Key Takeaways
- Second quarter revenue climbed 17.6% to $2.03 billion, meeting market expectations
- Canadian same-store sales increased 5.4%, outpacing the prior year’s 4.9% growth
- EBITDA margin declined to 32.2% from 34.1%, pressured by Australian business integration
- Company upgraded full-year Canadian comparable sales outlook to 4%-4.5% from 3%-4%
- Shares have declined approximately 19% year-to-date, with an additional 1.69% drop on Wednesday
Dollarama (TSX: DOL) unveiled its fiscal 2027 second-quarter financial performance on Wednesday, delivering revenue of $2.03 billion—a 17.6% jump from $1.72 billion recorded in the corresponding quarter last year. The figure aligned closely with Wall Street projections.
Shares declined 1.69% during Wednesday’s trading session, adding to a year-to-date loss of approximately 19%.
The discount retailer reported diluted earnings per share of $1.29, marking an 11.2% increase from $1.16 in the year-ago period. Net income advanced 8.7% to reach $349.3 million for the three-month period.
Same-store sales across Canadian locations expanded 5.4%, propelled by a 3.7% uptick in transaction count and a 1.7% gain in average purchase value. This represents an acceleration from the 4.9% comparable sales growth achieved in last year’s second quarter.
Strong consumer demand for consumable products and general merchandise items drove the traffic increase across Dollarama’s Canadian store network.
Australian Business Integration Pressures Profitability
EBITDA margin compressed to 32.2% from 34.1% in the prior-year quarter, primarily attributable to the full-quarter consolidation of Dollarama Australia results. Last year’s comparison period included only 13 days of Australian operations following the company’s acquisition of The Reject Shop.
The Australian segment operates with lower gross margins and elevated selling, general, and administrative expenses as a percentage of revenue compared to Dollarama’s Canadian operations, contributing approximately 110 basis points of margin headwind each.
When examining the Canadian business in isolation, EBITDA margin actually expanded to 34.9% from 34.5%, demonstrating continued operational strength in the company’s core market.
During the quarter, the retailer added 15 net new locations across Canada, compared to 27 store additions in the same period last year. The Australian operation saw four net new stores opened and completed renovations at 25 existing locations.
The company also executed share repurchases of 1,596,016 common shares totaling $300.4 million throughout the quarter.
Management Raises Full-Year Outlook Amid Strong Canadian Performance
Dollarama elevated its annual comparable store sales growth projection for Canada to a range of 4%-4.5%, up from previous guidance of 3%-4%.
CEO Neil Rossy highlighted shifting consumer patterns as a significant growth driver, observing that shoppers are “making careful spending decisions” and increasingly choosing Dollarama for value-oriented purchases.
The Dollarcity operation, spanning Central America, South America, and Mexico, demonstrated continued expansion momentum. Revenue from this division surged 30% year-over-year, while the store footprint grew from 658 to 781 locations over the trailing twelve months.
Net financing expenses rose by $8.0 million to $51.2 million, driven by elevated average debt balances following two fixed-rate debt offerings completed in the first quarter.
Management reaffirmed its updated store expansion targets alongside the enhanced comparable sales forecast when releasing Wednesday’s quarterly results.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
