CIBC has adjusted its price target for Dollarama (DLMAF, Financial), increasing it from C$174 to C$204. Despite this upward adjustment, the firm continues to maintain a Neutral rating on the stock. This update reflects a reassessment of Dollarama's market potential and performance.
DLMAF Key Business Developments
Release Date: June 11, 2025
- Revenue: Sales increased 8.2% to over $1.5 billion.
- Same-Store Sales (SSS): Grew 4.9%, with a 3.7% increase in transactions and a 1.2% increase in average transaction size.
- Gross Margin: Improved to 44.2% from 43.2% in the previous year.
- EBITDA: $496.2 million, with a margin of 32.6%.
- Adjusted EBITDA: Excluding a $10.4 million unrealized gain, EBITDA was $485.8 million, with a margin of 31.9%.
- Diluted Net Earnings Per Share: Increased by 27.3% to $0.98.
- Store Count: Opened 22 net new stores in Canada, totaling 1,638 stores.
- Dollarcity Store Count: Opened 12 net new stores, totaling 644 stores in Latin America.
- SG&A Expenses: Represented 15.3% of sales, slightly down from 15.4% the previous year.
- Dividend: Quarterly cash dividend of $0.1058 per share announced.
- Capital Expenditures: Updated range to $285 million to $330 million for fiscal 2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dollarama Inc (DLMAF, Financial) reported a strong start to fiscal 2026 with a 4.9% increase in same-store sales, driven by sustained demand for consumables and positive seasonal performance.
- The company opened 22 net new stores in Q1, bringing the total store count in Canada to 1,638, and plans to open between 70 and 80 net new stores this year.
- Dollarcity, the Latin American subsidiary, opened 12 net new stores, expanding its presence in Colombia, Peru, El Salvador, and Guatemala to 644 stores.
- The company is set to enter the Mexican market with the first Dollarcity stores opening imminently, marking a significant milestone for its international expansion.
- Gross margin improved to 44.2% from 43.2% in the previous year, primarily due to lower logistics costs and reduced inventory shrinkage.
Negative Points
- The macroeconomic environment remains uncertain, with consumer confidence at an all-time low earlier in the year, impacting spending behavior.
- Counter tariffs imposed by Canada on goods imported from the US continue to pose challenges, particularly affecting national brand consumable products.
- The company is facing potential headwinds from continued mix shifts, foreign exchange fluctuations, and shipping rates, which could impact future gross margins.
- Dollarama Inc (DLMAF) anticipates losses from its Mexico market entry, with expectations of continued losses for the next two to three years before breaking even.
- The company did not conduct any share buybacks in Q1 due to market uncertainty and upcoming capital needs, impacting its capital allocation strategy.
