Canadian retail chain Dollarama has reported a 5.7% increase in sales for the third quarter (Q3) of the fiscal year 2025 (FY25), reaching C$1.56bn ($1.108bn), up from the previous year's C$1.48bn.
The growth is attributed to an expansion in store count in the last year, and a rise in comparable store sales.
The retailer saw its operating income grow by 5.4% to C$407.49m - an operating margin of 26.1%.
Net earnings for the quarter ended 27 October 2024 also experienced a boost, increasing by 5.6% to C$275.80m, with diluted net earnings per share up by 6.5% at C$0.98.
The retailer’s comparable store sales were up 3.3% in Q3 FY25, spurred by consistent demand for consumable products although somewhat offset by a dip in seasonal item sales.
Gross margin slightly declined to 44.7% due to stronger sales of lower-margin consumables and increased logistics costs.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the quarter stood at C$509.7m, making an EBITDA margin of 32.6% - a slight improvement from the previous year's figure of 32.4%.
Selling, general and administrative expenses increased by 4.5% to C$223.5m but represented a smaller percentage of sales due to scaling benefits.
Dollarama president and CEO Neil Rossy stated: "We are pleased with our financial results in the third quarter of fiscal 2025, with solid same-store sales growth in the context of continued normalisation and cautious consumer spending. Our performance demonstrates the enduring relevance of our business model for consumers from coast to coast.”
The company has signed an agreement to acquire land in Calgary for C$46.7m to build a warehouse and second distribution centre to service Western Canada by the end of the calendar year 2027.
The two-node logistics model aims to optimise logistics operations and support growth while achieving cost savings.
For the fiscal year 2025, Dollarama anticipates comparable store sales between 3.5% and 4.5%, with gross margins between 44% and 45%.
The company aims to expand its Canadian store network to 2,200 locations by 2034, with an average new store capital payback period of around two years. This represents an increase from the previous target of 2,000 stores by 2031.
The new long-term store target was determined based on ongoing positive customer reception to Dollarama's value offering, the continued relevance of its business model, its rates of store penetration per capita, the performance of both existing and new stores and its current real estate pipeline.
