Dollarama Q3 2026 Earnings Report

Dollarama EPS Results

• Actual EPS: C$1.17
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Dollarama Revenue Results

• Actual Revenue: $1.91 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Dollarama Announcement Details

• Quarter: Q3 2026
• Date: 12/11/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, December 11, 2025
• Conference Call Time: 10:30AM ET

Dollarama (TSE:DOL) Inc is a Canada-based company principally engaged in operating discount retail stores. The company provides a broad range of everyday consumer products, general merchandise, and seasonal items, with merchandise at low fixed price points. General merchandise and consumer products jointly account for the majority of the company's product offerings. The company's stores are throughout Canada, generally located in convenient locations, such as metropolitan areas, midsize cities, and small towns. All the stores are owned and operated by the company.

Dollarama Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Dollarama reported a strong Q3 with total sales up >22% to over CAD 1.9B and EPS growth of nearly 20%, driven by 6% same-store sales in Canada and robust traffic gains.
• Positive Sentiment: Management raised full-year Canada same-store sales guidance to 4.2–4.7% and increased the Canadian gross margin target to 45.0–45.5%, citing favorable mix and lower logistics costs.
• Neutral Sentiment: Dollar City's LatAm business continues rapid expansion (700 stores reached) and delivered strong earnings contribution, but Mexico is still early-stage and requires ongoing capital (US$18M contributed this quarter).
• Negative Sentiment: The Reject Shop transformation in Australia is a multi-year project that will require heavy investment, and management expects the Australian segment to be neutral to slightly negative for company earnings in the near term, including fiscal 2027.
• Positive Sentiment: Capital allocation remained active: the company repurchased ~2.6M shares for CAD 884.6M, declared a quarterly dividend (CAD 0.1058/share), and lowered FY26 CapEx guidance due to timing of the Western Logistics Hub spend.

Presentation

[Etienne Ricard, Equity Research Analyst at BMO Capital Markets]

Good morning, and welcome to Dollarama's third quarter fiscal 2026 results conference call. On today's call are Neil Rossy, President and CEO, and Patrick Bui, CFO. They will begin with brief remarks followed by Q&A with financial analysts. Before we begin, please note that today's remarks may contain forward-looking statements about Dollarama's current and future plans, expectations, intentions, results, or any other future events or developments. Forward-looking statements are based on information currently available to management and on reasonable estimates and assumptions made by management. Many factors could cause actual results, future events, or developments to differ materially from those expressed or implied. You're cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements represent management's expectations as at December 11th, 2025, except as may be required by law.

[Etienne Ricard, Equity Research Analyst at BMO Capital Markets]

Dollarama has no intention and undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. You are invited to consult the cautionary statement on forward-looking statements in Dollarama's Management's Discussion and Analysis dated December 11th, 2025. All forward-looking statements on today's call are expressly qualified by this cautionary statement. In addition, Dollarama may refer to certain Non-GAAP and other financial measures during the call. Please consult the Non-GAAP and other financial measures section of Dollarama's MD&A dated December 11th for definitions, reconciliations with appropriate GAAP measures, and other information. The quarterly disclosure documents related to this call are available in the investor relations section of dollarama.com and on SEDAR+. I will now turn the call over to Neil Rossy.

[Neil Rossy, President and CEO at Dollarama]

Thank you, Operator, and good morning, everyone. For the third quarter, we delivered a strong top-line performance and double-digit earnings growth, including a nearly 20% increase in EPS. In an economic environment that has remained unpredictable, our business model has continued to prove its enduring relevance and resilience. Starting in Canada, we generated 6% same-store sales growth with sustained demand for consumables and higher seasonal product sales, thanks to the full Halloween shopping period falling within the quarter. We saw strong store traffic trends and contributions from our full product mix, demonstrating once again that Dollarama is a reliable and sought-after destination across product categories. Amid economic uncertainty, the certainty of our low prices and year-round value keeps bringing consumers back. We are always working hard to hold on pricing for our customers and to be a price follower.

