Dollarama focuses on growth following solid Q2 results
MONTREAL — Dollarama has opened 93 net new stores in the past 12 months, including 22 during the second quarter ended Aug. 4, for a total of 828. This accelerated growth helped drive sales for the quarter, which increased 16% to $511.3 million from $441.0 million in the prior-year quarter.
Comparable store sales increased 7.3% in the quarter, thanks to a 4.6% increase in average transaction size combined with a 1.5% increase in the number of transactions. The company reported that 62% of its sales originated from products priced higher than $1, compared to 56% in the corresponding quarter last year. Debit card penetration also increased, as 41% of sales were paid with debit cards compared to 39% in the corresponding period of the previous fiscal year.
Operating income grew 17.1% to $84.4 million, or 16.5% of sales, and diluted net earnings per share increased by 24.2%, from $0.66 to $0.82.
"We are very satisfied with the financial and operating results being reported for our second quarter. These results demonstrate the growth of our business through our store expansion across Canada, the success of our merchandising strategy and our team's ability to execute on our operating plans," stated Larry Rossy, chairman and CEO.
The gross margin stood at 36.6% of sales in the quarter, compared to 36.9% of sales in the prior-year quarter, mainly because stable product margins were offset by additional occupancy and logistics costs associated with the increased pace of new store openings. The cost impact associated with the acceleration of net new store openings is expected to decrease in the second half of fiscal 2014.
Dollarama is Canada's leading dollar store operator, which offers a broad assortment of everyday consumer products, general merchandise and seasonal items. Products are currently sold in individual or multiple units at select fixed price points up to $3.