Dollarama Q2 2027 Earnings Call: Complete Transcript

On Wednesday, Dollarama (TSX: DOL ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. 6% increase in consolidated sales, reaching over $2 billion, and an EBITDA increase of 11% to $653 million.

5%, up from 3-4%, and plans to open 65-75 net new stores in Canada, surpassing previous guidance. 7% increase in net earnings, while the Mexican market saw continued expansion with 10 new stores opened, and Australian operations are progressing with store renovations and the introduction of Dollarama-sourced products. 5% for the year. 12 per share.

Full Transcript Shannon, Investor Relations Good morning and welcome to Dollarama's second quarter fiscal 2027 results conference call. On today's call are Neil Rossy, President and CEO, and Patrick Bui, CFO. They will begin with brief remarks followed by a Q&A with financial analysts. Before we begin, please note that today's remarks may contain forward-looking statements about Dollarama's current and future plans, expectations, intentions, results, or any other future events or developments.

Forward-looking statements are based on information currently available to management and on reasonable estimates and assumptions made by management. Many factors could cause actual results, future events, or developments to differ materially from those expressed or implied. You are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements represent management's expectations as at September 16, 2026.

Except as may be required by law, Dollarama has no intention and undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. You are invited to consult the Cautionary Statement on Forward-Looking Statements in Dollarama's Management's Discussion and Analysis dated September 16, 2026. All forward-looking statements on today's call are expressly qualified by this cautionary statement. In addition, Dollarama may refer to certain non-GAAP and other financial measures during the call.

Please consult the Non-GAAP and Other Financial Measures section of Dollarama's MD&A dated September 16, 2026 for definitions, reconciliations with appropriate GAAP measures, and other information. com and on SEDAR+. I will now turn the call over to Neil Rossy. Neil Rossy, President and CEO Thank you, Shannon.

Good morning everyone, and thank you for joining us. We delivered a strong second quarter and first half of fiscal 2027. Two things stand out: the continued strength of our value proposition and the execution of our teams across markets. At a time when consumers are making careful spending decisions, customers are counting on Dollarama for dependable value.

Our brand promise continues to resonate across a broad customer base, reinforcing our relevance as a destination for everyday and seasonal goods. We are also moving our strategic priorities forward. With discipline, we are driving profitable growth in Canada and in Central and South America, thoughtfully building our presence in Mexico and gaining momentum on our transformation roadmap in Australia. In Canada, despite a cautious consumer and continued pressure on household budgets, customers turned to Dollarama for their everyday needs.

During the second quarter, same store sales were strong, supported by an increase in customer traffic and basket growth, bringing our SSS year-to-date above our expectations for the first half of the year. Demand for consumables and general merchandise was sustained while demand for seasonal products remained stable year over year. This performance reflects the strength of our merchandising approach. We continue to carefully manage our assortment across our established product categories and fixed price points to deliver compelling relative value.

It also speaks to the proximity and convenience we provide through our growing national network of well-located stores. We opened 15 net new stores across Canada during the quarter. This brought year-to-date net new openings to 43 and our total Canadian store count to 1,734 stores. Given our strong pace of openings through the first half and our pipeline for the balance of the year, we have increased our fiscal 2027 guidance to between 65 and 75 net new stores, up from the previous range of 60 to 70.

Construction of our future logistics hub in Western Canada also progressed on plan. The hub is expected to be fully operational by the end of calendar 2027, enabling us to move to a two-node distribution model in Canada in the near term. Turning to Latin America, Dollarcity delivered another solid performance in the second quarter and first half, generating strong same store sales and store network growth. During its second quarter, Dollarcity opened 19 net new stores across our four Central and South American markets.

This brought total store count in the region to 760 locations in mid-August. Subsequent to quarter end, the earthquake in Colombia temporarily affected a limited number of Dollarcity stores. I want to recognize the Dollarcity team for responding with care and urgency to support colleagues while restoring affected locations. Operations have since largely returned to normal and the financial impact is expected to be minimal.

