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Dollarama announces strong third quarter results



               Dollarama announces strong third quarter results

PR Newswire

MONTREAL, Dec. 6, 2012

MONTREAL, Dec. 6, 2012 /PRNewswire/  - Dollarama Inc. (TSX: DOL)  ("Dollarama" 
or the  "Corporation")  today  reported  strong increases  in  sales  and  net 
earnings for the third quarter ended October 28, 2012.

Financial and Operating Highlights

(All comparative figures  below and  in the "Financial  Results" section  that 
follows, are for  the third  quarter ended  October 28, 2012  compared to  the 
third quarter ended October 30, 2011.  All financial information presented  in 
this press release  has been  prepared in accordance  with generally  accepted 
accounting principles in  Canada ("GAAP") as  set out in  the Handbook of  the 
Canadian Institute  of  Chartered  Accountants -  Part  1  which  incorporates 
International  Financial  Reporting  Standards  ("IFRS")  as  issued  by   the 
International Accounting Standards Board.   Throughout this press release  the 
term "Normalized"  is  used to  refer  to  financial results  that  have  been 
adjusted to  exclude a  non-recurring  item. For  a  full explanation  of  the 
Corporation's use of these  non-GAAP measures, please refer  to footnote 1  of 
the "Selected  Consolidated  Financial  Information"  section  of  this  press 
release.)

Throughout this press  release, all  references to  "Fiscal 2012"  are to  the 
Corporation's fiscal year ended January 29,  2012 and to "Fiscal 2013" are  to 
the Corporation's fiscal year ending February 3, 2013.

Compared to the third quarter of Fiscal 2012:

  * Sales increased by 14.4%;
  * Comparable store sales grew 6.6%;
  * Gross margin improved to 37.2% of sales from 37.0% of sales;
  * Normalized EBITDA^(1) grew 20.2% to $86.6 million, or 18.9% of sales;
  * Normalized operating income^(1) grew 20.9% to $76.7 million, or 16.7% of
    sales;
  * Normalized diluted net earnings per share ^ (1) increased by 29.1%, from
    $0.55 to $0.71.

In addition, during the third quarter ended October 28, 2012, the Corporation
opened 26 net new stores.

"We once again  delivered strong  results in  the third  quarter", said  Larry 
Rossy, Chief  Executive  Officer  of  Dollarama.  "We  are  pleased  with  our 
continued double-digit growth performance in  sales, operating income and  net 
earnings and are particularly happy to  see a 6.6% growth in comparable  store 
sales over the  third quarter  of fiscal year  2012.  We  have maintained  the 
focus on execution in a  quarter where we have opened  a record 26 new  stores 
and we are on track to open 75 to 80 new stores for this fiscal year".

Financial Results

Sales  for  the  third   quarter  of  Fiscal  2013   increased  by  14.4%   to 
$458.0 million from $400.3 million  in the corresponding  period of the  prior 
fiscal year. The increase is due  to continued organic sales growth driven  by 
comparable store sales  growth of 6.6%  in the third  quarter of Fiscal  2013, 
over and above comparable store sales growth  of 5.1% in the third quarter  of 
Fiscal 2012. The increase in sales was also attributed to the 10.3% growth  in 
the number of stores over the past twelve  months as we added 71 stores to  go 
from 690  stores on  October  30, 2011  to 761  stores  on October  28,  2012. 
Comparable store sales growth for the  third quarter of Fiscal 2013  consisted 
of a 4.9% increase in average  transaction size combined with a 1.6%  increase 
in the number of  transactions. In this quarter,  57% of our sales  originated 
from products priced higher  than $1.00 compared to  49% in the  corresponding 
quarter last year.

The gross margin increased to  37.2% of sales in  the third quarter of  Fiscal 
2013, compared to 37.0% of sales in  the third quarter of Fiscal 2012,  mainly 
due to  a slight improvement  in product  margins and  lower inventory  shrink 
levels, partially  offset  by  higher  occupancy  costs  associated  with  the 
significantly higher  number of  store  openings in  the third  quarter  ended 
October 28, 2012.