[Neil Rossy, President and CEO at Dollarama]

In Q3, we continue to leverage our agility and expertise as buyers to limit price increases across our product offering. Retail increases on domestic brand names were unavoidable this quarter due to higher domestic supplier costs, but they did not impact our relative value. On the real estate front, we opened 19 net new stores in Q3, bringing our total number of stores in Canada to 1,684 locations. With 68 net new store openings in the first nine months of fiscal 2026, we have already opened more stores than we typically do in a year. We are on track to achieve our exceptionally higher target of between 70 to 80 net new stores for the full fiscal year. The development of our future Western Logistics Hub north of Calgary also continues to progress. Construction is underway since the fall, and the project remains on budget and on time.

[Neil Rossy, President and CEO at Dollarama]

Turning now to Latin America, where we continue to demonstrate the portability of our business model. Dollarcity delivered strong financial results for its third quarter and opened another 25 net new locations. This brought the total Dollarcity store count to 683 at the end of September. Since then, we have been busy opening several more stores, including our 700th location in Latin America last month. With five countries of operation and a strong presence in four of those countries, the Dollarcity team deserves recognition for reaching this latest milestone and for their outstanding execution. Dollarcity's 700th store was also our fifth location in Mexico. With just a handful of stores concentrated in the Guadalajara area, it is still early days. However, we are pleased with how our market entry is progressing and look forward to opening many more stores by year-end.

[Neil Rossy, President and CEO at Dollarama]

We continue to see meaningful long-term potential in this new market by applying the discipline playbook that has worked across our four current LatAm countries of operation. In Australia, we have begun laying the groundwork for The Reject Shop's multi-year transformation. On the merchandising front, updating the product offering is a deliberately thorough undertaking, which requires planning on the procurement, logistics, and inbound shipping sides. The process of reviewing all SKUs takes time because of the volume and related complexities, as well as the initial legwork involved on the compliance side. It's also the most important aspect of this transformation in terms of delivering our value proposition to the Australian consumer. We continue to be on plan to have select Dollarama SKUs starting to hit shelves next year, with penetration gradually increasing throughout fiscal 2027 and fiscal 2028.

[Neil Rossy, President and CEO at Dollarama]

Once stores better reflect the Dollarama value proposition, we will start putting our name on the outside of the store. On the store format front, we have begun introducing the Dollarama layout through the store renovations and new store openings. Overhauling an existing store entails overhauling the floor plan, new fixtures, racking, lighting, etc. We have renovated four stores since the beginning of the year. We expect to ramp up in fiscal 2027 as we fine-tune the process and to renovate all existing stores over a four-year period. Going forward, new stores will have the Dollarama fixtures and layout, which enables more SKU density, among other improvements. This will be very impactful once we are further along with the Dollarama merchandise rollout. As we work through these more customer-facing aspects of the transformation, we are also actively working on optimizing our IT infrastructure, store processes, and logistics operations.

[Neil Rossy, President and CEO at Dollarama]

While we are only at the beginning of this journey, I am motivated by the strong alignment across the business and by the local team's drive to get things rolling. To summarize, in Canada, we remain cautiously optimistic as we head into Q4 and mindful of the continued economic uncertainty that has been impacting consumer behavior. In Latin America, we look forward to tapping into more growth and gradually ramping up expansion in Mexico. And in Australia, it's all hands on deck to transform the business ahead of deploying our value proposition over the coming years. Across our complementary growth platforms, from leadership to the shop floor, everyone is focused on execution. With that, I'll pass it over to Patrick.

[Patrick Bui, CFO at Dollarama]

Thank you, Neil, and good morning, everyone. In Q3, total sales increased more than 22% to over CAD 1.9 billion. The year-over-year increase was driven by sales from our Australian segment, as well as an increase in Canadian same-store sales and store network growth. 6% SSS in Canada consisted of a 4.1% increase in transactions and a 1.9% increase in basket size. SSS was boosted by all Halloween sales days falling in the quarter. This is due to the retail calendar shift as we lap a 53-week year, with four of those days falling in the fourth quarter last year. Heading into the second half of the year, our outlook on SSS in Canada was cautious due to consumer fragility and fluctuations in discretionary spending through the first half.

