- 11.1% increase in comparable store sales(1)
- 24.0% growth in EBITDA(1) to
$478.8 million , or 32.4% of sales - Diluted net earnings per common share up 31.4% to
$0.92 - Fiscal 2024 guidance for comparable store sales growth increased to between 11.0% to 12.0%
Fiscal 2024 Third Quarter Highlights Compared to Fiscal 2023 Third Quarter Results
- Sales increased by 14.6% to
$1,477.7 million - Comparable store sales grew 11.1%, over and above 10.8% growth the previous year
- EBITDA increased by 24.0% to
$478.8 million , or 32.4% of sales, compared to 29.9% of sales - Operating income increased by 27.8% to
$386.7 million , or 26.2% of sales, compared to 23.5% of sales - Diluted net earnings per common share increased by 31.4% to
$0.92 , from$0.70 - 16 net new stores opened, compared to 18 net new stores
- 1,740,514 common shares repurchased for cancellation for a total consideration of
$166.0 million
"Sustained consumer demand for our broad range of affordable everyday products and strong execution in the third quarter of Fiscal 2024 drove double-digit same store sales growth for a sixth consecutive quarter as well as over 31% earnings per share growth. Our financial and operational performance year-to-date reflects the strength and relevance of our value proposition and business model in a challenging macro-economic context," said Neil Rossy, President and CEO.
Explanatory Notes |
All comparative figures that follow are for the third quarter ended |
__________________________ |
(1) We refer the reader to the notes in the section entitled "Non-GAAP and Other Financial Measures" of this press release for the definition of these items and, where applicable, their reconciliation with the most directly comparable GAAP measure. |
Fiscal 2024 Third Quarter Financial Results
Sales for the third quarter of Fiscal 2024 increased by 14.6% to
Comparable store sales for the third quarter of Fiscal 2024 increased by 11.1%, consisting of a 10.4% increase in the number of transactions and a 0.6% increase in average transaction size, over and above comparable store sales growth of 10.8% in the corresponding period of the prior fiscal year. The increase in comparable store sales is primarily attributable to higher sales across all product categories, including continued higher than historical demand for consumables.
EBITDA totalled
Gross margin(1) was 45.4% of sales in the third quarter of Fiscal 2024, compared to 43.3% of sales in the third quarter of Fiscal 2023. Gross margin as a percentage of sales was higher primarily as a result of lower inbound shipping costs and lower logistics costs.
General, administrative and store operating expenses ("SG&A") for the third quarter of Fiscal 2024 increased by 17.6% to
The Corporation's 50.1% share of Dollarcity's net earnings for the period from
Net financing costs increased by
Net earnings were
_______________________________ |
(1) We refer the reader to the notes in the section entitled "Non-GAAP and Other Financial Measures" of this press release for the definition of these items and, where applicable, their reconciliation with the most directly comparable GAAP measure. |
Dollarcity Store Growth
During its third quarter ended
Normal Course Issuer Bid ("NCIB")
During the third quarter of Fiscal 2024, 1,740,514 common shares were repurchased for cancellation under the Corporation's NCIB for a total cash consideration of
Dividend
On
Outlook(2)
Based on our performance fiscal year-to-date and assuming continued positive customer response to our product offering, value proposition and in-store merchandising in the fourth quarter of Fiscal 2024, the Corporation has increased its full-year comparable store sales guidance to a range of 11.0% to 12.0%. All other guidance ranges and underlying assumptions remain unchanged.