General, administrative and  store operating expenses  ("SG&A") for the  third 
quarter of Fiscal 2013 was 18.3% of sales on a normalized basis^(1),  compared 
to 19.0% of sales in the corresponding period of Fiscal 2012. This decrease is
due to  the scaling  effects of  certain  fixed costs  over the  higher  sales 
volume, partially  offset  by incremental  labour  costs associated  with  the 
significantly higher  number of  store  openings in  the third  quarter  ended 
October 28,  2012. Normalized  SG&A ^  expenses^(1) in  the third  quarter  of 
Fiscal 2013 stood at $83.9 million, a 10.5% increase over $76.0 million in the
corresponding period of  Fiscal 2012.  The increase  is due  primarily to  the 
opening of 71 net new stores over the past twelve months.

Net financing costs decreased by $0.6 million, from $3.4 million for the third
quarter of Fiscal 2012 to $2.8 million  for the third quarter of  Fiscal 2013. 
This decrease is attributable to a lower debt level and a lower interest  rate 
on the long-term debt compared to the corresponding period of Fiscal 2012.

For the third quarter of Fiscal 2013, normalized net earnings^(1) increased to
$53.7 million, or $0.71 per diluted share, compared to $41.8 million, or $0.55
per diluted share, for the corresponding period of Fiscal 2012.

Normal Course Issuer Bid

On June 13,  2012, the Corporation  received approval from  the Toronto  Stock 
Exchange to implement  a normal course  issuer bid ("NCIB")  to purchase,  for 
cancellation, up to 2,583,264  common shares (representing  3.5% of the  total 
issued and outstanding shares  of the Corporation  as of June 1, 2012)  during 
the period from June 15, 2012  to no later than  June 14, 2013.  Total  common 
shares repurchased during the period  from June 15, 2012 to October 28,  2012, 
amounted to 1,613,656 common shares for  a total cash consideration of  $100.0 
million. As of October  28, 2012, all shares  repurchased under the NCIB  were 
cancelled, except for 54,518 common shares (representing a total consideration
of $3.4 million), which were held in the treasury and subsequently cancelled.

Dividend

The Corporation's Board of Directors approved a quarterly dividend for holders
of its common shares  of $0.11 per common  share. The Corporation's  quarterly 
dividend will be paid  on February 5,  2013 to shareholders  of record at  the 
close of  business  on January  4,  2013 and  is  designated as  an  "eligible 
dividend" for Canadian tax purposes.

About Dollarama

Dollarama is Canada's leading dollar store operator with 761 locations  across 
the country. Our stores provide customers with compelling value in  convenient 
locations, including  metropolitan areas,  mid-sized cities  and small  towns. 
Dollarama aims to  provide customers  with a  consistent shopping  experience, 
offering a broad assortment of everyday consumer products, general merchandise
and seasonal  items. Products  are sold  in individual  or multiple  units  at 
select fixed price points up to $3.00.

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 us and on estimates
and assumptions  made by  us in  light  of our  experience and  perception  of 
historical trends,  current conditions  and expected  future developments,  as 
well as other factors  that we believe are  appropriate and reasonable in  the 
circumstances,  but  there  can  be  no  assurance  that  such  estimates  and 
assumptions will prove  to be  correct. Many  factors could  cause our  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,  without  limitation,  the  following 
factors,  which  are   discussed  in   greater  detail  in   the  "Risks   and 
Uncertainties"  section  of  the  Corporation's  management's  discussion  and 
analysis (MD&A)  for Fiscal  2012  and in  its continuous  disclosure  filings 
(available on  SEDAR  at www.sedar.com):  future  increases in  operating  and 
merchandise costs, inability  to sustain assortment  and replenishment of  our 
merchandise, increase in  the cost  or a disruption  in the  flow of  imported 
goods,  disruption  of   distribution  infrastructure,  inventory   shrinkage, 
inability to  renew  store, warehouse,  distribution  center and  head  office 
leases  on  favourable  terms,  inability   to  increase  our  warehouse   and 
distribution  center  capacity  in   a  timely  manner,  seasonality,   market 
acceptance of  our private  brands, failure  to protect  trademarks and  other 
proprietary rights,  foreign  exchange  rate  fluctuations,  potential  losses 
associated with using derivative financial instruments, level of  indebtedness 
and inability to generate sufficient cash  to service our debt, interest  rate 
risk associated with  variable rate  indebtedness, competition  in the  retail 
industry, current economic conditions, failure to attract and retain qualified
employees,  departure  of   senior  executives,   disruption  in   information 
technology systems,  unsuccessful execution  of our  growth strategy,  holding 
company  structure,  adverse  weather,  natural  disasters  and  geo-political 
events, unexpected  costs  associated  with  our  current  insurance  program, 
litigation, product liability  claims and product  recalls, and  environmental 
and regulatory compliance.

