Dollarama Inc Q1 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Just want to circle back on the same-store sales. It's pretty impressive that you're able to drive 5.8% same-store sales and as you indicated, more units in the basket, all that in the absence of the normalized level of inflation. Can you speak to some of the more effective tactics and merchandising strategies that permitted you to really drive the items per basket?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Michael, on the 170 basis points deterioration in gross margin, and you keep referring to the logistics costs, can you frame as like what the magnitude of that was? Like is that like 1/3 of the margin compression or 1/2 or 1/4, is there anything you can wrap around that? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 13, 2019 / 3:30PM, DOL.TO - Q1 2020 Dollarama Inc Earnings Call

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And when you're talking about the impact of mix -- of your sales mix and the impact that had on margin, I think, you're implying that lower price point items carry lower margins. In traditional retailing, typically it's higher price point items that carry lower percentage margins, although they have hire dollar margins. Is yours like the flip-flop of that?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And Neil, in your remarks, you said that Dollarama is aggressively maintaining a strong value proposition. What does that mean? Does that mean you're lowering prices and margins? Or does it mean you have -- in terms you have more assortment of the entry-level price points. Could you just explain what that statement means?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. So when you talk about inflation, you're talking about like product inflation, not overhead inflation and labor inflation?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Yes, okay. And lastly, Michael, the option to acquire the interest in Dollar City which kicks in, in February 2020. What is the term of that option? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 13, 2019 / 3:30PM, DOL.TO - Q1 2020 Dollarama Inc Earnings Call

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Well, actually there is some term. It's not like you have to decide.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : On these merchandising initiatives that you were talking about last quarter, and that we're seeing the results from this quarter to stimulate the traffic, how far are you in terms of implementing them? Like are you -- is there a lot more opportunity associated with them in the quarters ahead? Have you cycled this, or how should we think about that?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And the benefits from the better data usage, is that reflected in this? And I know it's difficult to isolate, but is that reflected in this comp or are there more things that will come from that looking forward?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And is that early days kind of, the -- analyzing the data and will take time for you to implement the strategies? Or have you been on it for some period of time now? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 13, 2019 / 3:30PM, DOL.TO - Q1 2020 Dollarama Inc Earnings Call

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And just a common question here for Michael. On the SG&A, what initiatives are now the key initiatives that you are implementing in order to improve the efficiency?