Difficult weather no match for Dollarama’s fourth quarter

Despite difficult weather conditions during the peak holiday season, Dollarama enjoyed an increase in sales, net earnings and earnings per share for the fourth quarter ended Feb. 2.

"Fourth quarter and full-year financial results came out strong despite the adverse impact of severe weather conditions on store traffic, particularly in December, during our peak sales period. While not as severe, weather conditions did remain challenging for the remainder of the winter season," stated Larry Rossy, chairman and CEO of Dollarama.

This year’s fourth quarter had one fewer week than last year’s. That 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 3.6% to $582.3 million in the quarter from $561.9 million in last year’s fourth quarter. 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 increased to 61% in the quarter from 56% in the prior-year quarter. 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.

The company’s board of directors has approved a 14% increase of the quarterly dividend for holders of its common shares, from $0.14 per common share to $0.16 per common share. This increased quarterly dividend will be paid May 7 to shareholders of record at the close of business April 29, and is designated as an "eligible dividend" for Canadian tax purposes. The board has determined that this new level of quarterly dividend is appropriate based on Dollarama's current cash flow, earnings, financial position and other relevant factors.

Dollarama is Canada's leading dollar store operator with 874 locations across the country.



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