Turning to Mexico, we opened 10 stores during the second quarter, bringing the total count in the country to 21 by quarter end. The ramp up of operations and network growth in Mexico remains on plan as the team continues to build density in the Guadalajara region. We also continue to be pleased with the initial customer response to our value and convenience proposition in Australia. Our multi-year transformation roadmap gained momentum during the quarter, supported by the team's continued execution of our fiscal 2027 initiatives.

We renovated 25 stores during the quarter, up from 13 in Q1, improving store layout and navigation while allowing for greater SKU density. We also opened four net new stores on top of the eight net new stores opened in the first quarter. We remain on track to renovate between 60 and 80 stores and open between 15 and 25 net new stores in fiscal 2027. Halfway through the year, we now have 60 stores operating with the Dollarama layout and fixtures, up from 28 at the end of Q1, out of a total of 414 locations nationally.

It is encouraging to see the store transformations gradually taking shape as we work diligently and in parallel to introduce Dollarama-sourced products. On that front, the first Dollarama-sourced import products started to reach shelves across the store network during the second quarter, and we expect that rollout to continue. While the number of new products currently available is too limited to provide a meaningful read on customer response, we are confident that our import assortment will be highly attractive once we have greater density. As a reminder, the product transition will remain gradual and disciplined.

The team is working SKU by SKU to introduce more compelling value while aligning the required logistics support. We aim to have about half of our import products transition by fiscal year end. This work will continue into fiscal 2028. Looking more broadly, we continue to operate in an uncertain environment in Canada.

Economic conditions remain challenging. Continued trade tensions and elevated living costs are pressuring consumers and weighing on the economic outlook. In this context, we expect consumers to remain thoughtful about their spending while continuing to seek value. S.

As discussed during the last round of counter-tariffs over a year ago, we have the agility to navigate these measures and their financial impact remains manageable. Geopolitical conflict also continues to create cost pressures across global supply chains. The adaptability of our business model has enabled us to mitigate these in Q2 and we are actively working to manage the potential impacts through the second half of the year. In this evolving environment, we will continue to make disciplined choices across sourcing, merchandising, and operations.

We will also stay true to our price-follower philosophy to protect relative value for consumers through our product offering and within our fixed price points across our markets. Our teams remain focused on earning every customer visit with strong value, convenient locations, compelling assortment, and a consistent shopping experience. With that, I'll pass it over to Patrick. Patrick Bui, Chief Financial Officer Thank you, Neil, and good morning, everyone.

We delivered strong financial and operating results in the second quarter, supported by sustained customer demand in Canada and Latin America and disciplined execution in Australia. We also continue to advance our growth ambitions while returning excess cash to shareholders. Starting with consolidated results, let me first highlight one point of comparability. Q2 of fiscal 2027 includes three full months of Australian results compared with only 13 days in the corresponding period of the prior fiscal year.

6% to more than $2 billion. The increase reflects network and same store sales growth in Canada as well as the sales contribution from Australia. 2%. 29.

16 last year. 9% growth last year while consumer confidence remained weak. Customers continue to turn to Dollarama for everyday value. 5%, up from our previous range of 3 to 4%.

Our updated guidance reflects a prudent view of the balance of the year. While our performance demonstrates the enduring relevance of a value proposition, we remain mindful that sustained pressure on household budgets and the uncertainty created by the current trade environment can affect consumer sentiment and overall spending. 6% in the second quarter of fiscal 2026. The year-over-year increase primarily reflects the positive impact of scaling.

Supply chain pressures, including the impact of higher oil prices on raw material and transportation costs, were effectively managed in Q2. However, given the lag before these costs flow through our P&L, we expect their impact to become more pronounced as of Q3. We're confident we can mitigate a significant portion of these pressures through the second half of the year by leveraging the tools at our disposal while protecting relative value for customers. 5%.

