Dollarama: Canadian dollar store retail chain.

One of many direct competitors, Dollar Tree has only 254 stores in Canada, accounting for only 2.2% of market.
In February 2013, Dollarama entered right into a commercial agreement to do something as the primary product vendor of Dollarcity.
Through its direct sourcing and import platform, they are able to handle the growth of Dollarcity network of stores.
Under the terms of the Dollarcity Agreement, products can be purchased to Dollarcity at cost, except for a nominal handling fee charged on shipments that transit through Dollarama’s facilities.
Though management initially placed an upper bound of just one 1,200 stores in Canada, Dollarama has projected to improve stores to a threshold quantity of 1,400 stores on the next six years.
Because the store count reaches this upper amount, cannibalization is expected to increase, leading to the common capital payback period increasing from the existing two-year total within two to three years.

Payment in Dollarama stores was once by cash only, until Interac debit cards were added as a payment option beginning in 2008.
As of 2015, all Dollarama stores also support contact-less Interac Flash payments.

Discount Shopping Behavior In Canada

For me, volatility is really a problem when you want to get out of a posture quickly or when you don’t know everything you are buying.
I am not a trader and I want to understand the businesses in which I invest my savings.A few of the investors I admire most who’ve helped shape my thinking are Warren Buffet, Charlie Munger, Peter Lynch, and Mohnish Pabrai.
Competition will certainly be an obstacle but Dollarama has already been dominant in Canada and through the rapid expansion of Dollarcity it might also become so in Latin America.
It’s not extremely overvalued but, the more the purchase price goes down the more Dollarama will be a less risky investment.
Operating income increased by 13.4% to CA$1.283 million, and operating margin was 22.7% compared to 21.4%.

• It’s good to learn, in any event, that residents of the neighbourhood it’s still in a position to access an outpost of the favorite discount retailer, whatever happens to 1337 and when.
• Nonetheless, the comparison highlights how Dollarama is really a whale in a aquarium.
• Small basket size coupled with an increase in store traffic reflects higher sales of consumables and strong seasonal demand, Nattel said.
• Through its direct sourcing and import platform, they can handle the growth of Dollarcity network of stores.
• “It is business as usual at the Parkdale Dollarama location at the moment. Should a store close and/or relocate, this will be communicated to customers.”

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Dollarama’s strong quarter underscores its “deep value positioning resonating ever more strongly with consumers,” she said.
Dollarama’s strong quarter underscores its “deep value positioning, which is increasingly resonating with consumers,” she said.

Spend Less On Grocery Delivery Amid Rising Cost Of Living: Survey

According to a recent survey, almost 90 percent of Canadian respondents stated that Dollarama was a discount store which they frequently visited.
Food and beverage and household care are two product categories where price is really a leading purchase consideration for a lot more than 50 percent of survey respondents.

The recession caused wage cuts and job losses, thus allowing dollar stores to reap the benefits of consumers’ tighter budgets.
With a gain throughout the market, as workers commence to enjoy better paychecks and re-enter the workforce, expect consumers to shift to larger bulk purchases instead of smaller, individual purchases at dollar stores.
Increasing wages will probably lead some consumers to shift to stores such as for example Costco and Wal-Mart for their purchases.
The discount retailer grew to 44 stores by 1992 which until then operated under the name Rossy S Inc. (never to be confused with Rossy Michael, a similar chain founded in 1949 by another son of Salim Rassy).
That year, Larry Rossy opened the first Dollarama at the shopping centre “Les promenades du St-Laurent” in Matane.

Finally, a scenario analysis is undertaken to forecast the range of share prices under the base-case scenario.
In order to run the scenario analysis, I used various WACC and terminal growth rate values to forecast free cash flows and,

Serving Customers From Coast To Coast

The tax rate regarding the company’s current taxes equates to 26.3%, thus culminating within an after-tax cost of debt of 3.08%.
Dollarama has been taking right out an increasing quantity of debt in the last three fiscal years, with a lot of the debt used to repurchase shares.
I forecast that debt will continue to be used to buy back shares; however, this can occur at a decelerating amount.

In March 2017, Dollarama announced that credit cards would be offered as a payment option at all stores by the finish of summer 2018.
Customers should be able to pay with Visa, Mastercard, and American Express, following a successful pilot program.

At the bottom line, diluted net earnings per share increased by 20.4% to CA$2.18.
The operating income was also influenced by the share of net earnings deriving from the investment in Dollarcity, equal to CA$33.184 million, 68.8% higher than last years.
The Company also offers an online store for Canadian customers who want to buy products in large quantities that may not be available in store.
Analyzing Dollarama we shall find a superb company, market leader, with higher margins than its competitors and which within the last 10 years has had the average Return on Capital around 30%.
This kind of companies have become rare, finding them at acceptable prices is even rarer.
The cost of debt for Dollarama is approximated from the interest rate on its long-term debt, which stands at 4.17%.