(1)(1) Fiscal 2026 Canadian segment Comparable store sales guidance increased to between 4.2% and 4.7% and Gross margin guidance increased to between 45.0% and 45.5% of sales MONTREAL, Dec. 11, 2025 /PRNewswire/ - Dollarama Inc. (TSX: DOL) ("Dollarama" or the "Corporation") today reported its financial results for the third quarter ended November 2, 2025. The Corporation has two reportable segments: Canada (which includes the contribution of the Corporation's equity-accounted investments in Latin America) a ...

Core Insights - Dollarama Inc. reported a significant increase in sales and net earnings for the second quarter of fiscal 2026, driven by its acquisition of The Reject Shop and strong performance in Canada [1][4][13] Financial Performance - Sales for the second quarter of fiscal 2026 increased by 10.3% to $1,723.8 million, compared to $1,563.4 million in the same period of the previous year [4][27] - Net earnings rose by 12.4% to $321.5 million, resulting in a diluted net earnings per share increase of 13.7% to $1.16 [13][27] - EBITDA increased by 12.2% to $588.5 million, with an EBITDA margin of 34.1% compared to 33.5% in the prior year [9][27] Segment Performance - The company now operates in two reportable segments: Canada and Australia, with the Australian segment contributing $25.7 million in sales during the Post-Acquisition Period [2][4] - Comparable store sales in Canada increased by 4.9%, driven by a 3.9% increase in transactions and a 0.9% increase in average transaction size [5][31] Acquisition and Expansion - Dollarama completed the acquisition of The Reject Shop, Australia's largest discount retailer, for A$233.6 million ($208.8 million) [19][20] - The acquisition is part of Dollarama's strategy to expand internationally, with the opening of Dollarcity's first store in Mexico also celebrated during the quarter [3][20] Cost and Margin Analysis - Gross margin for the second quarter was 45.5%, up from 45.2% in the previous year, primarily due to lower logistics costs in Canada [6][29] - SG&A expenses increased by 13.3% to $241.2 million, representing 14.0% of sales, compared to 13.6% in the prior year [7][29] Future Outlook - The company has provided fiscal 2026 guidance for the Canadian segment, expecting net new store openings of 70 to 80 and comparable store sales growth of 3.0% to 4.0% [24][25] - The Australian segment's performance will be evaluated over the coming years, and no separate guidance is provided for it at this time [26]

Core Viewpoint - Dollarama Inc. has announced its acquisition of The Reject Shop Limited, Australia's largest discount retailer, for A$6.68 per share, valuing the transaction at approximately A$259 million (C$233 million) [1][5]. Company Overview - Dollarama is a Canadian value retailer founded in 1992, with a network of 1,601 locations across Canada, offering a wide range of consumable products and general merchandise at fixed price points up to C$5.00 [20]. - The Reject Shop, headquartered in Melbourne, operates over 390 stores across Australia and generated consolidated sales of A$866 million (C$779 million) for the last twelve months ending December 29, 2024 [4][20]. Transaction Details - The acquisition price of A$6.68 per share represents a 108% premium over The Reject Shop's 20-day volume-weighted average price of A$3.21 [5]. - The enterprise value of the transaction is approximately A$189 million (C$170 million) on a pre-AASB 16 basis and approximately A$421 million (C$379 million) on a post-AASB 16 basis, implying an 8.9x multiple on The Reject Shop's EBITDA (pre-AASB 16) [5]. - The Reject Shop may pay a fully franked special dividend of up to A$0.77 per share, which will be deducted from the cash consideration [6]. Strategic Intent - The acquisition aligns with Dollarama's strategy to expand into new geographies, leveraging its proven track record in Canada and Latin America [2]. - Dollarama aims to grow The Reject Shop's store network from over 390 locations to approximately 700 stores by 2034, indicating a clear path for future expansion [9]. Management and Integration - Dollarama plans to collaborate with The Reject Shop's local management team and its over 5,000 employees to execute its strategic vision, focusing on retail, merchandising, and operational expertise [3][8]. - The transaction is expected to have a minimal immediate impact on Dollarama's net earnings per share and a limited effect on its pro forma adjusted net debt-to-EBITDA ratio upon closing [7]. Approval Process - The transaction will be executed through an Australian scheme of arrangement and is subject to customary closing conditions, including shareholder approval and regulatory approvals, with closing anticipated in the second half of 2025 [10].