Dollarama Group L.P. and Dollarama Group Holdings L.P. Announce Financial Results as of August 2nd, 2009



    
    Dollarama Group L.P. Highlights

    - Sales Increased 14.8% in the 2nd Quarter and 15.1% Year-To-Date

    - Comparable Store Sales Rose by 7.0% in the 2nd Quarter and 7.2%
    Year-To-Date

    - Adjusted EBITDA Increased $1.2 million in the 2nd Quarter and $8.2
    million, or 11.4% Year-To-Date






    
    MONTREAL, Sept. 10 /CNW/ -- Dollarama Group L.P. and Dollarama Group
Holdings L.P. today announced financial results for the second quarter of
fiscal year 2010, which ended August 2, 2009.  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 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.

    For the 13-week period ended August 2, 2009, Dollarama Group L.P.
recorded sales of $303.4 million, a 14.8% increase from $264.3 million the
prior year.  Comparable store sales rose 7.0% compared to the same quarter
last year, lifted in part by a 5.6% increase in average transaction size, and
a 1.4% increase in the number of transactions.  The remaining portion of the
sales growth, or $23.6 million, was driven primarily by the full impact of 54
new stores opened in the last 13 full fiscal months ended August 2, 2009, and
the incremental impact of four earlier store openings.  On February 2, 2009,
the Company introduced a new selection of items at price points of $1.25,
$1.50 and $2.00.  Dollarama Group L.P. believes the introduction of these new
price points favourably impacted revenues and resulted in both a greater
number of transactions and a higher average transaction size.

    Gross margin for the period was 33.9% compared to 35.2% for the same
period last year. The decrease in gross margin was attributable to a one-time
favorable adjustment to costs of direct-to-store delivered products in the
period ending August 3, 2008, and to the unfavourable impact of a stronger
U.S. dollar relative to the Canadian dollar on imported product costs.

    Adjusted EBITDA (as defined in the attached tables) was $43.5 million for
the 13-week period ended August 2, 2009, up $1.2 million versus the prior
year.

    Dollarama Group L.P. ended the second quarter with $103.4 million in cash
compared with $54.8 million for the same period last year, largely due to
increased profitability and continued efforts to improve working capital
management.

    For the 26-week period ended August 2, 2009, Dollarama Group L.P.
recorded sales of $576.8 million, a 15.1% increase over the prior year. 
Comparable store sales rose 7.2% versus the same period last year, lifted by a
2.4% increase in number of transactions and a 4.8% increase in average
transaction size.  The remaining portion of sales growth, or $46.0 million,
was driven primarily by the full impact of the 54 stores opened in the last 13
full fiscal months ending August 2, 2009, and the incremental impact of 13
earlier store openings.

    Gross margin for the period was 34.0% compared with 33.9% for the period
ended August 3, 2008.  The gross margin remained stable compared to last year
as a result of product sourcing initiatives, which have entirely offset
increased logistics and labor costs.

    Adjusted EBITDA (as defined in the attached table) was $80.0 million for
the 26-week period ended August 2, 2009, up $8.2 million versus the prior
year.

    "We are pleased to announce another strong quarter of financial
performance, including an increase in comparable store sales and adjusted
EBITDA, despite some continued sluggishness in consumer spending in Canada,"
said Larry Rossy, Chief Executive Officer of Dollarama.  "During the second
quarter, we continued to roll out our multi-price product assortment, which is
being well received by customers.  We believe the positive response is evident
in the increase in average transaction size and traffic we experienced in most
of our stores.  Our efforts to increase productivity in our distribution
center and warehouses are delivering results, and we continue to implement
additional initiatives in logistics, store operations, warehouse performance,
transportation efficiency, loss prevention and associate training.  We are
confident that these activities, coupled with our continued efforts to enhance
the consumer shopping experience at Dollarama, will drive continued growth for
our company going forward."
    

    ABOUT DOLLARAMA
    
    Dollarama is the leading operator of discount retail stores in Canada.
Currently, the company operates more than 585 stores, each offering a broad
assortment of quality everyday merchandise sold in individual or multiple
units primarily at fixed prices of $1.00, $1.25, $1.50 and $2.00. 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.
    


    SUMMARY CONSOLIDATED FINANCIAL DATA

    

    Dollarama Group L.P.