[Patrick Bui, CFO at Dollarama]

However, given our year-to-date performance, including stronger-than-expected Q3 results, we are increasing our full-year SSS guidance from between 3% and 4% to between 4.2% and 4.7%. This upward revision factors in our expectations for Q4, with the negative impact of the calendar shift and assuming a positive response to our holiday offering from a still pressured consumer. Gross margin increased to 45.8% for the Canadian segment in Q3, compared to 44.7% last year, thanks to a more favorable sales mix, with higher sales of seasonal products and lower logistics costs. As a result, we are increasing our fiscal 2026 guidance range for this segment's gross margin from between 44.2% and 45.2% of sales to between 45% and 45.5%. Factoring in Australia's lower margin, consolidated gross margin came in at 44.8% of sales for Q3. SG&A for the Canadian segment came in at 14.2%, compared to 14.3% last year.

[Patrick Bui, CFO at Dollarama]

The increase reflects the positive impact of scaling. Full-year guidance on this metric remains unchanged at between 14.2% and 14.7% of sales. Consolidated SG&A was 15.4% of sales in Q3, an increase primarily driven by additional SG&A from the Australian segment. Turning to Dollarcity, our 60.1% share of their net earnings amounted to $42.4 million in Q3, representing a 56.5% increase over last year. The increase is driven by higher sales, both from SSS and store network growth, and margin expansion, partially offset by higher SG&A related to Mexico. During the quarter, we made a second capital contribution of US$18 million towards Mexico expansion plans. Again, a portion of our share of the latest Dollarcity dividend was used as a funding source. Next year, we expect to maintain the pace of two dividends a year, each followed by a Mexico capital contribution.

[Patrick Bui, CFO at Dollarama]

Based on the strong performance of our Canadian segment, including Dollarcity's equity contribution, EBITDA increased by 20.1% to CAD 612 million. Net earnings increased by 16.6% to CAD 321.7 million, and diluted EPS grew 19.4% to CAD 1.17. The Australian segment had a negative 3% impact on EPS. Regarding Australia, Q3 is usually a soft quarter due to seasonality, while Q4 is historically their strongest, with summer and Christmas occurring at the same time. This should balance out their results through the second half of the year. While immaterial, we expect TRS to have a neutral to slightly negative impact on earnings in fiscal 2026. The Australian business represents a long-term investment, and it will be built over the next four years.

[Patrick Bui, CFO at Dollarama]

In this context, it is important to keep in mind that the Australian segment's results will not reflect the performance of our business model in this market, not until our value proposition is meaningfully deployed, which will only occur once we have made significant progress on key aspects of the transformation. Near-term results will instead reflect the investments required to deploy our value proposition in Australia. As we work on implementing the major changes Neil spoke to, we expect fiscal 2027 to be a heavy investment and transition year for the business. As a result, we do not expect the Australian segment to have a positive impact on our overall profitability in the near term, including fiscal 2027. Turning to capital allocation, we were active on the share buyback in Q3, with a repurchase of over 2.6 million shares for cancellation, for a total cash consideration of CAD 884.6 million.

[Patrick Bui, CFO at Dollarama]

We also announced today that the board approved a quarterly cash dividend of CAD 0.1058 per share. You will also note that we lowered our CapEx guidance for fiscal 2026 to a range of between CAD 240 million and CAD 285 million. This simply reflects a shift in timing of certain expenses related to the Western Logistics Hub into next year. Clearly, the everyday value and convenience Dollarama offers continues to resonate. In a challenging economic environment and at a time of softer consumer confidence, Canadians from coast to coast are consistently seeking out our value proposition. We also continue to see similar trends in Latin America. These results only strengthen our resolve and commitment to our growth plans and to delivering reliable value in what remains an uncertain context. Across the business, we will continue to deploy capital with discipline and always with the aim of creating long-term value for all stakeholders.

