MONTREAL, April 4, 2024 /CNW/ – Dollarama Inc. (TSX: DOL) (“Dollarama” or the “Corporation”) today reported its financial results for the fourth quarter and fiscal year ended January 28, 2024 (“Fiscal 2024”) and issued guidance for the fiscal year ending February 2, 2025 (“Fiscal 2025”).
Sales increased 11.3% to $1,639.2 million, compared to $1,473.2 million
Comparable store sales grew 8.7%, over and above a 15.9% growth in the corresponding period of the previous fiscal year
EBITDA(1) increased 19.5% to $558.9 million, representing an EBITDA margin(1) of 34.1%, compared to 31.7%
Operating income increased 21.8% to $464.7 million, representing an operating margin(1) of 28.3%, compared to 25.9%
Diluted net earnings per common share increased by 26.4%, from $0.91 to $1.15
ADVERTISEMENT
Fiscal 2024 Results Highlights Compared to Fiscal 2023 Results
Sales increased 16.1% to $5,867.3 million, compared to $5,052.7 million
Comparable store sales grew 12.8%, over and above a 12.0% growth the previous year
EBITDA increased 22.2% to $1,861.2 million, representing an EBITDA margin of 31.7%, compared to 30.1%
Operating income increased 25.5% to $1,495.7 million, representing an operating margin of 25.5%, compared to 23.6%
Diluted net earnings per common share increased by 29.0%, from $2.76 to $3.56
65 net new stores opened, same as prior year, bringing total store count to 1,551
7,125,730 common shares repurchased for cancellation for $655.9 million
“In Fiscal 2024, we met or exceeded our guidance for all our key performance metrics, including higher than expected comparable store sales, translating into a 29% increase in EPS. Our strong financial and operational performance demonstrates the enduring strength of our business model and that our compelling value proposition continues to resonate with consumers, including in an uncertain economic context,” said Neil Rossy, President and CEO of Dollarama.
“Looking ahead to Fiscal 2025, we expect to generate strong comparable store sales growth of between 3.5% to 4.5%, over and above an exceptional two years of double-digit growth, by staying true to our value and convenience promise to Canadian consumers,” Mr. Rossy concluded.
_______________________________
(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 Fourth Quarter Financial Results
Sales for the fourth quarter of Fiscal 2024 increased by 11.3% to $1,639.2 million, compared to $1,473.2 million for the fourth quarter of the fiscal year ended January 29, 2023 (“Fiscal 2023”). This increase was driven by growth in the total number of stores over the past 12 months (from 1,486 on January 29, 2023 to 1,551 on January 28, 2024) and comparable store sales growth.
Comparable store sales for the fourth quarter of Fiscal 2024 increased by 8.7%, consisting of a 11.2% increase in the number of transactions and a 2.2% decrease in average transaction size, over and above comparable store sales growth of 15.9% for the fourth quarter of Fiscal 2023. The increase in comparable store sales is primarily attributable to higher sales across all product categories, including continued higher than historical demand for consumables.
Gross margin(1) was 46.3% of sales in the fourth quarter of Fiscal 2024, compared to 44.6% of sales in the fourth quarter of Fiscal 2023. Gross margin as a percentage of sales was higher primarily as a result of lower inbound shipping costs, as well as lower logistics costs.
General, administrative and store operating expenses (“SG&A”) for the fourth quarter of Fiscal 2024 increased by 13.1% to $237.1 million, compared to $209.6 million for the fourth quarter of Fiscal 2023. SG&A represented 14.5% of sales for the fourth quarter of Fiscal 2024, compared to 14.2% of sales for the fourth quarter of Fiscal 2023, reflecting higher store labour costs.
EBITDA was $558.9 million, or 34.1% of sales, for the fourth quarter of Fiscal 2024, compared to $467.7 million, or 31.7% of sales, in the fourth quarter of Fiscal 2023.
