Dollarama Q2 Earnings Call Highlights

Key Points

• Strong second-quarter results: Sales rose 17.6% year over year to more than C$2 billion, while net earnings increased to C$349.3 million and diluted EPS rose 11.2% to C$1.29.
• Canadian momentum lifted guidance: Same-store sales grew 5.4%, prompting Dollarama to raise its fiscal 2027 Canadian same-store sales outlook to 4%–4.5% and its store-opening target to 65–75 net new locations.
• International expansion continues: Dollarcity reached 760 stores across Central and South America, Mexico expansion accelerated despite expected losses, and Dollarama advanced its Australian renovations and merchandising transformation.

Dollarama TSE: DOL reported higher second-quarter fiscal 2027 sales and earnings as Canadian same-store sales growth accelerated and the company expanded its store networks in Canada, Latin America, Mexico and Australia.

Consolidated sales rose 17.6% year over year to more than C$2 billion in the quarter, while EBITDA increased 11% to C$653 million, representing an EBITDA margin of 32.2%, Chief Financial Officer Patrick Bui said. Net earnings totaled C$349.3 million and diluted earnings per share increased 11.2% to C$1.29, compared with C$1.16 a year earlier.

Bui noted that the quarter included three full months of Australian results, versus 13 days in the comparable prior-year period.

Canadian sales momentum prompts higher guidance

In Canada, same-store sales increased 5.4%, following 4.9% growth in the prior-year quarter. The increase was supported by higher customer traffic and basket growth, according to President and CEO Neil Rossy. Traffic rose 3.7% during the quarter, Bui said, compared with 3.5% in the first quarter.

The company raised its fiscal 2027 Canadian same-store sales outlook to growth of 4% to 4.5%, from a prior range of 3% to 4%. Bui said the revised outlook reflects strong first-half performance but remains prudent given uncertainty around consumer sentiment, trade developments and higher oil prices.

Rossy said customers continued to seek value amid pressure on household budgets. Demand for consumables and general merchandise remained strong, while seasonal demand was stable year over year. During the analyst question-and-answer session, Rossy said toys were an outlier, performing “much better” than historically, while other categories remained within trends seen in recent quarters.

Dollarama opened 15 net new Canadian stores in the second quarter, bringing its year-to-date total to 43 and its Canadian store base to 1,734 locations. The company increased its fiscal 2027 store-opening target to 65 to 75 net new Canadian stores, from 60 to 70 previously.

Rossy said the increased target reflected opportunities that could be executed within the current fiscal year rather than a permanent change to the company’s typical annual opening range. Construction of Dollarama’s future Western Canada logistics hub also remained on schedule, with the facility expected to be fully operational by the end of calendar 2027.

Margins held steady despite expected cost pressures

Canadian gross margin was 45.7% of sales, compared with 45.6% a year earlier. Bui attributed the modest improvement primarily to scaling, adding that the company managed supply-chain pressures during the quarter.

However, he said higher oil prices are expected to have a more pronounced impact beginning in the third quarter because of the lag before costs flow through to the company’s profit and loss statement. Dollarama maintained its full-year Canadian gross-margin forecast of 45.0% to 45.5%, assuming elevated oil prices persist through the second half.

Canadian selling, general and administrative expense was 13.8% of sales, in line with the prior year. Dollarama maintained its full-year SG&A outlook of 14.1% to 14.6% of sales. Bui said additional scale could provide leverage, though the company faces higher store labor, operating and recycling-program costs.

Rossy said the company’s direct tariff exposure stems from Canadian counter-tariffs on certain products sourced from the United States. He described the financial impact as manageable, while noting that geopolitical conflicts and supply-chain conditions continue to create cost pressures. The company plans to use sourcing, merchandising and operational measures to offset costs, with pricing changes viewed as a last resort, Bui said.

Rossy also said Dollarama does not currently see a need to introduce a price point above C$5. The company would consider a C$6 price point only if cost inflation made the existing maximum price point unsustainable.

Dollarcity expands while Mexico investment continues

Dollarcity opened 19 net new stores across its four Central and South American markets during its second quarter, reaching 760 stores. Dollarama’s share of Dollarcity net earnings rose 30.3% to C$49.9 million.

The result included a 39.7% increase in Dollarama’s 60% share of earnings from Dollarcity’s established Central and South American operations, partly offset by a C$5.7 million loss from its 80% share of Mexico ramp-up losses. Bui said the Mexico losses remained in line with expectations.

In Mexico, Dollarcity opened 10 stores during the quarter, bringing the country total to 21. Bui said customer reception in Guadalajara has been encouraging and supported an accelerated store rollout. He added that Dollarcity’s experience entering prior markets has provided a roadmap for the Mexican expansion.

An earthquake in Colombia after quarter-end temporarily affected a limited number of Dollarcity stores. Rossy said operations have largely returned to normal and the financial impact is expected to be minimal.

Australia transformation advances

Dollarama renovated 25 Australian stores during the quarter, following 13 renovations in the first quarter, and opened four net new locations. It now has 60 stores using Dollarama layouts and fixtures, out of 414 Australian locations nationally.

The company remains on track to renovate 60 to 80 stores and open 15 to 25 net new Australian stores during fiscal 2027. Dollarama-sourced imported products began arriving on shelves during the quarter, with the company aiming to transition about half of its import products by fiscal year-end.

Bui said transformation and integration costs in Australia will be weighted more heavily toward the second half as the pace of product conversion accelerates. The transition to lower-priced merchandise is also expected to pressure sales during fiscal 2027, particularly in the second half, as the company resets its merchandising mix and price-point structure.

During the quarter, Dollarama repurchased more than 1.5 million common shares for cancellation at a total cost of C$300.4 million. The board also approved a quarterly cash dividend of C$0.12 per share.

About Dollarama (TSE:DOL)

Dollarama 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.

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