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Dollarama Q2 diluted net EPS increased 18.9%

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Staff Writer | Thursday September 1, 2016 1:42PM ET
Dollarama
Dollarama   The increase in sales

Dollarama reported increases in sales and net earnings for the second quarter ended July 31, 2016. Diluted net earnings per share rose 18.9% to $0.88.


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Sales for the second quarter of Fiscal 2017 increased by 11.6% to $729.0 million, compared to $653.3 million in the corresponding period of the prior fiscal year.

The increase in sales was driven by continued organic sales growth fuelled by comparable store sales growth of 5.7%, over and above comparable store sales growth of 7.9% in the second quarter of Fiscal 2016, and the growth in the number of stores over the past twelve months, from 989 stores on August 2, 2015 to 1,051 stores on July 31, 2016.

Dollarama comparable store sales growth for the second quarter of Fiscal 2017 consisted of a 4.6% increase in the average transaction size and a 1.0% increase in the number of transactions. The gross margin was 38.4% of sales in the second quarter of Fiscal 2017, the same as in the corresponding quarter of the prior year.

General, administrative and store operating expenses (“SG&A”) for the second quarter of Fiscal 2017 was $110.9 million, a 7.0% increase over $103.7 million for the second quarter of Fiscal 2016.

The increase is primarily related to the continued growth in the total number of stores. SG&A for the second quarter of Fiscal 2017 represented 15.2% of sales compared to 15.9% of sales for the second quarter of Fiscal 2016.

The 0.7% improvement in SG&A as a percentage of sales is mainly the result of store labour productivity improvements and the positive scaling impact of strong comparable store sales.

Dollarama financing costs increased by $2.9 million, from $4.4 million for the second quarter of Fiscal 2016 to $7.3 million for the second quarter of Fiscal 2017. The increase is mainly due to increased borrowings on long-term debt.

Net earnings increased to $106.4 million, or $0.88 per diluted common share, in the second quarter of Fiscal 2017, compared to $95.5 million, or $0.74 per diluted common share, in the second quarter of Fiscal 2016. The increase in net earnings is mainly the result of an 11.6% increase in sales and lower SG&A as a percentage of sales.

The board approved a quarterly cash dividend for holders of common shares of $0.10 per common share. The Corporation’s quarterly cash dividend will be paid on November 2, 2016 to shareholders of record at the close of business on September 30, 2016 and is designated as an “eligible dividend” for Canadian tax purposes.

 

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