Dollarama Inc Q4 2025 Earnings Call Transcript

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

Question: Irene Nattel - RBC Capital Markets (Canada) - Analyst : We may, as well, start with the topic of the day, tariffs. Neil, you said it's mostly retaliatory tariffs on a selection of goods. Can you give us an idea of sort of which categories or which type of goods specifically and what you see as the magnitude of the headwind?

Question: Irene Nattel - RBC Capital Markets (Canada) - Analyst : Very much agree with that last one. And then I guess the corollary question, and maybe this is for you, Patrick. When we look at your guide for F '26, can you walk through the factors that would influence you coming in at the low end versus the high end? And also just a housekeeping question, the $10 million to $20 million loss in Mexico, is that your portion or 100%?

Question: Chris Li - Desjardins Securities Inc. - Analyst : Yes, maybe, Neil, I'll just start with another question on tariffs. I know there are lots of moving parts, but I think in the past, you've mentioned a potential benefit for Dollarama, is that some of your overseas vendors might increase some local opportunities outside of the US. Have you seen that yet? I'm just trying to get a sense of what the potential opportunity or benefit could be for Dollarama if that trends happen.

Question: Chris Li - Desjardins Securities Inc. - Analyst : Okay. How about just -- maybe I'm not understanding correctly, but how about from products that you source from China, which are, I guess, more general merchandise or seasonal? I mean those products will now be more expensive, I guess, into the US for those suppliers. So will they see better opportunities to supply to you guys over the short term?

Question: Chris Li - Desjardins Securities Inc. - Analyst : Okay. No, that's helpful. And then maybe a question just on Dollarcity. I know that there's a bit of incremental disclosures with the Q4 results. You guys noted that the sales were up 14.4%. I'm just curious to see if we can tease it off for us like how much of that was from new store openings versus the same-store sales growth.

Question: Brian Morrison - TD Securities, Inc. - Analyst : Maybe for Neil, I guess, what does transpire for you to bring Mexico forward? How many stores is the test concept? What is the first region you're charging? And how do you plan to see the market in advance?

Question: Brian Morrison - TD Securities, Inc. - Analyst : Okay. I appreciate the high level. It sounds like you won't get into the details. That's fair. But maybe on Australia then, I know it's a process. But last week, I took away the message that it's going to take three-plus years to transform the store base to the Dollarama model and the EPS contribution. Following that close, it's going to be neutral. If I think forward to that transformation period, is there any reason we shouldn't believe that share best practices over this transformation could lead to margins such as Dollarcity at an equivalent store based upon completion? And what kind of CapEx will be required per store? And will there be DC and warehousing investment required? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 03, 2025 / 2:30PM, DOL.TO - Q4 2025 Dollarama Inc Earnings Call

Question: John Zamparo - Scotia Capital Inc. - Analyst : I wonder if we could talk about behavior of Canadian consumers, particularly recently. Have you noticed any shift in buying behavior or preferences since tariff talk really ramped up in February? And can you share your view on the theme of buying Canadian? Is that providing a lift to Dollarama versus peers?

Question: John Zamparo - Scotia Capital Inc. - Analyst : Right. Okay. Fair enough. And then a modeling question. You talked about lower logistics costs in FQ4, but also said that inbound shipping costs were negatively impacting the F'26 guide, can you add a bit more color on what you're seeing on those factors, both in the quarter and subsequent to it.

Question: Vishal Shreedhar - National Bank Financial (Research) - Analyst : I wanted to get your thoughts on further acquisition opportunities and what is management's impetus right now? Obviously, a lot going on. But should we be thinking that management is continuing to explore future opportunities? Or is it pause for now?

Question: Vishal Shreedhar - National Bank Financial (Research) - Analyst : Okay. And with respect to the outlook and the same-store sales guidance, just wanted to get a little bit more color on that. So Q4 was strong, but there were some transient events or call it, some events, which may have lifted the comp, including the tax holiday and the Halloween shift. And the indication was January is continuing along at a similar pattern, but notwithstanding the comp expectation is within the 3% to 4%, which is below kind of Dollarama's historical level. So as I square those altogether, should I think that management anticipates comps to kind of fade towards the back end of the year associated with economic weakness? Is that the thinking? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 03, 2025 / 2:30PM, DOL.TO - Q4 2025 Dollarama Inc Earnings Call

Question: Mark Petrie - CIBC World Markets Inc. - Analyst : I just wanted to follow up on a couple of the topics. First, on sales mix. It sounds like there's some different moving parts here. And in Q4, specifically, you got better growth from the seasonal categories than you had been previously, I think. So can you just clarify for Q4, was sales mix a positive or a negative effect?

