- Increases equity interest in Dollarcity to 60.1% with
acquisition of additional 10.0% stake
- Acquires option to purchase additional 9.89% equity interest in
the future
- Expands partnership countries to include Mexico with an 80.05% equity interest and
initial entry planned for 2026
MONTREAL, June 12, 2024 /PRNewswire/ - Dollarama Inc.
(TSX: DOL) ("Dollarama" or the "Corporation") announced today that
it has acquired an additional 10.0% equity interest in
Latin American value retailer Dollarcity in exchange for the
issuance of 6,060,478 common shares of Dollarama. As a result,
Dollarama now owns a 60.1% equity interest in Dollarcity and has an
option to purchase an additional 9.89% equity interest at any time
on or before December 31, 2027.
Dollarama and the Dollarcity founding stockholders have also
agreed on governance terms providing for the future expansion of
the business to a new country, Mexico. Dollarama and the Dollarcity founding
stockholders will indirectly have an 80.05% and 19.95% equity
interest, respectively, in the Mexico portion of the business. Dollarcity
intends to pilot its first store in Mexico in calendar 2026.
"Dollarcity continues to represent a compelling, long-term
growth platform for Dollarama, with the Dollarcity leadership team
successfully executing on its strategy throughout the course of our
over decade-long partnership. Since we initially acquired a
majority equity interest in 2019, Dollarcity has more than tripled
its revenues and significantly grown its presence in key LATAM
markets, demonstrating the underlying strength of its business
model and the appetite for our value proposition from LATAM
consumers," said Neil Rossy, President and Chief Executive
Officer of Dollarama.
"With its strong leadership team, Dollarcity is well-positioned
to continue delivering profitable growth, both from its current
markets of operation and as we eye our next market of entry. We
look forward to preparing for entry in Mexico in the near term, a large and dynamic
market with untapped potential in the value retail space, guided by
the same careful and disciplined approach as with our successful
entries in Colombia in 2017 and in
Peru in 2021."
The transaction is expected to be neutral to Dollarama's net
earnings per share for the fiscal year 2025.
Dollarcity Store Count and New Long-term Target
As at March 31, 2024, Dollarcity
had 547 stores with 324 locations in Colombia, 99 in Guatemala, 72 in El Salvador and 52 in
Peru. Following an updated
evaluation of the market potential, Dollarcity's management has
revised its long-term store target in these four current markets of
operation to 1,050 stores by 2031, up from its previous target of
850 stores by 2029. The increased target reflects anticipated
growth primarily in Peru and
Colombia and does not take into
account any future expansion in Mexico.
Other Transaction Details
Pursuant to the call option, Dollarama is entitled to acquire an
additional 9.89% equity interest in Dollarcity and a corresponding
4.945% equity interest in the Mexico partnership at any time on or before
December 31, 2027.
Other than for the addition of the call option, no material
changes have been made to the terms of the stockholders' agreement,
sourcing agreement and services agreement entered into between the
parties with respect to the business being currently operated by
Dollarcity. In addition, the governance terms that will apply to
Mexico and its future operations,
including with respect to certain specified strategic and
operational decisions to be subject to the approval of all
stockholders, will be substantially similar to those applicable to
the business currently being operated by Dollarcity.
The 6,060,478 common shares of Dollarama issued in
connection with the acquisition of the 10.0% equity interest in
Dollarcity were issued by Dollarama on a private placement basis
and are subject to a statutory hold period of four months after the
date hereof as well as certain contractual transfer restrictions
applicable for a 12-month period after the date hereof, subject to
specified exceptions. The listing and posting for trading of such
common shares of Dollarama, which represent approximately 2.1% of
all common shares issued and outstanding of Dollarama as of the
date hereof (on a non-diluted basis), has been conditionally
approved by the Toronto Stock Exchange ("TSX"), subject only to
satisfaction by the Corporation of customary post-closing
conditions imposed by the TSX.
The Corporation will continue to have a joint control over
Dollarcity, including the Mexico
partnership, and account for its investment as a joint arrangement
using the equity method.
Please refer to the management's discussion and analysis of
Dollarama dated June 12, 2024 for
additional details regarding Dollarama, Dollarcity and the
transaction.
Forward-Looking Statements
Certain statements in this press release about our current and
future plans, expectations and intentions, results, levels of
activity, performance, goals or achievements or any other future
events or developments constitute forward-looking statements,
including the statements relating to the Dollarcity transaction,
the impact of the transaction on Dollarama, including on its net
earnings per share for the fiscal year 2025, and the markets and
growth opportunities in Latin
America. The words "may", "will", "would", "should",
"could", "expects", "plans", "intends", "trends", "indications",
"anticipates", "believes", "estimates", "predicts", "likely" or
"potential" or the negative or other variations of these words or
other comparable words or phrases, are intended to identify
forward-looking statements.
Forward-looking statements are based on information currently
available to management and on estimates and assumptions made by
management regarding, among other things, general economic and
geopolitical conditions and the competitive environment within the
retail industry in Canada and in
Latin America, in light of its
experience and perception of historical trends, current conditions
and expected future developments, as well as other factors that are
believed to be appropriate and reasonable in the circumstances.
However, there can be no assurance that such estimates and
assumptions will prove to be correct. Many factors could cause
actual results, level of activity, performance or achievements or
future events or developments to differ materially from those
expressed or implied by the forward-looking statements, including
the factors which are outlined in the management's discussion and
analysis for the first quarter of the fiscal year ending
February 2, 2025 and discussed in
greater detail in the "Risks and Uncertainties" section of the
Corporation's annual management's discussion and analysis for the
fiscal year ended January 28, 2024, both available on
SEDAR+ at www.sedarplus.com and on the Corporation's website at
www.dollarama.com.
These factors are not intended to represent a complete list of
the factors that could affect the Corporation or Dollarcity;
however, they should be considered carefully. The purpose of the
forward-looking statements is to provide the reader with a
description of management's expectations regarding the
Corporation's and Dollarcity's financial performance and may not be
appropriate for other purposes. Readers should not place undue
reliance on forward-looking statements made herein. Furthermore,
unless otherwise stated, the forward-looking statements contained
in this press release are made as at June
12, 2024 and management has no intention and undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law. All of the forward‑looking statements
contained in this press release are expressly qualified by this
cautionary statement.
First Quarter Results and Dollarcity Transaction Conference
Call
Dollarama will hold a conference call to discuss its fiscal 2025
first quarter results and the Dollarcity transaction today,
June 12, 2024 at 11:00 a.m. (ET) followed by a question-and-answer
period for financial analysts only. Other interested parties may
participate in the call on a listen‑only basis via live audio
webcast accessible through Dollarama's website at
www.dollarama.com/en-CA/corp/events-presentations.
About Dollarama
Dollarama is a recognized Canadian value retailer offering a
broad assortment of consumable products, general merchandise and
seasonal items both in-store and online. Our 1,569 locations across
Canada provide customers with
compelling value in convenient locations, including metropolitan
areas, mid-sized cities and small towns. Select products are also
available, by the full case only, through our online store at
www.dollarama.com. Our quality merchandise is sold at select fixed
price points up to $5.00.
Dollarama also owns a 60.1% interest in Dollarcity, a growing
Latin American value retailer. Dollarcity offers a broad assortment
of consumable products, general merchandise and seasonal items at
select, fixed price points up to US$4.00 (or the equivalent in local currency) in
547 conveniently located stores in El
Salvador, Guatemala,
Colombia and Peru.
www.dollarama.com
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SOURCE Dollarama Inc.