These factors are  not intended to  represent a complete  list of the  factors 
that could  affect  us; 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 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  of December 6, 2012, and  we have no intention  and 
undertake 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.  The  forward-looking statements  contained  in  this  press 
release are expressly qualified by this cautionary statement.

Dollarama Inc.
                                                                              
Selected          
Consolidated
Financial
Information                                                                   
                                                                              
                       13-Week Period Ended           39-Week Period Ended
(dollars in       
thousands,
except per share                                       Oct. 28,       Oct. 30,
amounts)           Oct. 28, 2012   Oct. 30, 2011           2012           2011
                                                                              
Earnings Data                                                                 
Sales               $    457,993    $    400,347   $  1,296,939    $ 1,134,121
Cost of sales            287,428         252,270        819,444        720,180
Gross profit             170,565         148,077        477,495        413,941
SG&A                      87,021          75,990        241,429        218,826
Depreciation and  
amortization               9,961           8,667         28,478         24,615
Operating income          73,583          63,420        207,588        170,500
Net financing     
costs                      2,794           3,444          8,145         13,503
Earnings before   
income taxes              70,789          59,976        199,443        156,997
Provision for     
income taxes.             19,308          18,184         55,588         47,130
Net earnings        $     51,481    $     41,792   $    143,855    $   109,867
                                                                              
Basic net         
earnings per
common share        $       0.70    $       0.57   $       1.95    $      1.49
Diluted net       
earnings per
common share        $       0.68    $       0.55   $       1.90    $      1.45
                                                                              
Weighted average number of common shares outstanding during the period:      
       
    Basic (in
    thousands)            73,667          73,713         73,763         73,665
    Diluted (in
    thousands)            75,525          75,533         75,699         75,537
                                                                              
Other Data                                                                    
Year-over-year    
sales growth               14.4%           12.5%          14.4%          12.2%
Comparable store  
sales growth^(2)            6.6%            5.1%           7.3%           4.4%
Gross margin^(3)           37.2%           37.0%          36.8%          36.5%
Normalized SG&A   
as a % of
sales^(1) (3)              18.3%           19.0%          18.4%          19.3%
Normalized        
EBITDA^(1)          $     86,616    $     72,087   $    239,138    $   195,115
Normalized        
operating
margin^(1) (3)             16.7%           15.8%          16.2%          15.0%
Normalized net    
earnings^(1)        $     53,730    $     41,792   $    146,104    $   109,867
Capital           
expenditures        $     20,054    $     12,201   $     52,483    $    35,634
Number of         
stores^(4)                   761             690            761            690
Average store     
size (gross
square feet)^(4)           9,932           9,910          9,932          9,910
Declared          
dividends per
common share^(5)    $       0.11    $       0.09   $       0.33    $      0.18
                                                                              
                               As of                                          
(dollars in                             Jan. 29,
thousands)         Oct. 28, 2012            2012                              
                                                                              
Statement of      
Financial
Position Data                                                                 
Cash and cash     
equivalents         $     32,045    $     70,271                              
Merchandise       
inventories              349,906         315,873                              
Property and      
equipment                196,337         173,053                              
Total assets           1,429,449       1,407,741                              
Total debt^(6)           264,420         274,997                              
Net debt^(7)             232,375         204,726                              

________________________________
(1)  In this news release, Normalized operating income, Normalized EBITDA,
     Normalized SG&A and Normalized net earnings are collectively referred to
     as the "Non-GAAP measures". Normalized operating income represents
     operating income, in accordance with GAAP, adjusted for significant
     non-recurring charges. Normalized EBITDA represents Normalized operating
     income plus amortization. Normalized SG&A represents SG&A, in accordance
     with GAAP, adjusted for significant non-recurring charges. Normalized net
     earnings represents net earnings, in accordance with GAAP, adjusted for
     significant non-recurring charges, net of tax impacts. The Non-GAAP
     measures are not generally accepted measures under GAAP and do not have a
     standardized meaning under GAAP. The Non-GAAP measures, as calculated by
     the Corporation, may not be comparable to those of 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.
     We have included the Non-GAAP measures to provide investors with
     supplemental measures of our operating and financial performance. We
     believe the Non-GAAP 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
     measures in the evaluation of issuers, many of which present non-GAAP
     measures when reporting their results. Our management also uses the
     Non-GAAP 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.