[Patrick Bui, CFO at Dollarama]

With that, I'll now turn the call back to the operator for the Q&A.

[Etienne Ricard, Equity Research Analyst at BMO Capital Markets]

Thank you. To ensure we hear from as many participants as possible, we ask that you please limit yourself to one question. To ask a question, press star 11 on your telephone keypad and wait for your name to be announced. To withdraw your question, press star 11 again. Please stand by while we compile the Q&A roster. Our first question is from Irene Nattel of RBC Capital Markets. Your line is now open.

[Irene Nattel, Managing Director at RBC Capital Markets]

Thanks, and good morning, everyone. Listening to the commentary, it sounds as though you're seeing a better consumer shop across the store. I didn't hear as much around sort of weakness in seasonal as we have in certain other quarters. So can you talk about what you're seeing and how we're trending quarter four today? Thank you.

[Patrick Bui, CFO at Dollarama]

Yeah. I mean, in terms of context, I think it's really the same as last quarter, really more of the same. We continue to observe a fragile consumer and what seems to be an uncertain macro backdrop, and in that context, consumers focus on essentials and on value. What that means on our side is consumable assortment continues to perform, but you're also right in pointing out that one change this quarter is that our seasonal assortment improved and was positive this quarter, so as of now, we expect that will hopefully continue into Q4, but like all things, we're not immune of trends shifting either.

[Etienne Ricard, Equity Research Analyst at BMO Capital Markets]

Thank you. Our next question comes from the line of Brian Morrison with TD Cowen. Your line is now open.

[Brian Morrison, Managing Director and Senior Equity Analyst at TD Cowen]

Yes, thanks very much. Patrick, it looks like you have a second capital call ready for Mexico. Store openings are starting to accelerate. I think you said you already have more capital planned to allocate there for next year. Can you maybe just tell us how you're allocating this capital? Is it new stores only? Does it include any warehousing? And how has the initial performance been trending ahead of these expectations with the first few stores realizing it's early days?

[Patrick Bui, CFO at Dollarama]

Yeah. So just a comment on the second part of the question. We agree it's still very early days. Our first store only opened at the end of June. We have nine stores now as of today. And as Neil commented, we're encouraged by the initial customer response. As for the first part, and apologies, I think the line wasn't very clear, but the business is still in a ramp-up phase and requires capital for new store openings and really setting up the business. And as we think about next year, we're still in that ramp-up phase. I mean, the business is not at scale to absorb fixed costs that we're committing in the country. And that would lead to more of the same as this year, meaning losses. We're not expecting the business to be break-even next year and further capital investments.

[Etienne Ricard, Equity Research Analyst at BMO Capital Markets]

Thank you. Our next question comes from the line of Chris Li with Desjardins. Your line is now open.

[Chris Li, Managing Director at Desjardins]

Oh, hi, good morning, everyone. Maybe a question on Dollarcity in LatAm. As you mentioned, it continues to be very strong. I know you've already provided some colors on the drivers, but I was wondering if you can provide just a bit more details on some of those drivers. And then when do you think you'll be in a position to update us on what the long-term store potential target is for LatAm? Thank you.

[Patrick Bui, CFO at Dollarama]

Thank you, Chris. Look, I mean, when we think about the LatAm business, you see the top-line performance, right? When you contrast that to Canada, it's a business that continues to grow very quickly with respect to units. It's opening at a higher pace compared to a smaller base. So you have that increase on the top line. And SSS, just like in Canada, it's the same trends. It's the same consumer trends. And SSS remains healthy. But the thing to keep in mind is, given the size of the business, it still benefits from substantial scaling. So when you look at your fixed costs that are included in your gross margins, your fixed costs in your SG&A, those costs are amortized on bigger and greater sales numbers.

[Patrick Bui, CFO at Dollarama]

So that's how you go from a high-sales business on the top line to a business that is capable of scaling the net income.

[Etienne Ricard, Equity Research Analyst at BMO Capital Markets]

Thank you. Our next question comes from the line of Etienne Ricard with BMO Capital Markets. Your line is now open.

