Dollarama Group Holdings L.P. and Dollarama Group L.P. Announce Financial Results for Second Quarter of Fiscal Year 2009



    
    Dollarama Group L.P. Highlights for the Second Quarter

    -- Sales Increased 13.3%

    -- Comparable Store Sales Rose by 3.7%

    -- Adjusted EBITDA Up 3.3%

    -- Net Earnings Up 16.8%
    

    MONTREAL, Sept. 17 /CNW/ -- Dollarama Group Holdings L.P. and Dollarama
Group L.P. today announced financial results for the second quarter ended
August 3, 2008.  The results of operations of Dollarama Group Holdings L.P.
are almost identical to those of Dollarama Group L.P., with the main exception
being interest expense, financing costs, and foreign exchange gain or loss
associated with Dollarama Group Holdings L.P.'s outstanding balance of senior
floating rate deferred interest notes.  Note:  All dollar amounts in this
press release are in Canadian dollars unless otherwise indicated.
    Dollarama Group L.P. reported that sales increased $31.1 million, or
13.3%, to $264.3 million for the 13-week period ended August 3, 2008, up from
$233.2 million for the same period in the prior year.  Comparable store sales
rose 3.7% driven by an increase in average transaction size of 4.3% but were
offset by a modest 0.6% decline in store traffic. The remaining portion of the
sales growth was driven primarily by 53 new store openings since the end of
the first quarter of fiscal year 2008, and by the full 13-week effect of the
stores opened during the second quarter of last year.
    Gross margin for the period was at 35.2% compared with 34.8% for the same
period last year.
    Dollarama Group L.P.'s net earnings grew 16.8% to $26.0 million in the
second quarter of fiscal 2009 from $22.3 million in the second quarter of
fiscal 2008.
    Adjusted EBITDA (as defined in the attached tables) was $42.3 million for
the 13-week period ended August 3, 2008, up 3.3% versus the prior year.
    For the 26-week period ended August 3, 2008, Dollarama Group L.P.
reported a sales increase of $52.0 million or 11.6% to $501.1 million from
$449.1 million.  Comparable store sales rose 1.9%, driven by an increase in
average ticket size of 3.7%.  This was offset by a 1.8% decline in store
traffic.
    Gross margin increased to 33.9% for the 26-week period ended August 3,
2008 from 33.8% for the 26-week period ended August 5, 2007.
    Dollarama Group L.P.'s net earnings increased $3.2 million to $35.6
million for the 26-week period ended August 3, 2008, from $32.4 million for
the same period last year.
    Adjusted EBITDA (as defined in the attached tables) was $71.8 million for
the 26-week period ended August 3, 2008 up 1.9% versus the prior year.
    "We are pleased to report solid revenue growth, strong comparable store
sales and an increase in Adjusted EBITDA for the quarter," said Larry Rossy,
Chief Executive Officer of Dollarama.  "Given the macroeconomic environment
and the general state of the retail industry, we believe these results reflect
recent initiatives to enhance our operations."
    The Company also announced plans to begin offering an additional
assortment of exciting new products in its stores during the first quarter of
2009 that will be priced between $1.00 and $2.00.  While the vast majority of
products in its stores will continue to be $1.00, these new high value
products that have never been offered before at Dollarama stores, will expand
the company's merchandise selection, across many categories including
giftware, toys, glassware and plastic products.
    "I am excited to announce the introduction, in the first quarter of 2009,
of new product assortments priced between $1.00 and $2.00.  This new selection
will leverage Dollarama's distinct merchandising strength -- delivering
tremendous value to our customers across a broad and exciting array of
products, always at the lowest possible price points.  It will also continue
to enhance our customers' shopping experience," explained Rossy.

    About Dollarama

    Dollarama is the leading operator of dollar discount stores in Canada. 
Currently, the company operates more than 535 stores in 10 provinces, 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 Statements

    This 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.

