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Dollarama Q2 diluted net EPS rose 45.1% to $0.74

Staff writer |
Dollarama reported a significant increase in sales, net earnings and earnings per share for the second quarter ended August 2, 2015. Diluted net earnings per share rose 45.1% to $0.74.

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Sales for the second quarter of Fiscal 2016 increased by 14.1% to $653.3 million, compared to $572.6 million in the corresponding period of the prior fiscal year.

Comparable store sales growth for the second quarter of Fiscal 2016 consisted of a 6.2% increase in the average transaction size and a 1.5% increase in the number of transactions.

In this quarter, 76.5% of company's sales originated from products priced higher than $1.00 compared to 67% in the corresponding quarter last year. Debit card penetration also increased, as 46% of sales were paid with debit cards compared to 42.7% in the corresponding period of the previous fiscal year.

The gross margin was 38.4% of sales in the second quarter of Fiscal 2016, compared to 36.1% of sales in the second quarter of Fiscal 2015. This increase is mainly attributable to slightly higher product margins, the positive scaling impact of strong comparable store sales as well as lower logistics and transportation costs as a percentage of sales.

Overall, gross margin remains in line with management’s expectations as the Corporation continues to strive to maintain a compelling product offering for its customers.

The Corporation now anticipates a gross margin for Fiscal 2016 in the range of 37% to 38%. The company continually reinvests in the value proposition offered to company's customers and the company intends to continue to target a margin in the range of 36% to 37% beyond Fiscal 2016 in order to stimulate continued sales growth.

General, administrative and store operating expenses (“SG&A”) for the second quarter of Fiscal 2016 was $103.7 million, a 5.9% increase over $98.0 million for the second quarter of Fiscal 2015. The increase is primarily related to the continued growth in the total number of stores.

SG&A for the second quarter of Fiscal 2016 represented 15.9% of sales, an improvement of 1.2% compared to 17.1% of sales for the second quarter of Fiscal 2015. The reduction in SG&A as a percentage of sales is mainly the result of store labour productivity improvements and the positive scaling impact of strong comparable store sales.

Net financing costs decreased by $0.7 million, from $5.1 million for the second quarter of Fiscal 2015 to $4.4 million for the second quarter of Fiscal 2016. The decrease is mainly due to lower interest rates on company's variable rate indebtedness.

Net earnings increased to $95.5 million, or $0.74 per diluted common share, in the second quarter of Fiscal 2016, compared to $68.9 million, or $0.51 per diluted common share, in the second quarter of Fiscal 2015.

The increase in net earnings is mainly the result of a 14.1% increase in sales, a gross margin improvement and lower SG&A as a percentage of sales.


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