Dollarama Inc Q2 2020 Earnings Call Transcript

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

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : In the past, in prior calls, management commented on industry inflation. Just wondering what your perspective is on that? And do you think -- are you starting to see it come in or is it still no inflation?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : So stable at no inflation?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And just to be clear, so the actual guidance reduction on gross margin was not a reaction to the environment so much as management's seeing some initiatives work well and then -- and then saying you wanted to continue these initiatives more so and not passing on anticipated price increases. Did I characterize that right?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And with respect to how you look at your margins, and I know you commented a little bit about this earlier. But the comment is, how should investors think about whether management is satisfied with the current level of margin? Or is that not the way to look at it? Is it more to look at are you generating the right amount of sales growth?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Michael, in your explanation of the gross margin impact, the declining gross margin, and the fact that you took your guidance down, one of the 3 factors you mentioned was logistics. So when you're referring to logistics, are you referring to the DC expansion? Or are you referring to like broader logistics, trucking costs, things like that?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. The other thing, Michael, in terms of your disclosure of Dollarcity, which will be in the next quarter's financial statements, clearly, there will be an equity income line. And I assume you'll continue to provide us with store count information. Have you decided yet, are you providing any additional information, such as comps or anything like that?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And then just lastly, Neil, I have a question for you, if I may. You've referred today to the merchandising tactics that you've introduced, a couple have surfaced, you've talked about the queue, the expanded SKU count. Are there other merchandising tactics that you can point to that are helping your sales efforts?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Three questions here. First of all, Michael, I just want a simple clarification. I know it's been discussed quite a few times in this call, the topic of markups. You said that you were going to maintain -- that you've maintained the course, which to me would imply that you would've had the same level of markups this year as last year. But in the answer to a few questions, you mentioned that there would've been fewer markups. Is that correct? There's fewer...

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. That's helpful. And then secondly, can you talk a little bit about what you experienced in the seasonal category in Q2?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. So you would've seen a bit of a softness there?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then thirdly, this actually relates to what Peter was just asking of Neil, so it's interesting that you're working very hard to stimulate both traffic and units. Seems -- certainly seems to be working. And I'm not asking for what you're doing or what the tactics are, I'm just curious are there specific tactics that are being deployed to traffic and other ones to units or is it all of the -- all of what you're doing is directed at both?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Because I'm curious about the traffic piece, mostly.