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1. Company Snapshot

1.a. Company Description

Dollarama Inc.operates a chain of dollar stores in Canada.Its stores offer general merchandise, consumables, and seasonal products.


The company also sells its products through online store.As of January 30, 2022, it operated 1,421 stores.The company was formerly known as Dollarama Capital Corporation and changed its name to Dollarama Inc.


in September 2009.Dollarama Inc.was founded in 1992 and is headquartered in Montreal, Canada.

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1.b. Last Insights on DOL

Dollarama Inc.'s recent performance was driven by its strong retail investor base, with 55% of shares owned by individual investors. This indicates significant control and influence over the company's direction. Additionally, the company's upcoming earnings release on April 3, 2025, for the fourth quarter and fiscal year 2025, is expected to provide insight into its financial performance. The company has also been focused on its operations and has been exploring opportunities to enhance its value proposition for customers.

1.c. Company Highlights

2. Dollarama Delivers Strong Q1 with 8.2% Sales Growth and Improved Margins

Dollarama reported a solid first quarter, with sales growing 8.2% to $1.5 billion, driven by a 4.9% increase in same-store sales. This growth was fueled by a combination of higher transaction counts (up 3.7%) and slightly larger basket sizes (up 1.2%). Gross margin improved to 44.2%, benefiting from lower logistics costs and reduced inventory shrink, as highlighted by CFO Patrick Bui, who noted, "Our focus on cost management and operational efficiency has allowed us to maintain our value proposition despite macro uncertainties." EBITDA reached $496.2 million, including a $10.4 million unrealized gain, while diluted EPS surged 27.3% to $0.98, well above consensus estimates of $0.71. The company also reported a $40.3 million share of Dollarcity's net earnings, reflecting strong performance in Latin America.

Publication Date: Jun -16

📋 Highlights
  • Same-Store Sales Growth: 4.9% increase driven by strong consumables demand and Easter performance.
  • Store Expansion: 22 new Canadian stores (total 1,638) and 12 new Dollarcity stores in Latin America (total 644).
  • Gross Margin Improvement: 44.2% gross margin, up due to lower logistics costs and reduced inventory shrink.
  • EBITDA and EPS Growth: EBITDA of $496.2 million and diluted EPS of $0.98, a 27.3% increase.
  • International Expansion: Imminent entry into Mexico and proposed acquisition of Australia's largest discount retailer.

Operational Performance

Dollarama continued to expand its footprint, opening 22 net new stores in Canada, bringing its total to 1,638 locations. Dollarcity, its Latin American subsidiary, added 12 net new stores, reaching 644 stores. The company remains on track to meet its annual target of 70-80 new stores in Canada and is poised to enter Mexico soon. While April sales rebounded after a softer March, management noted that May sales were impacted by weather, making it too early to assess Q2 performance. The company also emphasized its ability to navigate tariff-related challenges through vendor negotiations and a focus on maintaining price points.

Expansion Strategy

Dollarama's international ambitions were a key focus during the call. The company is nearing its entry into Mexico, with the first stores set to open soon. Management emphasized that the initial focus will be on testing the concept in this competitive market, with no significant changes planned to the product mix compared to other Latin American markets. Additionally, the proposed acquisition of Australia's largest discount retailer is progressing well, with closing expected in late July. This acquisition marks a significant step in Dollarama's global expansion strategy.

Valuation Analysis

At current levels, Dollarama trades at a P/E ratio of 46.13 and an EV/EBITDA of 28.38, reflecting the market's confidence in its growth prospects. While the valuation appears stretched, the company's strong execution, robust same-store sales growth, and international expansion plans suggest that the premium is justified. The stock's dividend yield of 0.2% is modest, but the company's focus on share buybacks and reinvestment in growth initiatives aligns with its long-term strategy.

Outlook

Looking ahead, Dollarama maintained its full-year guidance, signaling confidence in its ability to navigate macroeconomic uncertainties. The company's focus on consumables, which continue to drive sales, and its disciplined approach to cost management position it well for continued growth. While the near-term impact of tariffs and sales mix shifts could weigh on margins, the strong Q1 performance and progress on international expansion bode well for the future. Analysts expect revenue growth of 7.8% next year, reflecting optimism about Dollarama's strategic initiatives and market positioning.