(as a percentage of sales except net new store | Fiscal 2024 | ||
Guidance as provided on | Revised Guidance as at | ||
Net new store openings | 60 to 70 | No change | |
Comparable store sales | 10.0% to 11.0% | 11.0% to 12.0% | |
Gross margin | 43.5% to 44.5% | No change | |
SG&A | 14.7% to 15.2% | No change | |
Capital expenditures | No change |
(i) | Excludes the cost of the previously announced property acquisition, which closed on |
These guidance ranges are based on several assumptions, including the following:
- The number of signed offers to lease and the store pipeline for the next three months and the absence of delays outside of our control on construction activities
- No material increases in occupancy costs in the short- to medium-term
- Continued positive customer response to
Dollarama's product offering, value proposition and in-store merchandising - Approximately three months of visibility on open orders and product margins
- The active management of product margins, including through pricing strategies and refreshing some of the product offering
- The continued stabilization of our supply chain and logistics environment
- The inclusion of the Corporation's share of net earnings of its equity-accounted investment
- The entering into of foreign exchange forward contracts to hedge the majority of forecasted purchases of merchandise in
U.S. dollars against fluctuations of the Canadian dollar against theU.S. dollar - The continued execution of in-store productivity initiatives and the realization of cost savings and benefits aimed at improving operating expense
- The absence of a significant shift in labour, economic and geopolitical conditions or material changes in the retail competitive environment
- No significant changes in the capital budget for Fiscal 2024 for new store openings, maintenance capital expenditures, and transformational capital expenditures, the latter being mainly related to information technology projects and which budget excludes the purchase price for the previously announced property acquisition which closed on
August 16, 2023 - The successful execution of our business strategy
- The absence of pandemic-related restrictions impacting consumer shopping patterns or incremental direct costs related to health and safety measures
- The absence of unusually adverse weather, especially in peak seasons around major holidays and celebrations
__________________________________ |
(2) To be read in conjunction with the "Forward-Looking Statements" section of this press release. |
The Corporation has generated six consecutive quarters of double-digit comparable store sales and expects that comparable store sales growth will eventually normalize.
Many factors could cause actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the foregoing forward-looking statements, including the Fiscal 2024 guidance and the underlying assumptions. These statements, including the various underlying assumptions, are forward-looking and should be read in conjunction with the cautionary statement on forward-looking statements.
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 management and on estimates and assumptions made by management regarding, among other things, general economic and geopolitical conditions and the competitive environment within the retail industry in
These factors are not intended to represent a complete list of the factors that could affect the Corporation or Dollarcity; 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 and Dollarcity'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 at
Conference Call
About
Selected Consolidated Financial Information
13-Week Periods Ended | 39-Week Periods Ended | ||||||||
(dollars and shares in thousands, except per | 2023 | 2022 | 2023 | 2022 | |||||
$ | $ | $ | $ | ||||||
Earnings Data | |||||||||
Sales | 1,477,692 | 1,289,574 | 4,228,177 | 3,579,518 | |||||
Cost of sales | 807,462 | 730,812 | 2,373,350 | 2,038,832 | |||||
Gross profit | 670,230 | 558,762 | 1,854,827 | 1,540,686 | |||||
SG&A | 213,766 | 181,754 | 607,724 | 510,703 | |||||
Depreciation and amortization | 87,797 | 83,563 | 258,545 | 245,514 | |||||
Share of net earnings of equity-accounted | (17,989) | (9,210) | (42,485) | (25,627) | |||||
Operating income | 386,656 | 302,655 | 1,031,043 | 810,096 | |||||
Net financing costs | 36,705 | 30,357 | 109,458 | 81,380 | |||||
Earnings before income taxes | 349,951 | 272,298 | 921,585 | 728,716 | |||||
