporation's fiscal year ended February 3, 2013 and to "Fiscal 2014"
are to the Corporation's fiscal year ending February 2, 2014.
Compared to the third quarter of Fiscal 2013
-
Sales increased by 14.2% to $522.9 million;
-
Comparable store sales grew 4.8%;
-
Gross margin stood at 37.1% of sales, compared to 37.2% of sales;
-
EBITDA(1) grew 19.4% to $99.8 million, or 19.1% of sales;
-
Operating income grew 18.9% to $87.5 million, or 16.7% of sales; and
-
Diluted net earnings per share increased by 27.9%, from $0.68 to $0.87.
In addition, 86 net new stores were opened over the past 12 months,
including 19 net new stores opened during the third quarter of
Fiscal 2014.
"We are very satisfied with our continued growth in comparable store
sales in the third quarter. The consistent growth and strength of our
operating results are a testimony to the success of our merchandising
strategy, the compelling value of our product offering and the
dedication of our employees", stated Larry Rossy, Chairman and Chief Executive Officer of Dollarama.
Financial Results
Sales for the third quarter of Fiscal 2014 increased by 14.2% to
$522.9 million from $458.0 million in the corresponding period of the
prior fiscal year. The increase was driven by the growth in the number
of stores over the past twelve months, from 761 stores on October 28,
2012 to 847 stores on November 3, 2013, and by continued organic sales
growth driven by comparable store sales growth of 4.8% in the third
quarter of Fiscal 2014, over and above comparable store sales growth of
6.6% in the third quarter of Fiscal 2013. Comparable store sales growth
for the third quarter of Fiscal 2014 consisted of a 2.9% increase in
average transaction size and a 1.9% increase in the number of
transactions. In this quarter, 62% of our sales originated from
products priced higher than $1.00 compared to 57% in the corresponding
quarter last year. Debit card penetration also increased, as 41% of
sales were paid with debit cards compared to 38% in the corresponding
period of the previous fiscal year.
The gross margin stood at 37.1% of sales in the third quarter of Fiscal
2014, compared to 37.2% of sales in the third quarter of Fiscal 2013,
mainly due to stable product margins slightly offset by additional
occupancy costs. The acceleration of net new store openings over the
past 12 months to 86 net new stores compared to 71 net new stores
during the prior comparable period had a temporary cost impact of
approximately 0.1 % on gross margin in the third quarter. This cost
impact associated with the acceleration of net new store openings
decreased steadily over the first three quarters of Fiscal 2014 and
this acceleration is not expected to have a significant impact in the
last quarter of Fiscal 2014.
General, administrative and store expenses ("SG&A expenses") for the
third quarter of Fiscal 2014 decreased to 18.1% of sales, compared to
19.0% of sales in the corresponding period of Fiscal 2013. During the
quarter, we continued to realize the benefit of several productivity
initiatives implemented to date. Additionally, in the corresponding
period of Fiscal 2013, the Corporation incurred a $3.1 million charge
representing a payroll-related tax, more specifically a mandatory
contribution to Quebec's Health Services Fund calculated based on the
Corporation's aggregate salary pool, which was increased as a result of
the exercise of a significant number of options by members of senior
management. SG&A expenses in the third quarter of Fiscal 2014 stood at $94.5 million, an
8.5% increase over $87.0 million over the corresponding quarter of
Fiscal 2013.
Net financing costs increased by $0.3 million, from $2.8 million for the
third quarter of Fiscal 2013 to $3.1 million for the third quarter of
Fiscal 2014. This increase is attributable to an increase in borrowings
compared to the corresponding period of Fiscal 2013 which was largely
associated with the Corporation's share buyback initiatives.
For the third quarter of Fiscal 2014, net earnings increased to
$61.7 million, or $0.87 per diluted share, compared to $51.5 million,
or $0.68 per diluted share, for the corresponding period of
Fiscal 2013.
Dividend
On December 5, 2013, the Corporation's Board of Directors announced that
it had approved a quarterly dividend for holders of its common shares
of $0.14 per common share. The Corporation's quarterly dividend will be
paid on February 5, 2014 to shareholders of record at the close of
business on January 10, 2014 and is designated as an "eligible
dividend" for Canadian tax purposes.
