Dollarama (DOL) Q1 2025 earnings summary

Executive summary

• Achieved 8.6% year-over-year sales growth in Q1 Fiscal 2025, with a 22.2% increase in diluted EPS, driven by strong demand for core consumables and store expansion.

• Increased equity interest in Dollarcity to 60.1%, expanded partnership to include Mexico, and raised Dollarcity's long-term store target to 1,050 by 2031.

• Opened 18 net new stores in Canada, bringing the total to 1,569, and Dollarcity added 15 net new stores, reaching 547 across LATAM.

• Continued disciplined Canadian store growth and international expansion, with a focus on robust traffic and frequent customer visits.

• Advanced ESG initiatives, including energy management, diversity, and supply chain oversight.

Financial highlights

• Q1 sales reached $1,406M, up 8.6% year-over-year; same-store sales grew 5.6% with 8.7% traffic growth and a 2.8% decrease in basket size.

• Gross margin improved to 43.2% from 42.2% last year, mainly due to lower logistics and shipping costs.

• SG&A was 15.4% of sales, up from 15.1% last year, with ongoing efficiency initiatives to offset higher labor and operating costs.

• EBITDA grew 14.2% to $418M; operating income up 15.8% to $322M.

• Dollarcity's net earnings contribution rose 68.3% to $22.1M for the quarter.

Outlook and guidance

• Fiscal 2025 guidance unchanged: 60–70 net new stores, 3.5–4.5% comparable store sales growth, 44–45% gross margin, 14.5–15% SG&A as % of sales, $175–200M in capex.

• Dollarcity store target raised to 1,050 by 2031 (excluding Mexico); first Mexico store planned for 2026.

• Transaction to increase Dollarcity stake expected to be neutral to FY2025 EPS.

• Continued strong growth anticipated for Dollarcity, with further disclosure expected as its contribution increases.