    
                            13-Week      13-Week     26-Week      26-Week
                             Period       Period      Period       Period
                              Ended        Ended       Ended        Ended
                           August 2,    August 3,   August 2,    August 3,
                               2009         2008        2009         2008
    

    (dollars in thousands)

    
    Statement of Operations
     Data:
    Sales                  $303,400     $264,271    $576,809     $501,086
    Cost of sales           200,559      171,142     380,738      331,347
    

    
    Gross profit            102,841       93,129     196,071      169,739
    Expenses:
    General administrative
     and store operating
     expenses                60,944       52,227     119,319      100,756
    Amortization(1)           6,294        5,565      12,335       10,338
    

    Total expenses           67,238       57,792     131,654      111,094

    
    Operating income         35,603       35,337      64,417       58,645
    Interest expense(6)       8,539        9,660      18,265       19,523
    Foreign exchange
     loss (gain) on
     derivative financial
     instruments and
     long-term debt           1,264         (466)      2,219        3,302
    

    
    Earnings before
     income taxes            25,800       26,143      43,933       35,820
    Provision for
     current income taxes       131          126         153          171
    

    
    Net earnings for
     the period             $25,669      $26,017     $43,780      $35,649
    

    
    Statement of Cash
     Flows Data:
    Cash flows provided
     by (used in):
     Operating Activities   $55,323      $37,855     $74,759      $66,677
     Investing activities    (8,692)      (7,730)    (16,800)     (16,821)
     Financing activities    (9,927)      (7,545)    (20,649)     (21,247)
    

    
    Other Financial Data:
     Adjusted EBITDA(2)     $43,467      $42,260     $79,966      $71,807
     Capital expenditures     8,701        7,759      16,809       16,912
     Rent expenses(3)        18,767       16,633      37,590       33,268
     Gross margin(4)           33.9%        35.2%       34.0%        33.9%
     Number of stores
      (at end of period)        585          536         585          536
     Comparable store sales
      growth(5)                 7.0%         3.7%        7.2%         1.9%
    



    Dollarama Group L.P.

    
                                  As of August 2,    As of August 3,
                                            2009               2008
    (dollars in thousands)
    

    
      Balance Sheet Data:
      Cash and cash equivalents          103,433             54,809
      Merchandise inventories            250,114            191,039
      Property and equipment             134,188            118,031
      Total assets                     1,344,336          1,232,846
      Long-term debt (excluding
       current portion and financing
       costs)                            460,579            470,262
      Fair value of foreign
       currency and interest rate swaps   40,159             81,571
      Long-term debt net of fair value
       of swaps                          500,738            551,833
      Partners' capital                  653,493            558,333
    


    
    (1) Amortization represents amortization of tangible and amortizable
        intangible assets, including amortization of favourable and
        unfavourable lease rights.
    (2) EBITDA represents net income 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 to EBITDA and to Adjusted EBITDA is
        included below
    


    
                                       Dollarama Group L.P.
                              13-Week   13-Week      26-Week   26-Week
                               Period    Period       Period    Period
                                Ended     Ended        Ended     Ended
                             August 2, August 3,    August 2, August 3,
    (dollars in thousands)       2009      2008         2009      2008
    

    
    Net earnings              $25,669   $26,017      $43,780   $35,649
    Income taxes                  131       126          153       171
    Interest expense(6)         8,539     9,660       18,265    19,523
    Amortization of fixed
     tangible and intangible
     assets                     6,294     5,565       12,335    10,338
    

    
    EBITDA                     40,633    41,368       74,533    65,681
    Foreign exchange loss
     (gain) on derivative
     financial instruments
     and long-term debt         1,264      (466)       2,219     3,302
    Management fees(a)            810       795        1,620     1,590
    Deferred lease
     inducements(b)               439       342          912       791
    Stock-based compensation
     expense(c)                    85       221          446       443
    Other non-recurring cash
     charges(d)                   236         -          236         -
    

    Adjusted EBITDA           $43,467   $42,260      $79,966   $71,807


    
       (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.
       (d) Represents cash severance and other one-time non-recurring items.
    

    
    (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 13 complete fiscal
        months relative to the same period in the prior year. We include sales
        from relocated stores and expanded stores in comparable store sales.
    (6) Interest expense amount includes amortization of financing costs.


    SUMMARY CONSOLIDATED FINANCIAL DATA

    

    Dollarama Group Holdings L.P.