Normal Course Issuer Bid
Total common shares repurchased under the Corporation's normal course
issuer bid (or "NCIB") during the third quarter ended November 3, 2013
amounted to 657,871 common shares for a total cash consideration of
$49.6 million. Total common shares repurchased under the NCIB since
June 17, 2013 amounted to 2,219,118 common shares, representing
approximately 3.3% of the public float as at May 31, 2013, for a total
cash consideration of $165.0 million. As at November 3, 2013, all
common shares repurchased under the NCIB had been cancelled. Management
anticipates that the repurchase of shares under the NCIB will be
accretive to shareholder value over time.
About Dollarama
Dollarama is Canada's leading dollar store operator with 847 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
currently sold in individual or multiple units at select fixed price
points up to $3.00.
Forward-Looking Statements
Certain statements in this news 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. Specific forward-looking
statements included in this news release include, but are not limited
to, the potential accretive effect of the NCIB. 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 2013 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 news release
are made as of December 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 news release are expressly qualified by this cautionary statement.
Selected Consolidated Financial Information
|
|
13-Week Periods Ended
|
|
39-Week Periods Ended
|
(dollars and shares in thousands, except per share amounts)
|
|
November 3,
2013
|
|
October 28,
2012
|
|
November 3,
2013
|
|
October 28,
2012
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
Earnings Data
|
|
|
|
|
|
|
|
|
Sales
|
|
522,949
|
|
457,993
|
|
1,482,391
|
|
1,296,939
|
Cost of sales
|
|
328,714
|
|
287,428
|
|
940,196
|
|
819,444
|
Gross profit
|
|
194,235
|
|
170,565
|
|
542,195
|
|
477,495
|
SG&A expenses
|
|
94,459
|
|
87,021
|
|
270,476
|
|
241,429
|
Depreciation and amortization
|
|
12,271
|
|
9,961
|
|
34,790
|
|
28,478
|
Operating income
|
|
87,505
|
|
73,583
|
|
236,929
|
|
207,588
|
Net financing costs
|
|
3,074
|
|
2,794
|
|
7,684
|
|
8,145
|
Earnings before income taxes
|
|
84,431
|
|
70,789
|
|
229,245
|
|
199,443
|
Provision for income taxes
|
|
22,736
|
|
19,308
|
|
62,136
|
|
55,588
|
Net earnings
|
|
61,695
|
|
51,481
|
|
167,109
|
|
143,855
|
|
|
|
|
|
|
|
|
|
Basic net earnings per common share
|
|
$0.87
|
|
$0.70
|
|
$2.31
|
|
$1.95
|
Diluted net earnings per common share
|
|
$0.87
|
|
$0.68
|
|
$2.31
|
|
$1.90
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding during the period:
|
|
|
|
|
|
|
|
|
Basic
|
|
71,048
|
|
73,667
|
|
72,289
|
|
73,763
|
Diluted
|
|
71,209
|
|
75,525
|
|
72,454
|
|
75,699
|
|
|
|
|
|
|
|
|
|
Other Data
|
|
|
|
|
|
|
|
|
Year-over-year sales growth
|
|
14.2%
|
|
14.4%
|
|
14.3%
|
|
14.4%
|
Comparable store sales growth (2)
|
|
4.8%
|
|
6.6%
|
|
5.0%
|
|
7.3%
|
Gross margin (3)
|
|
37.1%
|
|
37.2%
|
|
36.6%
|
|
36.8%
|
SG&A as a % of sales (3)
|
|
18.1%
|
|
19.0%
|
|
18.2%
|
|
18.6%
|
EBITDA (1)
|
|
99,776
|
|
83,544
|
|
271,719
|
|
236,066
|
Operating margin (3)
|
|
16.7%
|
|
16.1%
|
|
16.0%
|
|
16.0%
|
Capital expenditures
|
|
24,604
|
|
20,054
|
|
74,556
|
|
52,483
|
Number of stores (4)
|
|
847
|
|
761
|
|
847
|
|
761
|
Average store size (gross square feet) (4)
|
|
9,915
|
|
9,932
|
|
9,915
|
|
9,932
|
Declared dividends per common share
|
|
$0.14
|
|
$0.11
|
|
$0.42
|
|
$0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
|
|
|
|
|
November 3,
2013
|
|
February 3,
2013
|
|
|
|
|
|
|
$
|
|
$
|
Statement of Financial Position Data
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
98,471
|
|
52,566
|
Merchandise inventories
|
|
|
|
|
|
366,182
|
|
338,385
|
Property and equipment
|
|
|
|
|
|
249,064
|
|
207,697
|
Total assets
|
|
|
|
|
|
1,567,731
|
|
1,453,692
|
Total debt (1, 5)
|
|
|
|
|
|
389,420
|
|
264,420
|
Net debt (1, 6)
|
|
|
|
|
|
290,949
|
|
211,854
|
(1)
|
In this press release EBITDA, total debt and net debt are referred to as
"non-GAAP measures". Non-GAAP measures are not generally accepted
measures under GAAP and do not have a standardized meaning under GAAP.
