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Dollarama sales increased 3.6%

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Staff writer ▼ | April 10, 2014
Dollarama, Inc. reported an increase in sales, net earnings and earnings per share for the fourth quarter and fiscal year ended February 2, 2014. The fourth quarter of Fiscal 2014 had 13 weeks whereas the fourth quarter of Fiscal 2013 had 14 weeks.
Dollarama
DollaramaDollarama, Inc. reported an increase in sales, net earnings and earnings per share for the fourth quarter and fiscal year ended February 2, 2014. The fourth quarter of Fiscal 2014 had 13 weeks whereas the fourth quarter of Fiscal 2013 had 14 weeks.


The additional week of sales in Fiscal 2013 accounted for an incremental $32.1 million of total sales. Despite the impact of an additional week in the prior year’s fourth quarter, sales increased by 3.6%, from $561.9 million in the fourth quarter of Fiscal 2013 to $582.3 million in the fourth quarter of Fiscal 2014.

On a comparable 13-week basis, sales increased by 9.9%. The increase in sales was driven by an 11.3% growth in the total number of stores, with the addition of 89 net new stores in Fiscal 2014, including 27 net new stores in the fourth quarter, and a 1.1% increase in comparable store sales.

The comparable store sales performance was impacted by a 7.5% decrease for the month of December 2013 due to the adverse weather conditions, especially in the two weeks leading up to Christmas Day. On a 13-week basis, comparable store sales growth consisted of a 4.4% increase in the average transaction size, partially offset by a 3.1% decrease in the number of transactions.

This decrease in the number of transactions was mainly the result of a significant reduction in store traffic and the temporary closure of approximately 80 stores for periods ranging from a few hours to two consecutive days, as a result of adverse weather and power failures in some of the Corporation’s core markets, the majority of the impacted days occurring during the two weekends leading up to Christmas Day.

Historically, the Corporation’s highest sales have occurred during the fourth quarter, more specifically during the winter holiday season, with December representing a higher proportion of sales. Average transaction size improved as the sale of products priced higher than $1.00 increased from 56% in the fourth quarter of Fiscal 2013 to 61% in the fourth quarter of Fiscal 2014. Debit card penetration also increased, as 43.2% of sales were paid with debit cards compared to 40.9% in the corresponding period of the previous fiscal year.

he gross margin was 38.4% of sales in the fourth quarter of Fiscal 2014, lower when compared to 38.7% of sales in the fourth quarter of Fiscal 2013. This decrease was primarily the result of a 7.5% decrease in comparable store sales for the month of December 2013, which typically represents a higher proportion of sales, due to the adverse weather conditions in the two weeks leading up to Christmas Day.

SG&A in the fourth quarter of Fiscal 2014 was $92.7 million, a 5.6% decrease over $98.2 million in the corresponding period of Fiscal 2013. SG&A for the fourth quarter of Fiscal 2014 was 15.9% of sales, an improvement of 1.6% compared to 17.5% of sales in the corresponding period of Fiscal 2013. The reduction in SG&A as a percentage of sales is the result of several store labour productivity improvements made in Fiscal 2014 as well as the timing of other operating expenses incurred.

Net financing costs increased by $1.3 million, from $2.7 million for the fourth quarter of Fiscal 2013 to $4 million for the fourth quarter of Fiscal 2014 mainly as a result of increased borrowings on long-term debt. For the fourth quarter of Fiscal 2014, net earnings increased to $83 million, or $1.17 per diluted share, compared to $77.1 million, or $1.04 per diluted share, for the corresponding period of Fiscal 2013.

Sales in Fiscal 2014 increased by 11.1%, from $1,858.8 million to $2,064.7 million compared to Fiscal 2013. The total sales for Fiscal 2013 included an additional week, associated with the 53-week retail calendar that accounted for $32.1 million. Therefore, sales on a comparable 52-week basis increased year-over-year by 13%.

The main drivers of our sales growth in Fiscal 2014 were an 11.3% growth in the number of stores over the past fiscal year as we added 89 net new stores, going from 785 stores on February 3, 2013 to 874 stores on February 2, 2014, and comparable store sales growth of 3.8%. On a 52-week basis, comparable store sales increased by 3.8% for Fiscal 2014, while they increased by 6.5% in Fiscal 2013.

Comparable store sales performance for Fiscal 2014 consisted of a 4% increase in the average transaction size partially offset by a 0.2% decrease in the number of transactions. During Fiscal 2014, 60.5% of our sales originated from products priced higher than $1 compared to 55% for Fiscal 2013.

The gross margin decreased to 37.1% of sales for Fiscal 2014 compared to 37.4% of sales for Fiscal 2013. This decrease was driven mainly by additional occupancy and logistics costs associated with the increased pace of new store openings in Fiscal 2014.

Over the past three fiscal years, the gross margin has steadily decreased from 37.5% in Fiscal 2012 to 37.1% in Fiscal 2014. In spite of the depreciation of the Canadian dollar against the U.S. dollar, management is committed to maintaining both a compelling product offering and a gross margin in the range of 36% to 37%.


 

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