    
    DOLLARAMA GROUP HOLDINGS L.P.
    SUMMARY CONSOLIDATED FINANCIAL DATA


                                 13-Week      13-Week     26-Week     26-Week
                                   Period      Period      Period      Period
                                   Ended        Ended       Ended       Ended
                                August 3,   August 5,    August 3,  August 5,
       (dollars in thousands)       2008        2007        2008        2007

     Statement of Operations
      Data:
     Sales                      $264,271      $233,205    $501,086   $449,080
     Cost of sales               171,142       152,117     331,347    297,413

     Gross profit                 93,129        81,088     169,739    151,667
     Expenses:
     General administrative
      and store operating
      expenses                    52,238        41,527     100,767     84,844
     Amortization(1)               5,565         4,239      10,338      8,338

     Total expenses               57,803        45,766     111,105     93,182

     Operating income/(loss)      35,326        35,322      58,634     58,485
     Other (income)/expense:
     Amortization of deferred
      financing costs              1,479         2,169       2,722      3,784
     Interest expense             13,186        16,613      27,301     33,875
     Foreign exchange loss
      (gain) on derivative
      financial instruments
      and long-term debt           1,102        (9,396)      9,556   (23,624)

     Earnings before income
      taxes                       19,559        25,936      19,055     44,450
     Income taxes                    149           177         194        219

     Net earnings                $19,410       $25,759     $18,861    $44,231

      Statement of Cash Flows
       Data:
     Cash flows provided by
      (used in):
       Operating activities      $37,855      $(18,295)    $66,885   $(5,811)
       Investing activities       (7,730)       (9,328)    (16,821)  (19,909)
       Financing activities       (7,544)       (7,420)    (21,453)   (9,346)
      Other Financial Data:
     Adjusted EBITDA(2)          $42,249       $40,901     $71,796    $70,449
     Capital expenditures         $7,759        $9,383     $16,912    $20,002
     Rent expenses(3)            $16,633       $13,749     $33,268    $27,545
     Gross margin(4)                35.2%         34.8%       33.9%     33.8%
     Number of stores (at end
      of period)                     536           486         536        486
     Comparable store
     sales growth(5)                 3.7%          0.7%        1.9%    (0.6%)


        (dollars in thousands)                      As of          As of
                                                  August 3,      August 5,
                                                    2008           2007

       Balance Sheet Data:
      Cash and cash equivalents                   $54,825        $12,637
      Merchandise inventories                     191,039        194,394
      Property and equipment                      118,031         96,493
      Total assets                              1,232,875      1,166,994
      Long-term debt                              665,139        700,950
      Partners' capital                           359,558        283,026
    

    (1)Amortization represents amortization of tangible and amortizable
intangible assets, including amortization of favourable and unfavourable lease
rights.
    (2)EBITDA 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, all of which are required in determining our compliance with financial
covenants under our senior secured credit facility. We have included EBITDA
and Adjusted EBITDA to provide investors with a supplemental measure of our
operating performance and information about the calculation of some of the
financial covenants that are contained in the senior secured credit facility.
We believe EBITDA is an important supplemental measure of operating
performance because it eliminates items that have less bearing on our
operating performance and thus highlights trends in our core business that may
not otherwise be apparent when relying solely on Canadian GAAP financial
measures. We also believe 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 us by the senior secured credit
facility. Under the senior secured credit facility, we are subject to
financial covenant ratios that are calculated by reference to Adjusted EBITDA.
Non-compliance with the financial covenants contained in our senior secured
credit facility could result in a default, an acceleration in the repayment of
amounts outstanding under the senior secured credit facility, and a
termination of the lending commitments under the senior secured credit
facility. Generally, any default under the senior secured credit facility that
results in the acceleration in the repayment of amounts outstanding under the
senior secured credit facility would result in a default under the indentures
governing the 8.875% senior subordinated notes and the senior floating rate
deferred interest notes. While an event of default under the senior secured
credit facility or the indentures is continuing, we would be precluded from,
among other things, paying dividends on our capital stock or borrowing under
the revolving credit facility. Our management also uses EBITDA and Adjusted
EBITDA in order to facilitate operating performance comparisons from period to
period, prepare annual operating budgets and assess our ability to meet our
future debt service, capital expenditure and working capital requirements and
our ability to pay dividends on our capital stock.

    EBITDA and Adjusted EBITDA are not presentations made in accordance with
Canadian GAAP. As discussed above, we believe that the presentation of EBITDA
and Adjusted EBITDA in this summary consolidated financial data section 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 our results as reported under Canadian GAAP. For
example, neither EBITDA nor Adjusted EBITDA reflect (a) our cash expenditures,
or future requirements for capital expenditures or contractual commitments;
(b) changes in, or cash requirements for, our working capital needs; (c) the
significant interest expense, or the cash requirements necessary to service
interest or principal payments, on our debt; and (d) tax payments or
distributions to our parent to make payments with respect to taxes
attributable to us that represent a reduction in cash available to us. Because
of these limitations, we primarily rely on our 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 we do, EBITDA may not be, and Adjusted EBITDA
as presented in this summary consolidated financial data section is not,
comparable to similarly titled measures reported by other companies.

