Dollarama Inc Q2 2023 Earnings Call Transcript

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

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Neil, you've called out a number of times the mix shift you're seeing into consumables versus discretionary. I'm just wondering what's your explanation of that? Do you think you're seeing trade down because the consumer is under pressure, so consumers trading down to Dollarama seeking more value versus other retailers? Or is this a permanent structural change in the mix we're going to see at Dollarama? If you could just comment on that, please?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And J.P. can you talk a little bit about the inflationary trends you're experiencing, specifically with respect to labor and logistics costs?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And then lastly, if you could just talk about your success or lack thereof in terms of recruiting labor into the store? How is the backdrop there?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And have you had to curtail store hours at all?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : On the 70 bps of benefit in Q2 that will subsequently unwind, was that what was anticipated in Q1 or a similar magnitude? Because I know in Q1, you mentioned the 20 bps to 30 bps and you said that it would unwind in H2, but I don't recall hearing about this potential 70 bps. So is that worse than expected or better depending on your view?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And. with respect to the -- can you quantify the amount -- it's such a large inventory number, can you quantify the dollars of inventory that you're waiting to receive on land?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And how should we think about your in-stocks now relative to where you'd like them to be?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And when we think about inventory going forward, are these higher inventory numbers, is that like a short-term thing? Or should we think them to revert back to Dollarama's standard way of operating?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And maybe just 1 last 1 here. In terms of the heightened inventory, just remind you on Dollarama's point of view. If inventory doesn't sell, is it as expected? I'm not saying that will happen. But if it doesn't sell as expected, does Dollarama typically take that and pack it away, or do they resort to discounting as well to clear?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Just coming back to the discussion of same-store sales and your traffic up 20.2% in the quarter, and I'll just kind of follow along Peter's trade-down discussion. Do you have any visibility on whether within that higher traffic you're getting customers that are new to Dollarama? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2022 / 2:30PM, DOL.TO - Q2 2023 Dollarama Inc Earnings Call

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then, secondly, coming back to your discussion on e-commerce and your additional offers there, the Instacart, the DoorDash, et cetera. Are there any notable trends you're seeing there in the products that people are ordering? Or is it across the board?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : That's excellent color, Neil. I really appreciate that. And you never know, you might -- some of those customers might end up going into your stores eventually. And my final question, I want to follow up on the discussion that you had about labor. And Neil, you made a reference to the fact that you guys are doing everything you can and make the store-level employees feel loved. And I'm just curious whether the employees at the store level have any kind of visibility on career progression within Dollarama, like, for example, that -- they can see examples of people who've moved from being a store level employee to a manager or from a manager to district manager because that's probably something that will be very attractive in retention.