The Corporation’s 50.1% share of Dollarcity’s net earnings for the period from October 1, 2023 to December 31, 2023 was $32.8 million, compared to $19.8 million for the same period last year. The Corporation’s investment in Dollarcity is accounted for as a joint arrangement using the equity method.
Net financing costs increased by $1.4 million, from $34.0 million for the fourth quarter of Fiscal 2023 to $35.4 million for the fourth quarter of Fiscal 2024. The slight increase is mainly due to a higher average borrowing rate, as well as higher average debt levels from lease liabilities, partially offset by an increase in interest income resulting from higher invested capital due to the timing of the issuance and repayment of Fixed Rate Notes.
Net earnings were $323.8 million, or $1.15 per diluted common share, in the fourth quarter of Fiscal 2024, compared to $261.3 million, or $0.91 per diluted common share, in the fourth quarter of Fiscal 2023.
Fiscal 2024 Financial Results
Sales in Fiscal 2024 increased by 16.1% to $5,867.3 million, compared to $5,052.7 million in Fiscal 2023. This increase was driven by growth in the total number of stores over the past 12 months (from 1,486 on January 29, 2023, to 1,551 on January 28, 2024) and increased comparable store sales.
Comparable store sales increased 12.8% for Fiscal 2024, consisting of a 12.3% increase in the number of transactions and a 0.4% increase in average transaction size, over and above comparable store sales growth of 12.0% for Fiscal 2023. Strong comparable store sales reflect strong demand across all product categories, including stronger than historical demand for consumables, and the continued refresh of our product offering.
Gross margin was $2,613.4 million or 44.5% of sales in Fiscal 2024, compared to $2,198.2 million or 43.5% of sales in Fiscal 2023. Gross margin as a percentage of sales was higher due to lower inbound shipping costs.
SG&A for Fiscal 2024 was $844.9 million, a 17.3% increase from $720.3 million for Fiscal 2023. SG&A for Fiscal 2024 represented 14.4% of sales, compared to 14.3% of sales for Fiscal 2023. This variance reflects higher store labour costs, partially offset by the positive impact of scaling.
EBITDA was $1,861.2 million, or 31.7% of sales, for Fiscal 2024, compared to $1,523.3 million, or 30.1% of sales, for Fiscal 2023.
The Corporation’s 50.1% share of Dollarcity’s net earnings for the period from January 1, 2023 to December 31, 2023 was $75.3 million, compared to $45.4 million for the same period last year, reflecting strong financial and operational performance by Dollarcity. Refer to the section entitled “Dollarcity Store Count and Dividend”.
Net financing costs increased by $29.4 million from $115.4 million for Fiscal 2023 to $144.8 million for Fiscal 2024. The increase is mainly due to a higher average borrowing rate, as well as higher average debt levels from lease liabilities, partially offset by an increase in interest income resulting from higher invested capital.
Net earnings were $1,010.5 million, or $3.56 per diluted common share, for Fiscal 2024, compared to $801.9 million, or $2.76 per diluted common share, for Fiscal 2023.
___________________________
(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 Count and Dividend
During its fourth quarter ended December 31, 2023, Dollarcity opened 52 net new stores, compared to 45 net new stores in the same period last year. For the year ended December 31, 2023, Dollarcity opened 92 net new stores, compared to 90 net new stores in the prior year. As at December 31, 2023, Dollarcity had a total of 532 stores, with 311 locations in Colombia, 99 in Guatemala, 72 in El Salvador and 50 in Peru. This compares to 440 stores as at December 31, 2022.
In the fourth quarter of Fiscal 2024, Dollarcity’s board of directors approved the declaration and distribution of a first dividend totaling US$80.0 million. Dollarama’s share of the dividend corresponded to US$40.1 million, reflecting its 50.1% ownership in Dollarcity. During the fourth quarter of Fiscal 2024, Dollarama received US$20.1 million ($27.0 million), with the balance of US$20.0 million ($26.9 million) received in Fiscal 2025.