Income taxes | 88,896 | 70,704 | 234,895 | 188,141 | |||||
Net earnings | 261,055 | 201,594 | 686,690 | 540,575 | |||||
Basic net earnings per common share | |||||||||
Diluted net earnings per common share | |||||||||
Weighted average number of common shares | |||||||||
Basic | 282,587 | 287,837 | 283,921 | 290,347 | |||||
Diluted | 283,595 | 289,636 | 285,059 | 292,105 | |||||
Other Data | |||||||||
Year-over-year sales growth | 14.6 % | 14.9 % | 18.1 % | 15.3 % | |||||
Comparable store sales growth (1) | 11.1 % | 10.8 % | 14.4 % | 10.5 % | |||||
Gross margin (1) | 45.4 % | 43.3 % | 43.9 % | 43.0 % | |||||
SG&A as a % of sales (1) | 14.5 % | 14.1 % | 14.4 % | 14.3 % | |||||
EBITDA (1) | 478,803 | 386,218 | 1,302,265 | 1,055,610 | |||||
Operating margin (1) | 26.2 % | 23.5 % | 24.4 % | 22.6 % | |||||
Capital expenditures (2) | 129,894 | 35,847 | 218,789 | 104,269 | |||||
Number of stores (3) | 1,541 | 1,462 | 1,541 | 1,462 | |||||
Average store size (gross square feet) (3) | 10,469 | 10,443 | 10,469 | 10,443 | |||||
Declared dividends per common share | $0.2124 |
As at | |||||||
(dollars in thousands) |
|
| |||||
$ | $ | ||||||
Statement of Financial Position Data | |||||||
Cash and cash equivalents | 730,178 | 101,261 | |||||
Inventories | 940,313 | 957,172 | |||||
Total current assets | 1,734,547 | 1,156,947 | |||||
Property, plant and equipment | 926,646 | 802,750 | |||||
Right-of-use assets | 1,779,583 | 1,699,755 | |||||
Total assets | 5,674,945 | 4,819,656 | |||||
Total current liabilities | 1,151,616 | 1,162,874 | |||||
Total non-current liabilities | 4,197,358 | 3,628,372 | |||||
Total debt (1) | 2,760,827 | 2,251,903 | |||||
Net debt (1) | 2,030,649 | 2,150,642 | |||||
Shareholders' equity | 325,971 | 28,410 | |||||
(1) | Refer to the section below entitled "Non-GAAP and Other Financial Measures" for the definition of these items and, where applicable, their reconciliation with the most directly comparable GAAP measure. | |||||
(2) | Includes the previously announced property acquisition, which closed on | |||||
(3) | At the end of the period. |
Non-GAAP and Other Financial Measures
The Corporation prepares its financial information in accordance with GAAP. Management has included non-GAAP and other financial measures to provide investors with supplemental measures of the Corporation's operating and financial performance. Management believes that those measures are important supplemental metrics of operating and financial performance because they eliminate items that have less bearing on the Corporation's operating and financial performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on GAAP measures. Management also believes that securities analysts, investors and other interested parties frequently use non-GAAP and other financial measures in the evaluation of issuers. Management also uses non-GAAP and other financial measures to facilitate operating and financial performance comparisons from period to period, to prepare annual budgets and to assess their ability to meet the Corporation's future debt service, capital expenditure and working capital requirements.
The below-described non-GAAP and other financial measures do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by 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.
(A) Non-GAAP Financial Measures
EBITDA
EBITDA represents operating income plus depreciation and amortization and includes the Corporation's share of net earnings of its equity-accounted investment. Management believes EBITDA represents a supplementary metric to assess profitability and measure the Corporation's underlying ability to generate liquidity through operating cash flows.
13-Week Periods Ended | 39-Week Periods Ended | |||||||
(dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||
$ | $ | $ | $ | |||||
A reconciliation of operating income to | ||||||||
Operating income | 386,656 | 302,655 | 1,031,043 | 810,096 | ||||
Add: Depreciation and amortization | 92,147 | 83,563 | 271,222 | 245,514 | ||||
EBITDA | 478,803 | 386,218 | 1,302,265 | 1,055,610 |
Total debt
Total debt represents the sum of long-term debt (including unamortized debt issue costs, accrued interest and fair value hedge – basis adjustment), short-term borrowings under the US commercial paper program and other bank indebtedness (if any). Management believes Total debt is a measure that facilitates the understanding of the Corporation's corporate financial position in relation to its financing obligations.