[Etienne Ricard, Equity Research Analyst at BMO Capital Markets]

Thank you, and good morning. So to circle back on Mexico, you've been opening more stores recently. If we look at your prior experience in other Latin American markets, at what store count level do you gain the confidence that your business model is working and that the brand is resonating with consumers? And as a follow-up, when could we expect Dollarcity to expand in other Mexican states? Thank you.

[Patrick Bui, CFO at Dollarama]

Look, I mean, it's not. It's hard to pinpoint an exact number, right? We've opened already nine stores. And as we increase the store count, I mean, you would suspect that the level of confidence will increase in time. And like we commented, I think at this point, what we're seeing today is quite encouraging. And we see the initial reception of the Mexican consumer, and hopefully that will continue in time.

[Operator]

Thank you. Our next question comes from the line of Vishal Shreedhar with National Bank. Your line is now open.

[Vishal Shreedhar, Analyst at National Bank]

Hi. Thanks for taking my question. With respect to traffic, continued strong numbers, I was hoping to get your perspective on the traffic growth that you're posting in the context of the ongoing real estate growth and slowing population growth in Canada. Is it something that you're doing? Is it competitors? Is it the backdrop with consumers? Perspective there would be useful. Thank you.

[Patrick Bui, CFO at Dollarama]

Yeah. You're correct in pointing out that what we hear and understand from a macro perspective, slower population growth is, in theory, a headwind. But if we look at the patterns at our business, I mean, traffic remains healthy. And in the context, as we commented on, of budgets being stretched and people seeking value in essentials, we're clearly hitting the mark. And people seem to appreciate that value and continuing coming to our stores. So I would say, despite this headwind, I think we're doing pretty well in the retail space.

[Operator]

Thank you. Our next question comes from the line of John Zamparo with Scotiabank. Your line is now open.

[John Zamparo, Equity Research Analyst]

Thanks. Good morning. My question's on gross margin. And I think, Neil, you had mentioned higher domestic costs on a procurement basis. I wonder what you're seeing on cost of goods based out of China because we continue to see negative PPI from that country. So I'm hoping you could add some color on cost increases that you're seeing in your general merchandise and seasonal categories.

[Neil Rossy, President and CEO at Dollarama]

So China's been relatively soft for the last, I would say, six months or so and favorable for importers. That's leveled off, we feel. And right now, it's pretty much stable. No decreases, not really many increases. But we do continue to see aggressive, I wouldn't go so far as to say overly aggressive, but certainly domestic producers are being very, very comfortable asking for price increases when we're not seeing the input costs going up on a lot of the products that those price increases are being asked for. So I think domestic corporate North America is definitely pushing on costs. And that's something that, as a retailer, when we don't see a proportionate increase in the input cost, it's very hard to keep up with why they're doing this other than wanting to make more profit.

[Neil Rossy, President and CEO at Dollarama]

So our job is to make sure that our relative value on those domestic products remains ultra-competitive. For the imports, it's much clearer because it's all based on input costs and nothing more than that, not a strategy to make more money per se. And so it's much easier to control and much easier to forecast months out. And so for now, it's fairly stable on the import side.

[Etienne Ricard, Equity Research Analyst at BMO Capital Markets]

Thank you. Our next question comes from the line of Mark Carden with UBS. Your line is now open.

[Mark Carden, Equity Research Analyst at UBS Investment Bank]

Good morning. Thanks so much for taking the question. Another one on the gross margin, just with respect to logistics tailwinds, they still seem to be a positive even with the tougher compares. How should we think about how that could play out over the course of the next few quarters? Are you finding incremental room for improvement on this front? Just what are you seeing there? Thank you.