Question: Mark Petrie - CIBC World Markets Inc. - Analyst : Okay. And then so your expectation, what's embedded in the outlook is that consumables continue to outperform, and sales mix is a headwind on gross margin for fiscal '26?

Question: Mark Petrie - CIBC World Markets Inc. - Analyst : Yes. Okay. Okay. Understood. And then I appreciate the additional disclosure for Dollarcity. I'm wondering if you can just give us a sense of a couple of things maybe what sort of -- how the sales growth kind of played out through fiscal '25, sort of Q1 to Q3, not necessarily specific numbers, if you don't want to share them, but what that sort of cadence was? And then also just related to that, how do store -- what's the store ramp-up for Dollarcity stores look like? I assume it's a little slower than Dollarama, just given the stage and maturity of the brand, but curious if you can share anything on that.

Question: Luke Hannan - Canaccord Genuity Limited - Analyst : I wanted to follow up. You mentioned the net new store openings that you have for the year, slightly above what your -- that's a function of taking over some leases from folks who have exited the market. So I mean, going forward, is it still going to be your MO to be, I guess, flexible in that regard? In other words, let's say, later this year, the backdrop gets a little less favorable for other retailers in the market, they decide to leave. Could we expect some flexibility in your store openings for the year?

Question: Luke Hannan - Canaccord Genuity Limited - Analyst : Okay. Understood. And then my second question is just on the stores -- store concepts rather to be rolled out in Mexico. I mean, overall, what -- relative maybe to the rest of your Latin American footprint, what should we be thinking about as far as the major points or concepts that you're going to be testing in these stores that could be different? I mean I imagine assortment, obviously, is going to be a key one. But I mean, what else are going to be sort of the things sort of the milestones that you're looking for to ensure everything is rolling as planned?

Question: Edward Kelly - Wells Fargo Securities, LLC - Analyst : Your gross margin over the last year has been a bit lumpier, I guess, thinking about the year-over-year change each quarter. Any help on the cadence of the gross margin in '25 and how we should be thinking about the trend here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 03, 2025 / 2:30PM, DOL.TO - Q4 2025 Dollarama Inc Earnings Call

Question: Edward Kelly - Wells Fargo Securities, LLC - Analyst : Okay. And as it pertains to the tariffs, what's in guidance in terms of mitigation? I mean, are you assuming like full mitigation, full pass-through of pricing related to the headwind?

Question: Edward Kelly - Wells Fargo Securities, LLC - Analyst : Okay. And then just last question for you on Dollarcity. I mean, is the best way to model Dollarcity sort of like what we think more normalized growth would be in the contribution and then subtract like your share of the $10 million to $20 million from that? And is that more back half weighted?

Question: Tamy Chen - BMO Capital Markets (Canada) - Analyst : Most of my questions have been answered. I just have one quick clarification. Just Patrick, going back to the ramp-up costs in Mexico for Dollarcity. So your fiscal '26, it's USD10 million to USD20 million. Again, I just want to confirm, when you say 100% on the ops, you mean this is all on Dollarcity's P&L. And so whatever we're modeling for a Dollarcity-based business, we should assume an increase, I guess, in the operating expenses by this amount. Is that the right way to think about it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 03, 2025 / 2:30PM, DOL.TO - Q4 2025 Dollarama Inc Earnings Call

Question: Tamy Chen - BMO Capital Markets (Canada) - Analyst : Right. Okay. That's clear.

Question: Mark Carden - UBS Equities - Analyst : So to start, you talked about some of the macro challenges impacting your outlook. How are you thinking about the impacts of lower immigration in the year ahead? And are you expecting for that to be much of a material headwind?

Question: Mark Carden - UBS Equities - Analyst : Okay. Great. And then as a follow-up, just how are you thinking about the potential impacts from Walmart accelerating its store growth in the region and does faster growth from that retailer or how much of an impact at all on how you're approaching real estate selection?