(dollars in thousands) | As at | ||
A reconciliation of long-term debt to total debt is included below: |
|
| |
Senior unsecured notes (the "Fixed Rate Notes") bearing interest at: | $ | $ | |
Fixed annual rate of 5.165% payable in equal semi-annual instalments, maturing | 450,000 | 450,000 | |
Fixed annual rate of 2.443% payable in equal semi-annual instalments, maturing | 375,000 | 375,000 | |
Fixed annual rate of 5.533% payable in equal semi-annual instalments, maturing | 500,000 | - | |
Fixed annual rate of 1.505% payable in equal semi-annual instalments, maturing | 300,000 | 300,000 | |
Fixed annual rate of 1.871% payable in equal semi-annual instalments, maturing | 375,000 | 375,000 | |
Fixed annual rate of 5.084% payable in equal semi-annual instalments, maturing | 250,000 | 250,000 | |
Fixed annual rate of 3.550% payable in equal semi-annual instalments, matured on | 500,000 | 500,000 | |
Unamortized debt issue costs, including | (9,668) | (9,107) | |
Accrued interest on the Fixed Rate Notes | 20,767 | 17,177 | |
Fair value hedge – basis adjustment on interest rate swap | (272) | (6,167) | |
Total debt | 2,760,827 | 2,251,903 |
Net debt
Net debt represents total debt minus cash and cash equivalents. Management believes Net debt represents a measure to assess the financial position of the Corporation including all financing obligations, net of cash.
(dollars in thousands) | As at | |||
|
| |||
$ | $ | |||
A reconciliation of total debt to net debt is included below: | ||||
Total debt | 2,760,827 | 2,251,903 | ||
Cash and cash equivalents | (730,178) | (101,261) | ||
Net debt | 2,030,649 | 2,150,642 |
(B) Non-GAAP Ratios
Adjusted net debt to EBITDA ratio
Adjusted net debt to EBITDA ratio is a ratio calculated using adjusted net debt over consolidated EBITDA for the last twelve months. Management uses this ratio to partially assess the financial condition of the Corporation. An increasing ratio would indicate that the Corporation is utilizing more debt per dollar of EBITDA generated.
(dollars in thousands) | As at | |||
2023 |
| |||
$ | $ | |||
A calculation of adjusted net debt to EBITDA ratio is included below: | ||||
Net debt | 2,030,649 | 2,150,642 | ||
Lease liabilities | 2,055,790 | 1,960,743 | ||
Unamortized debt issue costs | 9,668 | 9,107 | ||
Fair value hedge - basis adjustment on interest rate swap | 272 | 6,167 | ||
Adjusted net debt | 4,096,379 | 4,126,659 | ||
EBITDA for the last twelve-month period | 1,769,948 | 1,523,293 | ||
Adjusted net debt to EBITDA ratio | 2.31x | 2.71x |
EBITDA margin
EBITDA margin represents EBITDA divided by sales. Management believes that EBITDA margin is useful in assessing the performance of ongoing operations and efficiency of operations relative to its sales.
13-Week Periods Ended | 39-Week Periods Ended | |||||||
(dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||
$ | $ | $ | $ | |||||
A reconciliation of EBITDA to EBITDA margin | ||||||||
EBITDA | 478,803 | 386,218 | 1,302,265 | 1,055,610 | ||||
Sales | 1,477,692 | 1,289,574 | 4,228,177 | 3,579,518 | ||||
EBITDA margin | 32.4 % | 29.9 % | 30.8 % | 29.5 % |
(C) Supplementary Financial Measures
Gross margin | Represents gross profit divided by sales, expressed as a percentage of sales. |
Operating margin | Represents operating income divided by sales, expressed as a percentage of sales. |
SG&A as a % of sales | Represents SG&A divided by sales. |
Comparable store | Represents sales of 13 complete fiscal months relative to the same period in the prior fiscal year. |
Comparable store | Represents the percentage increase or decrease, as applicable, of comparable store sales |
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