Dollarama Normal Course Issuer Bid and Dividend
During Fiscal 2024, 7,125,730 common shares were repurchased for cancellation at a weighted average price of $92.04 per share, for a total cash consideration of $655.9 million, under the Corporation’s 2023‑2024 normal course issuer bid and the normal course issuer bid previously in effect.
On April 4, 2024, the Corporation announced that its board of directors approved a 29.9% increase of the quarterly cash dividend for holders of common shares, from $0.0708 to $0.0920 per common share. This dividend is payable on May 3, 2024 to shareholders of record at the close of business on April 19, 2024. The dividend is designated as an “eligible dividend” for Canadian tax purposes.
Fiscal 2025 Outlook and Capital Allocation Strategy(1)
While the path of the economy and its impact on future consumer behaviour remains hard to predict, the Corporation expects to benefit from a continued positive consumer response to the convenience and compelling value it offers, through its expansive store network and broad offering of everyday and seasonal products at low fixed price points. In Fiscal 2025, the Corporation expects to generate continued comparable store sales growth, over and above two years of double-digit comparable store sales growth which was fueled, in part, by an inflationary environment for consumers.
In Fiscal 2025, we expect to maintain a strong gross margin as a percentage of sales, with the positive impact of lower inbound shipping costs anticipated through the first half of the fiscal year, partially offset by higher inventory shrinkage. SG&A as a percentage of sales is expected to continue to be pressured as a result of higher store labour and operating costs, partially offset by ongoing efficiency and labour productivity initiatives. In Fiscal 2025, the Corporation will maintain its balanced approach to capital allocation, investing in organic growth and keeping its focus on returning capital to shareholders. The Corporation also intends to maintain its pace of new store openings and investments in maintenance and transformational capital expenditures. In addition to its intent to maintain a dividend subject to quarterly approval, the Corporation intends to continue allocating the majority of excess cash toward the repurchase of shares through its normal course issuer bid.
____________________________
(1) To be read in conjunction with the “Forward-Looking Statements” section of this press release.
The Corporation’s outlook for Fiscal 2025, as well as a summary of how it performed against Fiscal 2024 guidance, is provided below:
(as a percentage of sales except net new store
openings in units and capital expenditures in millions of dollars)
Fiscal 2024
Fiscal 2025
Revised Guidance as
at December 13, 2023
Actual results
Guidance
Net new store openings
60 to 70
65
60 to 70
Comparable store sales
11.0% to 12.0%
12.8 %
3.5% to 4.5%
Gross margin
43.5% to 44.5%
44.5 %
44.0% to 45.0%
SG&A
14.7% to 15.2%
14.4 %
14.5% to 15.0%
Capital expenditures(i)
$190.0 to $200.0
$190.7
$175.0 to $200.0
(i)
For Fiscal 2024, capital expenditures exclude the cost of the property acquisition which closed on August 16, 2023 for a total capital cost of $88.1 million.
