- Strong Sales & EPS Growth: Total sales surged 22% to $1.9B; EPS rose 19.4% to $1.17 driven by Canadian same-store sales (6%), Australian segment, and store growth.
- Store Expansion Momentum: Opened 19 net new Canadian stores (total 1,684) and 25 in Latin America (total 683), reflecting regional expansion success.
- Gross Margin Expansion: Canadian segment gross margin hit 45.8%, while consolidated margin stood at 44.8%, aided by logistics cost discipline and productivity gains.
- Capital Allocation Strategy: Repurchased $884.6M in shares (~2.6M shares) and raised annual dividends; maintained 2-dividend policy with Mexico capital contributions.
- Guidance & Strategic Focus: Raised full-year Canadian gross margin guidance to 45–45.5% and SSS to 4.2–4.7%, with Australia’s transformation expected to impact earnings neutrally by 2026.
Segment Performance
In Canada, same-store sales grew 6%, with a 4.1% increase in transactions and a 1.9% increase in basket size. The company opened 19 net new stores in Q3, bringing the total number of stores in Canada to 1,684. In Latin America, Dollarcity delivered strong financial results, opening 25 net new locations, and the total store count reached 683. The Australian segment is still in the early stages of transformation, with the company laying the groundwork for a multi-year transformation.
Margin Performance
Gross margin increased to 45.8% for the Canadian segment, and consolidated gross margin came in at 44.8% of sales for Q3. SG&A for the Canadian segment was 14.2%, and consolidated SG&A was 15.4% of sales in Q3. The company has seen stability in import costs, while domestic producers are pushing for price increases despite no significant input cost rises. Gross margin performance has been strong, partly due to lower logistics costs from productivity gains and stability in the logistics chain.
Guidance and Outlook
The company is increasing its full-year SSS guidance from between 3% and 4% to between 4.2% and 4.7% and raising its fiscal 2026 guidance range for the Canadian segment's gross margin to between 45% and 45.5%. The Australian segment had a negative $0.03 impact on EPS, and the company expects TRS to have a neutral to slightly negative impact on earnings in fiscal 2026. Analysts estimate next year's revenue growth at 13.1%.
Valuation
With a P/E Ratio of 42.76 and an EV/EBITDA of 30.5, the market is pricing in a high level of growth expectations. The company's ROE is 99.41%, indicating strong profitability. The Dividend Yield is 0.2%, which may not be attractive to income investors. The ROIC is 20.61%, indicating that the company is generating strong returns on its invested capital. The Net Debt / EBITDA ratio is 2.57, indicating a moderate level of leverage.