Dollarama (DOL) Stock Dips 1.69% as Australian Operations Weigh on Q2 Profit Margins

Key Highlights

Table of Contents

Second-quarter revenue climbed 17.6% to $2.03 billion, meeting market forecasts
Canadian same-store sales advanced 5.4%, accelerating from 4.9% in the prior-year period
EBITDA margin contracted to 32.2% from 34.1%, impacted by lower-margin Australian operations
Full-year Canadian comparable sales forecast upgraded to 4%-4.5% range from previous 3%-4%
Shares have declined approximately 19% in 2025, with an additional 1.69% drop following earnings

Dollarama (TSX: DOL) unveiled its fiscal 2027 second-quarter financial results on Wednesday, revealing revenue of $2.03 billion—a 17.6% jump from the $1.72 billion recorded in the corresponding quarter of the previous year. The figures aligned closely with Wall Street projections.

Dollarama Inc., DLMAF

Shares retreated 1.69% during Wednesday’s trading session, adding to a year-to-date loss of approximately 19%.

The discount retailer reported diluted earnings per share of $1.29, representing an 11.2% improvement over the $1.16 posted last year. Net income advanced 8.7% to reach $349.3 million during the three-month period.

Same-store sales across Canadian locations expanded 5.4%, powered by a 3.7% uptick in transaction counts and a 1.7% increase in average purchase amounts. This performance surpassed the 4.9% comparable sales growth achieved in last year’s second quarter.

The company attributed increased foot traffic in Canada primarily to heightened demand for consumable products and general merchandise categories.

Australian Acquisition Pressures Profitability Metrics

The company’s EBITDA margin declined to 32.2% from 34.1% year-over-year, primarily attributable to the full quarterly consolidation of Dollarama Australia’s financial results. Last year’s comparison included just 13 days of Australian data following the completion of The Reject Shop acquisition.

The Australian segment operates with thinner gross margins and elevated selling, general, and administrative expenses relative to sales when compared to the Canadian core business, contributing approximately 110 basis points of margin pressure in each category.

Examining the Canadian operations in isolation, EBITDA margin actually expanded to 34.9% from 34.5%, demonstrating the continued strength of the company’s domestic operations.

Throughout the quarter, the retailer added a net 15 new locations across Canada, representing a slowdown from the 27 net additions in the prior-year quarter. Meanwhile, the Australian division opened four net new stores while completing renovations at 25 existing locations.

The company also executed share buybacks totaling 1,596,016 common shares for $300.4 million during the reporting period.

Outlook Raised on Resilient Canadian Consumer Trends

Dollarama increased its full-year comparable store sales growth projection for Canadian operations to a range of 4%-4.5%, up from the previously communicated 3%-4% target.

Chief Executive Officer Neil Rossy highlighted evolving consumer patterns as a significant growth catalyst, observing that shoppers are “making careful spending decisions” and increasingly choosing Dollarama for value-oriented purchases.

The Dollarcity division, which operates across Mexico, Central America, and South America, continued its expansion trajectory. Revenue from this segment surged 30% compared to last year, while the store network expanded from 658 to 781 locations over the trailing 12-month period.

Net financing expenses climbed by $8.0 million to $51.2 million, driven by elevated average debt balances resulting from two fixed-rate note offerings completed during the first quarter.

The retailer reaffirmed its revised store expansion targets alongside the elevated comparable sales outlook when announcing quarterly results on Wednesday.

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