[Patrick Bui, CFO at Dollarama]

Yeah. And just to clarify what we meant by lower logistics costs, I mean, we're seeing strong productivity gains in our logistics network. We're seeing good stability in the logistics chain, whether shipping, port, rail, truck. And that essentially negates friction costs. So that's what we're seeing. And certainly, higher SSS is also very helpful in scaling gross margins. Now, you're asking about the future. We hope we'll be able to continue in that direction, but especially as we approach or enter, really, or we're in the middle of winter, sometimes there's unforeseen events. And that's just the normal course of our business. And there's friction costs that happen in that context. So I think what we've achieved in terms of gross margin this quarter is a really, really high bar. And we're very pleased with the results.

[Patrick Bui, CFO at Dollarama]

But something to note is, as we think about Q4 and if you look sequentially versus last year, last year, we also benefited from that 53rd week. So that was helpful in scaling gross margins. And that's not something that we will have as a positive in this Q4.

[Operator]

Thank you. Our next question comes from the line of Ed Kelly with Wells Fargo. Your line is now open.

[Ed Kelly, Managing Director at Wells Fargo]

Yeah. Good morning. I wanted to ask you because you talked about pricing. Could you give a little bit of commentary in terms of what's been happening with your average unit price and the benefit you're seeing there? And then on the $4-$5 and higher price point, I'm curious because your traffic has been remarkably strong. Do you think that moving into that higher price point is helping traffic, meaning you're able to add items that maybe you couldn't sell previously? And then it's been a few years since you've launched that price point. I'm kind of curious as to where you are in maximizing that at this point.

[Patrick Bui, CFO at Dollarama]

Thank you. That's a multi-layered question, if I remember all the bits and pieces. Look, I mean, as we commented in the past, moving up price points could be incrementally helpful in certain categories and being deeper in those categories, and we think there's a lot of room still to grow within the CAD 5 price point. And there's no need at the current time and no reasons for us to change that strategy as we speak. Now, to the first part of your question, on the back of strong inflation from suppliers and them pushing costs or attempting to push costs, that certainly puts added pressure on the unit costs, but overall, when you look at our results and you look at the relative value we deliver in the stores, I think we are able to fare fine in that context.

[Operator]

Thank you. Our next question comes from the line of Martin Landry with Stifel. Your line is now open.

[Martin Landry, Consumer and Retail Analyst at Stifel]

Hi. Good morning. I want to touch on your guidance for comparable same-store sales. Year to date, I believe you've grown your comparable sales at the pace of 5.3%. You're guiding for a full year of 4.2%-4.7%. So you do expect a little bit of a deceleration in Q4. You have pointed out and called out that there's a calendar shift, and I was wondering if you can quantify the headwind from the calendar shift that you expect.

[Patrick Bui, CFO at Dollarama]

Yeah. Thanks for the question. And I think it's important to clarify. So we are expecting a material deceleration in SSS in Q4. But if this wasn't evident yet, it has nothing to do with our views on the consumer environment or the macro context that is changing, or we hope that it continues staying the same. The material deceleration is really just mechanical from a calendar perspective. It's really just that. So these 52 over 53 happens once in a while. And the last time it happened, it was in fiscal 2020 over fiscal 2019. And if you have a look at what was discussed back then, we were talking about a deceleration just on the mechanics of the calendar of about 180 basis points.

[Patrick Bui, CFO at Dollarama]

So there's the impact of Halloween, but there's also the impact of replacing those Halloween days with days at the end of January, which are typically low sales days. So there's that double impact. So that 180 that we encountered five years ago or so is something to be expected this year as well.

[Operator]

Thank you. Our next question comes from the line of Luke Hannan with Canaccord Genuity. Your line is now open.

[Luke Hannan, Equity Research Analyst at Canaccord Genuity]

Thanks. And good morning. I wanted to follow up on the Australia build-out. I think it was referenced that you don't expect the segment to have a positive impact to profitability for fiscal 2027. But just a clarification on that. Does that mean also you'd expect it to be, I guess, neutral or maybe slightly negative to EPS in fiscal 2027? Or how should we think about that?

[Patrick Bui, CFO at Dollarama]

Yeah. Thanks for the question. I think it's a little too early to comment on that. I think we are in the middle of our planning work as expected, and we're doing everything very, very diligently, and once we feel more comfortable with the plan, well, we'll be happy to provide more color around that.