These guidance ranges are based on several assumptions, including the following:
The number of signed offers to lease and store pipeline for the next 12 months, the absence of delays outside of our control on construction activities and no material increases in occupancy costs in the short- to medium-term
Approximately three months visibility on open orders and product margins
Continued positive customer response to our product offering, value proposition and in-store merchandising
The active management of product margins, including through pricing strategies and product refresh, and of inventory shrinkage
The inclusion of the Corporation’s 50.1% share of net earnings of its equity-accounted investment
The entering into of foreign exchange forward contracts to hedge the majority of forecasted merchandise purchases in USD against fluctuations of CAD against USD
The continued execution of in-store productivity initiatives and 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 environment
No significant changes in the capital budget for Fiscal 2025 for new store openings, maintenance and transformational capital expenditures, the latter mainly related to IT projects
The absence of unusually adverse weather, especially in peak seasons around major holidays and celebrations
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 2025 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, including the statements relating to the Corporation’s Fiscal 2025 outlook and its capital allocation strategy, 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 Canada and in Latin America as well as, in the case of the Fiscal 2025 outlook, the estimates and assumptions discussed in the section “Fiscal 2025 Outlook and Capital Allocation Strategy”, in each case, in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. 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 forward-looking statements, including the following factors which are discussed in greater detail in the “Risks and Uncertainties” section of the Corporation’s annual management’s discussion and analysis for Fiscal 2024: future increases in operating costs (including increases in statutory minimum wages), future increases in merchandise costs (including as a result of rising raw material costs and tariff disputes), future increases in shipping, and transportation and other logistics costs (including as a result of freight costs, and fuel price increases and detention costs), inability to sustain assortment and replenishment of merchandise, increase in the cost or a disruption in the flow of imported goods (including as a result of global supply chain disruptions and the geopolitical instability triggered by the increased tensions between China and the Western countries), failure to maintain brand image and reputation, disruption of distribution infrastructure, inventory shrinkage, inability to enter into or renew, as applicable, store and, warehouse leases on favourable and competitive terms, inability to increase warehouse and distribution centre capacity in a timely manner, seasonality, market acceptance of private brands, failure to protect trademarks and other proprietary rights, foreign exchange rate fluctuations, potential losses associated with using derivative financial instruments, any exercise by Dollarcity’s (as hereinafter defined) founding stockholders of their put right, level of indebtedness and inability to generate sufficient cash to service debt, changes in creditworthiness and credit rating and the potential increase in the cost of capital, interest rate risk associated with variable rate indebtedness, increases in taxes and changes in applicable tax laws or the interpretation thereof, competition in the retail industry (including from online retailers), disruptive technologies, general economic conditions, departure of senior executives, failure to attract and retain quality employees, disruption in information technology systems, inability to protect systems against cyber attacks, unsuccessful execution of the growth strategy (including failure to identify and develop new growth opportunities), holding company structure, adverse weather, pandemic or epidemic outbreaks, earthquakes and other natural disasters, climate change, geopolitical events and political unrest in foreign countries, unexpected costs associated with current insurance programs, product liability claims and product recalls, class action lawsuits and other litigation, regulatory and environmental compliance and shareholder activism. The Corporation’s annual management’s discussion and analysis for Fiscal 2024 is available on SEDAR+ at www.sedarplus.com.
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 April 4, 2024 and management has no intention and undertakes 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. All of the forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Conference Call
Dollarama will hold a conference call to discuss its Fiscal 2024 fourth quarter and annual results today, April 4, 2024 at 10:30 a.m. (ET). Financial analysts are invited to ask questions during the call. Other interested parties may participate in the call on a listen-only basis. The live audio webcast is accessible through Dollarama’s website at www.dollarama.com/en-CA/corp/events-presentations.
About Dollarama
Dollarama is a recognized Canadian value retailer offering a broad assortment of consumable products, general merchandise and seasonal items both in-store and online. Our 1,551 locations across Canada provide customers with compelling value in convenient locations, including metropolitan areas, mid-sized cities and small towns. Select products are also available, by the full case only, through our online store at www.dollarama.com. Our quality merchandise is sold at select fixed price points up to $5.00.
Dollarama also owns a 50.1% interest in Dollarcity, a growing Latin American value retailer. Dollarcity offers a broad assortment of consumable products, general merchandise and seasonal items at select, fixed price points up to US$4.00 (or the equivalent in local currency) in 532 conveniently located stores in El Salvador, Guatemala, Colombia and Peru.