    A reconciliation of net earnings (loss) to EBITDA and to Adjusted EBITDA
is included below

    
                               13-Week     13-Week      26-Week     26-Week
                                Period      Period      Period      Period
                                Ended       Ended        Ended       Ended
                               August 3,   August 5,    August 3,  August 5,
    (dollars in thousands)       2008        2007         2008       2007


    Net earnings               $19,410    $25,759       $18,861    $44,231
    Income taxes                   149        177           194        219
    Interest expense            13,186     16,613        27,301     33,875
     Amortization of
      deferred financing
      costs                      1,479      2,169         2,722      3,784
     Amortization of fixed
      tangible and
      intangible assets          5,565      4,239        10,338      8,338

    EBITDA                      39,789     48,957        59,416     90,447
     Foreign exchange loss
      (gain) on derivative
      financial instruments
      and long-term debt         1,102     (9,396)        9,556    (23,624)
     Management
      fees(a)                      795        790         1,590      1,624
     Deferred lease
      inducements(b)               342        425           791      1,134
     Stock-based
      compensation
      expense(c)                   221        125           443        868

    Adjusted EBITDA            $42,249    $40,901       $71,796    $70,449
    

    (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.

    (3)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.
    (4)Gross margin represents gross profit as a percentage of sales.
    (5)Comparable store sales is a measure of the percentage increase or
decrease of the sales of stores open for at least the prior13 complete fiscal
months and that remain open at the end of the reporting period relative to the
same period in the prior year.  We include sales from stores expanded or
relocated in the calculation of comparable store sales.  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.



    DOLLARAMA GROUP L.P.
    SUMMARY CONSOLIDATED FINANCIAL DATA

    
                                13-Week     13-Week      26-Week     26-Week
                                 Period      Period      Period       Period
                                  Ended       Ended       Ended        Ended
                               August 3,   August 5,    August 3,   August 5,
       (dollars in thousands)     2008        2007        2008        2007

     Statement of Operations
      Data:
     Sales                      $264,271    $233,205    $501,086    $449,080
     Cost of sales               171,142     152,117     331,347     297,413

     Gross profit                 93,129      81,088     169,739     151,667
     Expenses:
     General administrative
      and store operating
      expenses                    52,227      41,526     100,756      84,843
     Amortization(1)               5,565       4,239      10,338       8,338

     Total expenses               57,792      45,765     111,094      93,181

     Operating income/(loss)      35,337      35,323      58,645      58,486
     Other (income)/expense:
     Amortization of
      deferred financing
      costs                        1,086       1,078       2,083       2,146
     Interest expense              8,574      10,836      17,440      21,863
     Foreign exchange loss
      (gain) on derivative
      financial instruments
      and long-term debt            (466)        976       3,302       1,842

     Earnings before income
      taxes                       26,143      22,433      35,820      32,635
     Income taxes                    126         158         171         200

     Net earnings                $26,017     $22,275     $35,649     $32,435

      Statement of Cash Flows
       Data:
     Cash flows provided by
      (used in):
       Operating activities      $37,855     $(6,586)    $66,677      $5,678
       Investing activities       (7,730)     (9,328)    (16,821)    (19,909)
       Financing activities       (7,545)    (19,131)    (21,247)    (20,838)
      Other Financial Data:
     Adjusted
     EBITDA(2)                   $42,260     $40,902     $71,807     $70,450
     Capital expenditures         $7,759      $9,383     $16,912     $20,002
     Rent expenses(3)            $16,633     $13,749     $33,268     $27,545
     Gross margin(4)                35.2%       34.8%       33.9%       33.8%
     Number of stores (at
      end of period)                 536         486         536         486
     Comparable store
     sales growth(5)                 3.7%        0.7%        1.9%     (0.6%)


        (dollars in thousands)                          As of          As of
                                                     August 3,      August 5,
                                                        2008           2007

       Balance Sheet Data:
      Cash and cash equivalents                       $54,809        $12,626
      Merchandise inventories                         191,039        194,394
      Property and equipment                          118,031         96,493
      Total assets                                  1,232,846      1,167,291
      Long-term debt                                  470,262        511,801
      Partners' capital                               558,333        475,913
    