3. NewsRoom

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This TSX stock's price may have highest to rise among TD's initial top picks for 2026

Nov -28

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Dollarama Price Target Raised to $220 at RBC

Nov -28

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DOLLARAMA TO REPORT THIRD QUARTER FISCAL 2026 RESULTS

Nov -07

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A Look At The Fair Value Of Dollarama Inc. (TSE:DOL)

Sep -18

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Bernstein sees Dollarama as Canada’s ’Costco,’ stays cautious on Five Below

Sep -17

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How Investors May Respond To Dollarama (TSX:DOL) Q2 Earnings Growth and Expansion Moves

Aug -31

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Dollarama Price Target Lowered to $199 at CIBC

Aug -28

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Dollarama reports 10.3% sales growth in Q2 2026

Aug -28

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.80%)

6. Segments

Retail - Variety Stores

Expected Growth: 7.8%

Dollarama's growth is driven by increasing consumer demand for affordable products, rising popularity of dollar stores, and strategic store locations. The company's focus on private labels and effective supply chain management also supports its expansion.

7. Detailed Products

Housewares

Dollarama offers a wide range of housewares including kitchen utensils, cleaning supplies, and home decor items.

Health and Beauty

Dollarama sells a variety of health and beauty products such as skincare, haircare, and personal care items.

Food and Beverages

Dollarama offers a selection of packaged snacks, candies, and beverages at discounted prices.

Party and Craft Supplies

Dollarama provides a range of party supplies, craft materials, and seasonal decorations.

Pet Food and Accessories

Dollarama sells pet food, toys, and accessories at discounted prices.

Stationery and Office Supplies

Dollarama offers a variety of stationery, office supplies, and school materials.

Toys and Games

Dollarama sells a range of toys, games, and puzzles for kids and adults.

Seasonal and Holiday Items

Dollarama provides seasonal decorations, gifts, and holiday-themed items.

8. Dollarama Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Dollarama's products are mostly non-essential and discretionary, making substitutes less of a threat. However, online shopping and e-commerce platforms can be considered substitutes, but Dollarama's focus on in-store experience and convenience mitigates this threat.

Bargaining Power Of Customers

Dollarama's customers have some bargaining power due to the availability of alternative retailers and online shopping options. However, Dollarama's low prices and convenient locations reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Dollarama has a diverse supplier base, which reduces the bargaining power of individual suppliers. Additionally, Dollarama's large scale of operations gives it negotiating power with suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high capital requirements and logistical challenges of setting up a large-scale retail operation. Additionally, Dollarama's established brand and economies of scale make it difficult for new entrants to compete.

Intensity Of Rivalry

The retail industry is highly competitive, and Dollarama faces intense rivalry from other discount retailers and dollar stores. However, Dollarama's focus on everyday low prices and convenient locations helps it to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 86.78%
Debt Cost 5.42%
Equity Weight 13.22%
Equity Cost 6.53%
WACC 5.56%
Leverage 656.15%

11. Quality Control: Dollarama Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Dollarama

A-Score: 5.6/10

Value: 1.0

Growth: 8.1

Quality: 6.5

Yield: 0.0

Momentum: 8.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Walmart

A-Score: 5.5/10

Value: 2.4

Growth: 5.4

Quality: 4.8

Yield: 2.0

Momentum: 8.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Dollar General

A-Score: 5.4/10

Value: 5.2

Growth: 5.6

Quality: 3.9

Yield: 3.0

Momentum: 9.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Costco Wholesale

A-Score: 5.4/10

Value: 1.4

Growth: 7.0

Quality: 5.7

Yield: 2.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Target

A-Score: 5.0/10

Value: 6.8

Growth: 5.1

Quality: 4.7

Yield: 7.0

Momentum: 0.5

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Dollar Tree

A-Score: 4.2/10

Value: 5.5

Growth: 3.2

Quality: 2.8

Yield: 0.0

Momentum: 8.5

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

201.11$

Current Price

201.11$

Potential

-0.00%

Expected Cash-Flows