Key Takeaways
- Second-quarter revenue climbed 17.6% to $2.03 billion, meeting Wall Street expectations
- Canadian same-store sales advanced 5.4%, accelerating from 4.9% growth in the prior year
- EBITDA margin contracted to 32.2% versus 34.1% last year, primarily due to Australian operations
- Company upgraded its full-year Canadian comparable sales outlook to 4%-4.5% from 3%-4%
- Shares have declined approximately 19% year-to-date and fell an additional 1.69% following the earnings announcement
Dollarama (TSX: DOL) unveiled its fiscal 2027 second-quarter financial results on Wednesday, delivering revenue of $2.03 billionāa 17.6% jump from the $1.72 billion recorded in the comparable quarter last year. The figures aligned closely with analyst projections.
Shares retreated 1.69% during Wednesday’s trading session, adding to a year-to-date decline of approximately 19%.
Earnings per share on a diluted basis reached $1.29, representing an 11.2% increase from the $1.16 reported in the year-ago period. Net income advanced 8.7% to $349.3 million for the quarter.
In Canada, same-store sales expanded 5.4%, fueled by a 3.7% uptick in transaction count and a 1.7% improvement in average transaction value. This performance represents an acceleration from the 4.9% comparable sales growth posted in last year’s second quarter.
Management attributed the Canadian traffic gains primarily to robust demand across consumable products and general merchandise categories.
Australian Business Pressures Profitability Metrics
EBITDA margin compressed to 32.2% from 34.1% in the prior-year quarter, predominantly reflecting the impact of incorporating a full quarter of Dollarama Australia results. Last year’s comparison period included just 13 days of Australian operations following the company’s purchase of The Reject Shop.
The Australian segment operates with lower gross margins and elevated selling, general and administrative expenses as a percentage of revenue compared to the Canadian core business, contributing approximately 110 basis points of margin pressure each.
Looking at the Canadian operations in isolation, EBITDA margin actually expanded to 34.9% from 34.5%, demonstrating continued strength in the company’s home market.
During the quarter, the retailer added a net 15 locations in Canada, compared to 27 net additions in the corresponding period of fiscal 2026. Meanwhile, the Australian business saw four net new store openings alongside renovations at 25 existing locations.
The company also executed a buyback of 1,596,016 common shares for $300.4 million throughout the three-month period.
Full-Year Outlook Upgraded on Canadian Momentum
Dollarama increased its full-year comparable store sales growth projection for Canadian operations to a range of 4%-4.5%, up from previous guidance of 3%-4%.
Chief Executive Officer Neil Rossy highlighted evolving consumer patterns as a significant positive factor, observing that shoppers are “making careful spending decisions” and increasingly choosing Dollarama for value-oriented purchases.
The Dollarcity franchise operations spanning Central America, South America, and Mexico also demonstrated strong performance. Revenue from this segment surged 30% year-over-year, while the store footprint expanded from 658 to 781 locations during the trailing 12-month period.
Net financing expenses rose by $8.0 million to $51.2 million, attributed to elevated average debt balances following two fixed-rate note offerings completed in the first quarter.
The retailer’s revised store expansion targets, coupled with the enhanced comparable sales forecast, were disclosed in conjunction with Wednesday’s quarterly earnings release.
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