    (1)Amortization represents amortization of tangible and amortizable
intangible assets, including amortization of favourable and unfavourable lease
rights.
    (2)EBITDA 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, all of which are required in determining our compliance with financial
covenants under our senior secured credit facility. We have included EBITDA
and Adjusted EBITDA to provide investors with a supplemental measure of our
operating performance and information about the calculation of some of the
financial covenants that are contained in the senior secured credit facility.
We believe EBITDA is an important supplemental measure of operating
performance because it eliminates items that have less bearing on our
operating performance and thus highlights trends in our core business that may
not otherwise be apparent when relying solely on Canadian GAAP financial
measures. We also believe 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 us by the senior secured credit
facility. Under the senior secured credit facility, we are subject to
financial covenant ratios that are calculated by reference to Adjusted EBITDA.
Non-compliance with the financial covenants contained in our senior secured
credit facility could result in a default, an acceleration in the repayment of
amounts outstanding under the senior secured credit facility, and a
termination of the lending commitments under the senior secured credit
facility. Generally, any default under the senior secured credit facility that
results in the acceleration in the repayment of amounts outstanding under the
senior secured credit facility would result in a default under the indenture
governing the 8.875% senior subordinated notes. While an event of default
under the senior secured credit facility or the indenture is continuing, we
would be precluded from, among other things, paying dividends on our capital
stock or borrowing under the revolving credit facility. Our management also
uses EBITDA and Adjusted EBITDA in order to facilitate operating performance
comparisons from period to period, prepare annual operating budgets and assess
our ability to meet our future debt service, capital expenditure and working
capital requirements and our ability to pay dividends on our capital stock.

    EBITDA and Adjusted EBITDA are not presentations made in accordance with
Canadian GAAP. As discussed above, we believe that the presentation of EBITDA
and Adjusted EBITDA in this summary consolidated financial data section 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 our results as reported under Canadian GAAP. For
example, neither EBITDA nor Adjusted EBITDA reflect (a) our cash expenditures,
or future requirements for capital expenditures or contractual commitments;
(b) changes in, or cash requirements for, our working capital needs; (c) the
significant interest expense, or the cash requirements necessary to service
interest or principal payments, on our debt; and (d) tax payments or
distributions to our parent to make payments with respect to taxes
attributable to us that represent a reduction in cash available to us. Because
of these limitations, we primarily rely on our 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 we do, EBITDA may not be, and Adjusted EBITDA
as presented in this summary consolidated financial data section is not,
comparable to similarly titled measures reported by other companies.

    A reconciliation of net earnings (loss) to EBITDA and to Adjusted EBITDA
is included below

    
    (dollars in            13-Week     13-Week     26-Week     26-Week
     thousands)             Period      Period      Period      Period
                             Ended      Ended       Ended       Ended
                           August 3,   August 5,   August 3,   August 5,
                             2008        2007        2008        2007


    Net earnings            $26,017    $22,275    $35,649    $32,435
    Income taxes                126        158        171        200
    Interest expense          8,574     10,836     17,440     21,863
     Amortization of
      deferred financing
      costs                   1,086      1,078      2,083      2,146
     Amortization of
      fixed tangible and
      intangible assets       5,565      4,239     10,338      8,338

    EBITDA                   41,368     38,586     65,681     64,982
     Foreign exchange
      loss (gain) on
      derivative
      financial
      instruments and
      long-term debt           (466)       976      3,302      1,842
     Management
     fees(a)                    795        790      1,590      1,624
     Deferred lease
     inducements(b)             342        425        791      1,134
     Stock-based
     compensation
     expense(c)                 221        125        443        868

    Adjusted EBITDA         $42,260    $40,902    $71,807    $70,450
    



    (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.


    (3)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.
    (4)Gross margin represents gross profit as a percentage of sales.
    (5)Comparable store sales is a measure of the percentage increase or
decrease of the sales of stores open for at least the prior 13 complete fiscal
months and that remain open at the end of the reporting period relative to the
same period in the prior year.  We include sales from stores expanded or
relocated in the calculation of comparable store sales.  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.





For further information:

For further information: Investors, Robert Coallier, Chief Financial
Officer of Dollarama, +1-514-737-1006 x1238; or Media, Alex Stanton of Stanton
Crenshaw Communications for Dollarama, +1-212-780-0701,
alex@stantoncrenshaw.com

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