EBITDA represents operating income plus depreciation and amortization.
Total debt and net debt are defined below. The non-GAAP measures, as
calculated by the Corporation, may not be comparable to those of other
issuers and should be considered as a supplement to, not a substitute
for, or superior to, the comparable measures calculated in accordance
with GAAP.
|
|
|
|
We have included non-GAAP measures to provide investors with
supplemental measures of our operating and financial performance. We
believe that non-GAAP measures are important supplemental metrics of
operating and financial performance because they eliminate items that
have less bearing on our operating and financial performance and thus
highlight trends in our core business that may not otherwise be
apparent when relying solely on GAAP measures. We also believe that
securities analysts, investors and other interested parties frequently
use non-GAAP measures in the evaluation of issuers, many of which
present non-GAAP measures when reporting their results. Our management
also uses non-GAAP measures in order to facilitate operating and
financial performance comparisons from period to period, to prepare
annual budgets, and to assess our ability to meet our future debt
service, capital expenditure and working capital requirements.
|
|
|
13-Week Periods Ended
|
|
39-Week Periods Ended
|
(dollars in thousands)
|
|
November 3,
2013
|
|
October 28,
2012
|
|
November 3,
2013
|
|
October 28,
2012
|
|
|
$
|
|
$
|
|
$
|
|
$
|
A reconciliation of operating income to EBITDA is included below:
|
|
|
|
|
|
|
|
|
Operating income
|
|
87,505
|
|
73,583
|
|
236,929
|
|
207,588
|
Add: Depreciation and amortization
|
|
12,271
|
|
9,961
|
|
34,790
|
|
28,478
|
EBITDA
|
|
99,776
|
|
83,544
|
|
271,719
|
|
236,066
|
|
EBITDA margin (3)
|
|
19.1%
|
|
18.2%
|
|
18.3%
|
|
18.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
(dollars in thousands)
|
|
|
|
|
|
November 3,
2013
|
|
February 3,
2013
|
|
|
|
|
|
|
$
|
|
$
|
A reconciliation of long-term debt to total debt is included below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
221,395
|
|
262,071
|
Debt issue costs
|
|
|
|
|
|
2,025
|
|
2,349
|
Bank indebtedness
|
|
|
|
|
|
166,000
|
|
-
|
Total debt (5)
|
|
|
|
|
|
389,420
|
|
264,420
|
|
|
|
|
|
|
|
|
|
A reconciliation of total debt to net debt is included below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
|
|
|
389,420
|
|
264,420
|
Cash and cash equivalents
|
|
|
|
|
|
(98,471)
|
|
(52,566)
|
Net debt (6)
|
|
|
|
|
|
290,949
|
|
211,854
|
(2)
|
Comparable store sales represents sales of stores, including relocated
and expanded stores, open for at least 13 complete fiscal months
relative to the same period in the prior year.
|
(3)
|
Gross margin represents gross profit divided by sales. SG&A as a % of
sales represents SG&A Expenses divided by sales. Operating margin
represents operating income divided by sales. EBITDA margin represents
EBITDA divided by sales.
|
(4)
|
At the end of the period.
|
(5)
|
Total debt, a non-GAAP measure, is defined as the sum of long-term debt,
debt issue costs and other bank indebtedness.
|
(6)
|
Net debt, a non-GAAP measure, is defined as total debt minus cash and
cash equivalents.
|
SOURCE Dollarama Inc.