(dollars and shares in thousands, except per share amounts)
January 28,
2024
January 29,
2023
January 28,
2024
January 29,
2023
$
$
$
$
Earnings Data
Sales
1,639,171
1,473,223
5,867,348
5,052,741
Cost of sales
880,557
815,703
3,253,907
2,854,535
Gross profit
758,614
657,520
2,613,441
2,198,206
SG&A
237,147
209,609
844,871
720,312
Depreciation and amortization
89,597
86,278
348,142
331,792
Share of net earnings of equity-accounted investment
(32,808)
(19,772)
(75,293)
(45,399)
Operating income
464,678
381,405
1,495,721
1,191,501
Net financing costs
35,384
34,014
144,842
115,394
Earnings before income taxes
429,294
347,391
1,350,879
1,076,107
Income taxes
105,524
86,103
340,419
274,244
Net earnings
323,770
261,288
1,010,460
801,863
Basic net earnings per common share
$1.15
$0.91
$3.57
$2.77
Diluted net earnings per common share
$1.15
$0.91
$3.56
$2.76
Weighted average number of common shares outstanding
Basic
280,533
286,928
283,074
289,412
Diluted
281,456
288,548
284,168
291,005
Other Data
Year-over-year sales growth
11.3 %
20.3 %
16.1 %
16.7 %
Comparable store sales growth (1)
8.7 %
15.9 %
12.8 %
12.0 %
Gross margin (1)
46.3 %
44.6 %
44.5 %
43.5 %
SG&A as a % of sales (1)
14.5 %
14.2 %
14.4 %
14.3 %
EBITDA (1)
558,901
467,683
1,861,166
1,523,293
Operating margin (1)
28.3 %
25.9 %
25.5 %
23.6 %
Adjusted net debt to EBITDA ratio (1)
2.16x
2.71x
2.16x
2.71x
Capital expenditures (2)
59,975
52,558
278,764
156,827
Number of stores (3)
1,551
1,486
1,551
1,486
Average store size (gross square feet) (3) (4)
10,422
10,407
10,422
10,407
Declared dividends per common share
$0.0708
$0.0553
$0.2832
$0.2212
As at
(dollars in thousands)
January 28,
2024
January 29,
2023
$
$
Statement of Financial Position Data
Cash and cash equivalents
313,915
101,261
Inventories
916,812
957,172
Total current assets
1,309,093
1,156,947
Property, plant and equipment
950,994
802,750
Right-of-use assets
1,788,550
1,699,755
Total assets
5,263,607
4,819,656
Total current liabilities
677,846
1,162,874
Total non-current liabilities
4,204,913
3,628,372
Total debt (1)
2,264,394
2,251,903
Net debt (1)
1,950,479
2,150,642
Shareholders’ equity
380,848
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)
For Fiscal 2024, includes the acquisition of the industrial property adjacent to the Corporation’s distribution center in the Town of Mount Royal, Quebec, which closed on August 16, 2023 for a total capital cost of $88.1 million.
(3)
At the end of the period.
(4)
The Corporation revised its prior years square footage information to align with its current and updated methodology.
Non-GAAP and Other Financial Measures
In addition to the measures prescribed by the International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), we have included certain non-GAAP and other financial measurements in our financial documents to provide a better understanding of the Corporation’s financial results. The Corporation uses the following non-GAAP and other financial measures and ratios: EBITDA, EBITDA margin, total debt, net debt, adjusted net debt to EBITDA ratio, gross margin, operating margin, SG&A as a percentage of sales, comparable store sales and comparable store sales growth. We believe that such 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 and other financial measures in the evaluation of issuers. Our management also uses non-GAAP and other financial 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.
The majority of these measures are used to bridge differences between external reporting under GAAP and external reporting that is tailored to the retail industry, and should not be considered in isolation or as a substitute for financial performance measures calculated in accordance with GAAP.
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.
(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 useful supplemental metric to assess profitability and measure the Corporation’s underlying ability to generate liquidity through operating cash flows.
