MONTREAL, June 20 /CNW/ -- Dollarama Group L.P. (the "Company"), the
leading operator of dollar discount stores in Canada, today announced its
results for the first quarter of fiscal year 2008, which ended May 6, 2007.
[Note: all dollar amounts in this press release are in Canadian dollars
unless otherwise indicated.]
On February 1, 2007, the Company changed its fiscal year end, moving it
from January 31 to a floating year end ending on the closest Sunday before or
after January 31 of each year. The change was effective beginning with fiscal
year 2007, which ended February 4, 2007. Fiscal year 2008 began February 5,
2007, and will end February 3, 2008. There are two additional days of
transactions included in the 13 weeks of the first quarter ended May 6, 2007
by comparison to the three-month period ended April 30, 2006.
Dollarama Group L.P. reported that sales increased $30.9 million, or
16.7%, to $215.9 million for the first quarter of fiscal year 2008, up from
$184.9 million for the three-month period ended April 30, 2006. Sales growth
was driven primarily by the opening of 65 new stores, which was offset by the
temporary closure of 2 stores for a net of 63 stores opened in the
twelve-month period ended May 6, 2007. Offsetting the sales increase was a
decline in comparable store sales of 1.8% for the 13-week period ended May 6,
2007.
Net earnings for the first quarter of fiscal year 2008 increased $1.3
million to $10.2 million from $8.9 million for the three-month period ended
April 30, 2006. Adjusted EBITDA increased 12.8%, to $29.5 million for the
three-month period ended May 6, 2007 from $26.2 million for the three-month
period ended April 30, 2006.
"We continued to expand our geographic footprint as we remain confident
that the concept is relevant to consumers across Canada," said Larry Rossy,
CEO of Dollarama Group L.P. "The slight softness in same store sales was
attributable to unfavorable weather conditions that impacted store traffic in
certain markets, cannibalization of existing stores by new store openings, and
a short-term issue with technology implementation which is currently being
resolved. We are already realizing benefits from this new technology. We are
continuing to be focused on our customer as we focus on scaling the business
while offering customers the products and value they want."About Dollarama Group L.P.Dollarama is the leading operator of dollar discount stores in Canada.
Currently, the company operates more than 477 stores, each offering a broad
assortment of quality everyday merchandise sold in individual or multiple
units primarily at a fixed price of $1.00. All stores are company-operated,
and nearly all are located in high traffic areas such as strip malls and
shopping centers in various locations, including metropolitan areas, mid-sized
cities, and small towns. In 1910, the company was established as a single
variety store in Quebec.Safe Harbor for Forward-Looking and Cautionary StatementsThis release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. As such, final results could
differ from estimates or expectations due to risks and uncertainties,
including among others, changes in customer demand for products, changes in
raw material and equipment costs and availability, seasonal changes in
customer demand, pricing actions by competitors and general changes in
economic conditions; and other risks. For any of these factors, the Company
claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995, as amended.
Summary Historical Financial Data(dollars in thousands) Three-Month 13-week period
period Ended Ended May 6,
April 30, 2006 2007
Statement of Operations Data:
Sales $184,941 $215,875
Cost of sales 127,107 145,296
Gross profit 57,834 70,579
Expenses:
General administrative and store
operating expenses 33,186 43,317
Amortization(1) 2,810 4,099
Total expenses 35,996 47,416
Operating income 21,838 23,163
Other expenses:
Amortization of deferred financing costs 1,020 1,068
Interest expense 11,318 11,027
Foreign exchange (gain) or loss on
derivative financial instruments and
long-term debt 181 866
Earnings before income taxes 9,319 10,202
Income taxes 422 42
Net earnings $8,897 $ 10,160
Statement of Cash Flows Data:
Cash flows provided by (used in):
Operating activities $37,639 $ 12,264
Investing activities (8,825) (10,581)
Financing activities (4,965) (1,707)
Other Financial Data:
Capital expenditures $8,900 $ 10,619
Rent expense(2) $11,300 $ 13,796
Gross margin(3) 31.3% 32.7%
Number of stores (at end of period) 414 477
Comparable store sales growth(4) 5.4% -1.8%
As at May 6,
(dollars in thousands) 2007
Balance Sheet Data:
Cash and cash equivalents $47,671
Merchandise inventories 163,813
Property and equipment 91,277
Total assets 1,168,163
Long-term debt(5) 576,430
Partners' capital 490,006
(1) Amortization represents amortization of tangible and amortizable
intangible assets, including amortization of favourable and
unfavourable lease rights.