                          13-Week Period Ended         39-Week Period Ended
(dollars in thousands) Oct. 28, 2012     Oct. 30,       Oct. 28,      Oct. 30,
                                             2011           2012          2011
                                                                              
A reconciliation of operating income to Normalized operating income is
included below:
                                                                              
Operating income         $    73,583    $  63,420     $  207,588    $  170,500
Add: non-recurring                  
charges:                                                                      
   Payroll taxes on                   
   exercise of
   options^(a)                 3,072            —          3,072             —
                                                                       
Normalized operating     $    76,655
income                                  $  63,420     $  210,660    $  170,500
   Normalized                         
   operating margin            16.7%        15.8%          16.2%         15.0%
                                                                              
A reconciliation of Normalized operating income to Normalized EBITDA is
included below:
                                                                              
Normalized operating     $    76,655
income                                  $  63,420     $  210,660    $  170,500
Add: Depreciation and          9,961
amortization                                8,667         28,478        24,615
                                                                       
Normalized EBITDA        $    86,616    $  72,087     $  239,138    $  195,115
   Normalized EBITDA                  
   margin                      18.9%        18.0%          18.4%         17.2%
                                                                              
A reconciliation of SG&A to Normalized SG&A is included below:
                                                                              
SG&A                     $    87,021    $  75,990     $  241,429    $  218,826
Deduct: non-recurring               
charges:                                                                      
   Payroll taxes on                   
   exercise of
   options^(a)               (3,072)            —        (3,072)             —
                                                                       
Normalized SG&A          $    83,949    $  75,990     $  238,357    $  218,826
   Normalized SG&A as                 
   a % of sales                18.3%        19.0%          18.4%         19.3%
                                                                              
A reconciliation of net earnings to Normalized net earnings is included below:
                                                                              
Net earnings             $    51,481    $  41,792     $  143,855    $  109,867
   Diluted net           $            
   earnings per common
   share                        0.68    $    0.55     $     1.90    $     1.45
                                                                       
Add non-recurring                   
charges (pre-tax):                                                            
   Payroll taxes on                   
   exercise of
   options^(a)                 3,072            —          3,072             —
                                                                       
Tax impact                     (823)            —          (823)             —
                                                                       
Normalized net           $    53,730
earnings                                $  41,792     $  146,104    $  109,867
   Diluted Normalized    $
   net earnings per                                                  
   common share                 0.71    $    0.55     $     1.93    $     1.45

________________________________
(a)  During the quarter ended October 28, 2012, the Corporation incurred a
     non-recurring payroll-related charge resulting from the exercise of stock
     options by senior management.

(2) Comparable store sales represents sales of stores, including relocated and
    expanded stores, open for at least 13 complete fiscal months relative to
    the same period in the prior year.
(3) Gross margin represents gross profit divided by sales. Normalized SG&A as
    a % of sales represents Normalized SG&A (see note 1) divided by sales.
    Normalized operating margin represents Normalized operating income (see
    note 1) divided by sales.
(4) At the end of the period.
(5) The Corporation's first quarterly dividend, in the amount of $0.09 per
    common share, was declared by the Board of Directors on June 8, 2011. On
    April 11, 2012, the Corporation announced that its Board of Directors had
    approved a 22% increase of the quarterly dividend, from $0.09 to $0.11 per
    common share. 
(6) Total debt is comprised of the current portion of long-term debt, and
    long-term debt before debt issue costs and discounts.
(7) Net debt is defined as total debt minus cash and cash equivalents.

 

 

 

SOURCE DOLLARAMA INC.

Contact:

Investors
Michael Ross, FCPA, FCA
Chief Financial Officer and Secretary
(514) 737-1006 x1237
michael.ross@dollarama.com

Media
Lyla Radmanovich
NATIONAL Public Relations
(514) 843-2336

www.dollarama.com
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