[Etienne Ricard, Equity Research Analyst at BMO Capital Markets]

Thank you. Our next question comes from the line of Corey Tarlowe with Jefferies. Your line is now open.

[Corey Tarlowe, Lead Equity Analyst at Jefferies]

Great. Thanks and good morning. I had two questions. The first one is on consumer behavior. So you had transaction growth was up 4%, basket was up about 2%. And I'm just wondering, are you seeing any shifts in purchasing patterns, whether it's trade-down or increased frequency, that cause you to think differently or influence your merchandising strategy? And if so, what are those changes? And then secondarily, just on the gross margin performance and the outlook, can you talk about if there are any changes in the merchandising strategy or mix shifts that are unlocking perhaps the upward revision to the guide despite persistent supply chain pressures? It would just be good to get some color there. Thanks so much.

[Patrick Bui, CFO at Dollarama]

Yeah. Thanks, Corey. I mean, I think the one word you need to keep in mind is consistency, right? And it means consistency in what we're seeing with respect to our merchandising strategy. So if you look over time, it has been the same recipe. And gladly, that is well received on the consumer side. Now, when you look at the pattern of our SSS broken down by traffic and basket, I'd say it's more of the same. And we're pleased with the traffic numbers. But traffic has been fairly robust if you look at the past few quarters. So we just think that it's a continuation of that and a clear indicator of a good receptivity of consumers to our consistent and relative value merchandising strategy.

[Operator]

Thank you. Our next question comes from the line of Zihan Ma with Bernstein Institutional Services LLC. Your line is now open.

[Zihan Ma, Senior Research Analyst at Bernstein Institutional Services LLC]

Hi, Zihan. Thank you for taking my question. Just to follow up on the Australian side of things, I wonder if you can add some color on the early results based on any sales lift, the pace of conversion versus your expectations, and a quick clarification on the gross margin point. I think you were saying that Q4 is going to be higher than Q3. Is it fair for us to use their historical second half of the year, take what they have done in Q3, and derive what Q4 is going to be? Thank you.

[Patrick Bui, CFO at Dollarama]

Yeah. On the second part of your question, I think one might suspect that gross margins will be better in Q4 because, just like in Canada, you're having more seasonal sales. So there is an improvement. But that being said, gross margins from year to year fluctuate depending on the context. So last year is not necessarily a perfect guide, but directionally, it will give you the sense that Q4 could be, because of the seasonality, could be stronger than Q3. In terms of the store renovations, look, I mean, it's very, very early days. There were four conversions. And to clarify why we do these renovations is really having the fixtures and the layout as per Dollarama. And that gives us the opportunity to have greater SKU density in the stores, which should lead to higher sales, even if you continue selling the same merchandise.

[Patrick Bui, CFO at Dollarama]

So just having more density could lead to more sales. So again, early days, but we're hopeful that that strategy will play out in the Australia market as well.

[Operator]

Thank you. As there are no further questions at this time, this will conclude today's call. Thank you all for your participation. You may now disconnect.

Participants

Executives

• Patrick Bui, CFO
• Neil Rossy, President and CEO

Analysts

• Martin Landry, Consumer and Retail Analyst at Stifel
• Luke Hannan, Equity Research Analyst at Canaccord Genuity
• Corey Tarlowe, Lead Equity Analyst at Jefferies
• Etienne Ricard, Equity Research Analyst at BMO Capital Markets
• John Zamparo, Equity Research Analyst
• Vishal Shreedhar, Analyst at National Bank
• Zihan Ma, Senior Research Analyst at Bernstein Institutional Services LLC
• Irene Nattel, Managing Director at RBC Capital Markets
• Brian Morrison, Managing Director and Senior Equity Analyst at TD Cowen
• Mark Carden, Equity Research Analyst at UBS Investment Bank
• Chris Li, Managing Director at Desjardins
• Ed Kelly, Managing Director at Wells Fargo