(2) Rent expense represents (i) basic rent expense on a straight-line
basis and (ii) contingent rent expense, net of amortization of
inducements received from landlords.
(3) Gross margin represents gross profit as a percentage of sales.
(4) Comparable store sales is a measure of the percentage increase or
decrease of the sales of stores open for at least 13 complete months
and that remain open at the end of the reporting period relative to
the same period in the prior year. To provide more meaningful results,
the Company measures comparable store sales over periods containing an
integral number of weeks beginning on a Monday and ending on a Sunday
that best approximate the fiscal period to be analyzed.
(5) Includes current portion of long-term debt, but excludes deferred
financing costs which have been shown as a reduction of long-term debt
on the balance sheet.
Adjusted EBITDAEBITDA represents net income (loss) before net interest expense, income
taxes, and depreciation and amortization expense. Adjusted EBITDA represents
EBITDA as further adjusted to reflect items set forth in the table below. A
reconciliation of net earnings to EBITDA and to Adjusted EBITDA is included
below:(dollars in thousands) Three-Month period 13-Week period
Ended Ended
April 30, May 6,
2006 2007
Net earnings $8,897 $ 10,160
Income taxes 422 42
Interest expense 11,318 11,027
Amortization of deferred financing costs 1,020 1,068
Amortization of fixed tangible and
intangible assets 2,810 4,099
EBITDA $ 24,467 $ 26,396
Foreign exchange (gain) or loss on
derivative financial instruments and
long-term debt 181 866
Management fees(a) 779 834
Non-cash straight line rent expense(b) 612 709
Non-cash stock-based compensation expense(c) 154 743
Adjusted EBITDA $26,193 $29,548
(a) Reflects the management fees incurred and paid or payable to the
Company's majority owners.
(b) Represents the elimination of non-cash straight-line rent expense.
(c) Represents the elimination of non-cash stock-based compensation
expense.The Company presents EBITDA and Adjusted EBITDA to provide investors with
a supplemental measure of its operating performance and information about the
calculation of some of the financial covenants that are contained in its
senior secured credit facility. The Company believes EBITDA is an important
supplemental measure of operating performance because it eliminates items that
have less bearing on the Company's operating performance and thus highlights
trends in the Company's core business that may not otherwise be apparent when
relying solely on Canadian GAAP financial measures. The Company also believes
that securities analysts, investors and other interested parties frequently
use EBITDA in the evaluation of issuers, many of which present EBITDA when
reporting their results. Adjusted EBITDA is a material component of the
covenants imposed on the Company by its senior secured credit facility. Under
the senior secured credit facility, the Company is subject to financial
covenant ratios that are calculated by reference to Adjusted EBITDA. The
Company's management also uses EBITDA and Adjusted EBITDA in order to
facilitate operating performance comparisons from period to period, prepare
annual operating budgets and assess the Company's ability to meet future debt
service, capital expenditure and working capital requirements and the
Company's ability to pay dividends on its capital stock.
EBITDA and Adjusted EBITDA are not presentations made in accordance with
Canadian GAAP. As discussed above, the Company believes that the presentation
of EBITDA and Adjusted EBITDA is appropriate. However, EBITDA and Adjusted
EBITDA have important limitations as analytical tools, and you should not
consider them in isolation, or as substitutes for analysis of the Company's
results as reported under Canadian GAAP. For example, neither EBITDA nor
Adjusted EBITDA reflect (a) the Company's cash expenditures, or future
requirements for capital expenditures or contractual commitments; (b) changes
in, or cash requirements for, the Company's working capital needs; (c) the
significant interest expense, or the cash requirements necessary to service
interest or principal payments, on the Company's debt; and (d) tax payments or
distributions to the Company's parent to make payments with respect to taxes
attributable to the Company that represent a reduction in cash available to
the Company. Because of these limitations, the Company primarily relies on
its results as reported in accordance with Canadian GAAP and use EBITDA and
Adjusted EBITDA only supplementally. In addition, because other companies may
calculate EBITDA and Adjusted EBITDA differently than the Company does, EBITDA
may not be, and Adjusted EBITDA is not, comparable to similarly titled
measures reported by other companies.
For further information: Investors: Robert Coallier, Chief Financial
Officer, +1-514-737-7080 ext. 238, robert.coallier@dollarama.com; Media: Alex
Stanton, Stanton Crenshaw Communications, +1-212-780-1900,
alex@stantoncrenshaw.com