8% of sales in Q2, in line with the prior year. 6% of sales. Scaling is expected to continue providing some leverage to help offset the higher store labour and operating costs. 9 million Canadian dollars for Q2.

7 million Canadian dollar loss, representing our 80% share of the net loss related to the Mexico ramp-up. These losses remain in line with our expectations. Subsequent to quarter end, Dollarcity declared a cash dividend of US$125 million, its second dividend this fiscal year. 1 million.

Once again, a portion of these proceeds is being used to fund our US$38 million share of the next capital contribution towards expansion activities in Mexico. Both the dividend and the capital injection will be recorded in the third quarter of fiscal 2027. Turning to Australia, the transformation initiatives outlined by Neil are progressing according to plan. Our full year expectations for both transformation-related costs and segment earnings performance remain unchanged.

As previously discussed, the ongoing transition to lower-priced merchandise is expected to continue weighing on sales in fiscal 2027, with the impact expected to be more pronounced through the second half of the year as the pace increases. We view this as a rebasing of sales. Resetting the merchandising mix and price point structure, which are key elements of our proven value retail model, will create near-term pressure. However, this transition is necessary to strengthen the value proposition and position the business for improved performance over time and for the long term.

Turning to capital allocation, we continue to return excess cash to shareholders through share repurchases and a quarterly dividend. 4 million. 12 per share. As we enter the second half of the fiscal year, our priorities remain unchanged and our plans are all on track.

Our teams are focused on execution across each of our markets, serving customers with value and convenience, and allocating capital in support of long-term value creation. We also recognize that the environment remains challenging for consumers and that trade tensions and geopolitical uncertainty persist. Against this backdrop, our value proposition remains highly relevant. While our business model provides flexibility and tools to help manage some of the external pressures, we are proud that Dollarama is a trusted destination for consumers seeking compelling value, convenience, and a broad assortment of everyday products.

Our focus is continuing to deliver on that brand promise. With that, I'll now turn the call back to the operator for the Q&A. OPERATOR Thank you. To ensure we hear from as many participants as possible, we ask that you please limit yourself to one question.

To ask a question, press star 11 on your telephone keypad and wait for your name to be announced. To withdraw your question, press star 11 again. Please stand by while we compile the Q&A roster. Our first question is from Irene Nadel with RBC Capital Markets.

Your line is now open. Irene Nadel, Analyst at RBC Capital Markets Thanks. Good morning, everyone. Great quarter and stable momentum, which brings me to my question, which is: if we look at the full-year guide on same store sales, it implies a quite reasonable deceleration in the back half of the year—looks like it takes you below 4% on same store sales, and particularly considering last year's Q4.

So wondering what you're actually seeing kind of at a more granular consumer demand level, and is there really that much more caution in what you're seeing? Thank you. Patrick Bui, Chief Financial Officer Yeah, thanks for your question, Irene. 4 in the quarter.

We saw consistent strength throughout the quarter, including as we exited Q2, with, you know, clearly traffic remaining strong. So when it comes to guidance, I would say on the one hand our strong performance in the first half supports the positive revision to the full-year outlook. But on the other hand I think it's important to remain prudent for the balance of the year given the ongoing uncertainties in the macro environment. We all know about whether that's higher oil prices and/or trade headlines, but overall I think we're encouraged by the continued momentum reflected in our Q2 results.

OPERATOR Thank you. Our next question comes from the line of Brian Morrison with TD Cowen. Your line is now open. Brian Morrison, Analyst at TD Cowen Thank you, Neil and/or Patrick.

I get a lot of questions on inflation recently, and I wonder where this most benefits you. Is it accelerating trade down? Where it most impacts you is at higher fuel prices, and how this nets out positive and negative and whether this moves forward. Your view of the potential for a higher price point since it's been about five years since the introduction of a $5 price point.

Neil Rossy, President and CEO Morning, Brian. Thank you for the question. So during difficult times the consumer has less money to spend. It's that simple.

By the same token, during difficult times the consumer trades down, and that can benefit Dollarama.