13‑week Periods Ended
52-week Periods Ended
(dollars in thousands)
January 28,
2024
January 29,
2023
January 28,
2024
January 29,
2023
$
$
$
$
A reconciliation of operating income to EBITDA is included below:
Operating income
464,678
381,405
1,495,721
1,191,501
Add: Depreciation and amortization
94,223
86,278
365,445
331,792
EBITDA
558,901
467,683
1,861,166
1,523,293
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 is useful to facilitate 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:
January 28,
2024
January 29,
2023
Senior unsecured notes (the “Fixed Rate Notes”) bearing interest at:
$
$
Fixed annual rate of 5.165% payable in equal semi-annual instalments,
maturing April 26, 2030
450,000
450,000
Fixed annual rate of 2.443% payable in equal semi-annual instalments,
maturing July 9, 2029
375,000
375,000
Fixed annual rate of 5.533% payable in equal semi-annual instalments,
maturing September 26, 2028
500,000
–
Fixed annual rate of 1.505% payable in equal semi-annual instalments,
maturing September 20, 2027
300,000
300,000
Fixed annual rate of 1.871% payable in equal semi-annual instalments,
maturing July 8, 2026
375,000
375,000
Fixed annual rate of 5.084% payable in equal semi-annual instalments,
maturing October 27, 2025
250,000
250,000
Fixed annual rate of 3.550% payable in equal semi-annual instalments,
matured on November 6, 2023
–
500,000
Unamortized debt issue costs, including $1,320 (January 29, 2023 – $1,609) for the credit facility
(9,049)
(9,107)
Accrued interest on the Fixed Rate Notes
21,460
17,177
Fair value hedge – basis adjustment on interest rate swap
1,983
(6,167)
Total debt
2,264,394
2,251,903
Net debt
Net debt represents total debt minus cash and cash equivalents. Management believes Net debt represents a useful additional measure to assess the financial position of the Corporation by showing all of the Corporation’s financing obligations, net of cash and cash equivalents.
(dollars in thousands)
As at
January 28,
2024
January 29,
2023
$
$
A reconciliation of total debt to net debt is included below:
Total debt
2,264,394
2,251,903
Cash and cash equivalents
(313,915)
(101,261)
Net debt
1,950,479
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 12 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
January 28,
2024
January 29,
2023
$
$
A calculation of adjusted net debt to EBITDA ratio is included below:
Net debt
1,950,479
2,150,642
Lease liabilities
2,069,229
1,960,743
Unamortized debt issue costs, including $1,320 (January 29, 2023 – $1,609) for the credit facility
9,049
9,107
Fair value hedge – basis adjustment on interest rate swap
(1,983)
6,167
Adjusted net debt
4,026,774
4,126,659
EBITDA for the last twelve-month period
1,861,166
1,523,293
Adjusted net debt to EBITDA ratio
2.16x
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
52-week Periods Ended
(dollars in thousands)
January 28,
2024
January 29,
2023
January 28,
2024
January
29, 2023
$
$
$
$
A reconciliation of EBITDA to EBITDA margin is included below:
EBITDA
558,901
467,683
1,861,166
1,523,293
Sales
1,639,171
1,473,223
5,867,348
5,052,741
EBITDA margin
34.1 %
31.7 %
31.7 %
30.1 %
(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 sales
Represents sales of Dollarama stores, including relocated and expanded stores, open for at least 13 complete fiscal months relative to the same period in the prior fiscal year.
Comparable store sales growth
Represents the percentage increase or decrease, as applicable, of comparable store sales relative to the same period in the prior fiscal year.
MONTREAL – Politics, public opinion and salary hikes south of the border helped push Air Canada toward a deal that secures major pay gains for pilots, experts say.
Hammered out over the weekend, the would-be agreement includes a cumulative wage hike of nearly 42 per cent over four years — an enormous bump by historical standards — according to one source who was not authorized to speak publicly on the matter. The previous 10-year contract granted increases of just two per cent annually.
The federal government’s stated unwillingness to step in paved the way for a deal, noted John Gradek, after Prime Minister Justin Trudeau made it plain the two sides should hash one out themselves.
“Public opinion basically pressed the federal cabinet, including the prime minister, to keep their hands clear of negotiations and looking at imposing a settlement,” said Gradek, who teaches aviation management at McGill University.