    
                            13-Week     13-Week       26-Week      26-Week
                             Period      Period        Period       Period
                              Ended       Ended         Ended        Ended
                           August 2,   August 3,     August 2,    August 3,
    (dollars in thousands)     2009        2008          2009         2008
    

    
      Statement of Operations
       Data:
      Sales                $303,400    $264,271      $576,809     $501,086
      Cost of sales         200,559     171,142       380,738      331,347
    

    
      Gross profit          102,841      93,129       196,071      169,739
      Expenses:
      General administrative
       and store operating
       expenses              60,956      52,238       119,331      100,767
      Amortization(1)         6,294       5,565        12,335       10,338
    

    Total expenses         67,250      57,803       131,666      111,105

    
      Operating income       35,591      35,326        64,405       58,634
      Interest expense(6)    13,472      14,665        28,896       30,023
      Foreign exchange loss
      (gain) on derivative
       financial instruments
       and long-term debt   (21,329)      1,102       (28,834)       9,556
    

    
      Earnings before
       income taxes          43,448      19,559        64,343       19,055
      Provision for current
       income taxes             131         149           153          194
    

    
      Net earnings for the
       period               $43,317     $19,410       $64,190      $18,861
    

    
       Statement of Cash Flows
        Data:
      Cash flows provided by
       (used in):
       Operating activities $55,323     $37,855       $74,759      $66,885
       Investing activities  (8,692)     (7,730)      (16,800)     (16,821)
       Financing activities  (9,924)     (7,544)      (20,642)     (21,453)
    

    
     Other Financial Data:
      Adjusted EBITDA(2)    $43,455     $42,249       $79,954      $71,796
      Capital expenditures    8,701       7,759        16,809       16,912
      Rent expenses(3)       18,767      16,633        37,590       33,268
      Gross margin(4)          33.9%       35.2%         34.0%        33.9%
      Number of stores (at
       end of period)           585         536           585          536
      Comparable store sales
       growth(5)                7.0%        3.7%          7.2%         1.9%
    



    Dollarama Group Holdings L.P.

    
                                  As of August 2,    As of August 3,
                                            2009               2008
    (dollars in thousands)
    

    
      Balance Sheet Data:
      Cash and cash equivalents          103,458             54,825
      Merchandise inventories            250,114            191,039
      Property and equipment             134,188            118,031
      Total assets                     1,344,411          1,232,875
      Long-term debt (excluding
       current portion and financing
       costs)                            685,109            665,139
      Fair value of foreign
       currency and interest rate swaps   40,159             81,571
      Long-term debt net of fair value
       of swaps                          725,268            746,710
      Partners' capital                  425,819            359,558
    


    
    (1) Amortization represents amortization of tangible and amortizable
        intangible assets, including amortization of favourable and
        unfavourable lease rights.
    (2) EBITDA represents net income 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 to EBITDA and to Adjusted EBITDA is
        included below
    


    
                                       Dollarama Group Holdings L.P.
                              13-Week      13-Week      26-Week      26-Week
                               Period       Period       Period       Period
                                Ended        Ended        Ended        Ended
                             August 2,    August 3,    August 2,    August 3,
    (dollars in thousands)       2009         2008         2009         2008
    

    
    Net earnings              $43,317      $19,410      $64,190      $18,861
    Income taxes                  131          149          153          194
    Interest expense(6)        13,472       14,665       28,896       30,023
    Amortization of fixed
     tangible and intangible
     assets                     6,294        5,565       12,335       10,338
    

    
    EBITDA                     63,214       39,789      105,574       59,416
    Foreign exchange loss
     (gain) on derivative
     financial instruments
     and long-term debt      (21,329)       1,102      (28,834)       9,556
    Management fees(a)           810          795        1,620        1,590
    Deferred lease
     inducements(b)              439          342          912          791
    Stock-based compensation
     expense(c)                   85          221          446          443
    Other non-recurring cash
     charges(d)                  236            -          236            -
    

    Adjusted EBITDA           $43,455      $42,249      $79,954      $71,796


    
       (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.
       (d) Represents cash severance and other one-time non-recurring items.
    

    
    (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 13 complete fiscal
        months relative to the same period in the prior year. We include sales
        from relocated stores and expanded stores in comparable store sales.
    (6) Interest expense amount includes amortization of financing costs.


    




For further information:

For further information: Robert Coallier, Chief Financial Officer,
+1-514-737-1006, Ext. 1237, robert.coallier@dollarama.com; or Alex Stanton,
Stanton Public Relations & Marketing, +1-212-780-0701,
astanton@StantonPRM.com

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