After late-night talks at a hotel near Toronto’s Pearson airport, the country’s biggest airline and the union representing 5,200-plus aviators announced early Sunday morning they had reached a tentative agreement, averting a strike that would have grounded flights and affected some 110,000 passengers daily.
The relative precariousness of the Liberal minority government as well as a push to appear more pro-labour underlay the prime minister’s hands-off approach to the negotiations.
Trudeau said Friday the government would not step in to fix the impasse — unlike during a massive railway work stoppage last month and a strike by WestJet mechanics over the Canada Day long weekend that workers claimed road roughshod over their constitutional right to collective bargaining. Trudeau said the government respects the right to strike and would only intervene if it became apparent no negotiated deal was possible.
“They felt that they really didn’t want to try for a third attempt at intervention and basically said, ‘Let’s let the airline decide how they want to deal with this one,'” said Gradek.
“Air Canada ran out of support as the week wore on, and by the time they got to Friday night, Saturday morning, there was nothing left for them to do but to basically try to get a deal set up and accepted by ALPA (Air Line Pilots Association).”
Trudeau’s government was also unlikely to consider back-to-work legislation after the NDP tore up its agreement to support the Liberal minority in Parliament, Gradek said. Conservative Leader Pierre Poilievre, whose party has traditionally toed a more pro-business line, also said last week that Tories “stand with the pilots” and swore off “pre-empting” the negotiations.
Air Canada CEO Michael Rousseau had asked Ottawa on Thursday to impose binding arbitration pre-emptively — “before any travel disruption starts” — if talks failed. Backed by business leaders, he’d hoped for an effective repeat of the Conservatives’ move to head off a strike in 2012 by legislating Air Canada pilots and ground crew to stick to their posts before any work stoppage could start.
The request may have fallen flat, however. Gradek said he believes there was less anxiety over the fallout from an airline strike than from the countrywide railway shutdown.
He also speculated that public frustration over thousands of cancelled flights would have flowed toward Air Canada rather than Ottawa, prompting the carrier to concede to a deal yielding “unheard of” gains for employees.
“It really was a total collapse of the Air Canada bargaining position,” he said.
Pilots are slated to vote in the coming weeks on the four-year contract.
Last year, pilots at Delta Air Lines, United Airlines and American Airlines secured agreements that included four-year pay boosts ranging from 34 per cent to 40 per cent, ramping up pressure on other carriers to raise wages.
After more than a year of bargaining, Air Canada put forward an offer in August centred around a 30 per cent wage hike over four years.
But the final deal, should union members approve it, grants a 26 per cent increase in the first year alone, retroactive to September 2023, according to the source. Three wage bumps of four per cent would follow in 2024 through 2026.
Passengers may wind up shouldering some of that financial load, one expert noted.
“At the end of the day, it’s all us consumers who are paying,” said Barry Prentice, who heads the University of Manitoba’s transport institute.
Higher fares may be mitigated by the persistence of budget carrier Flair Airlines and the rapid expansion of Porter Airlines — a growing Air Canada rival — as well as waning demand for leisure trips. Corporate travel also remains below pre-COVID-19 levels.
Air Canada said Sunday the tentative contract “recognizes the contributions and professionalism of Air Canada’s pilot group, while providing a framework for the future growth of the airline.”
The union issued a statement saying that, if ratified, the agreement will generate about $1.9 billion of additional value for Air Canada pilots over the course of the deal.
Meanwhile, labour tension with cabin crew looms on the horizon. Air Canada is poised to kick off negotiations with the union representing more than 10,000 flight attendants this year before the contract expires on March 31.
This report by The Canadian Press was first published Sept. 16, 2024.
HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.
Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.
Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”
Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.
The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.
Those delays forced Nova Scotia Power to spend more on generating its own electricity.
This report by The Canadian Press was first published Sept. 16, 2024.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
