Slide 1: Investor Presentation Q2-FY2020
Investor Presentation Q2-FY2020
Slide 2: Cautionary statement
Cautionary statement Forward-Looking Information This presentation contains forward-looking information about results, levels of activity, performance, goals or achievements of Dollarama and Dollarcity or other future events or developments that may affect Dollarama and Dollarcity which are based on
Slide 3: Dollarama Overview
Dollarama Overview MEGA
Slide 4: Dollarama through the years
Dollarama through the years Initial public offering Introduction of $2.50 Long-term (TSX: DOL) and $3.00 store target Dollarama price points Opening of Introduction of 1,700 founded as single- 585 Dollarama 1000th of $3.50 and across Launch of price point retail stores in Launch of Dollarama $4.00 p
Slide 5: Dollarama today
Dollarama today • Largest and only national dollar store chain in Canada • 1,250 corporate-owned and operated stores • Avg. of 10,262 sq. ft. per store • Avg. store annual sales of $3.0 million • Strong value proposition at select fixed price points up to $4 • Broad assortment of everyday goods • ~5
Slide 6: A simple, growth-oriented business model
A simple, growth-oriented business model We build We focus We solidify on our growing on delivering our brand store networks compelling reputation and and our value to our deliver superior low-cost direct customers financial sourcing platform results Backed by seasoned team and disciplined execution
Slide 7: Competitive Advantages
Competitive Advantages
Slide 8: Direct sourcing expertise
Direct sourcing expertise • Longstanding relationships with low-cost supplier network: • Overseas direct sourcing program initiated in 1992 • Well-diversified base of established suppliers • ~50% merchandise sourced directly from over 25 countries (primarily China) • Benefits of direct sourcing: • C
Slide 9: Large network with over 1,200 stores across Canada
Large network with over 1,200 stores across Canada Only dollar store chain with a significant presence in all ten provinces 104 112 33 37 352 103 509 ~2.5x more stores 1250 1178 than 4 largest pure 1125 3-yr Store Count Dollarama vs. play competitors Next 4 Pure Play Competitors combined ~5.5x large
Slide 10: Compelling product offering
Compelling product offering • Broad assortment of products across 20+ departments at compelling value • Mix of store brands and General Merchandise Consumables name brands 43% 41% Seasonal • Multiple fixed price points 16% 10
Slide 11: Strong brand awareness and broad customer appeal
Strong brand awareness and broad customer appeal • Our value proposition is the key differentiator • Brand awareness across Canada is at 98% • We appeal to all demographics and 98% income ranges • Typical consumer profile: • Female • 25-54 years of age • Annual income of $20k-$80k Source: Leger surv
Slide 12: Offering convenience and value
Offering convenience and value • Strong brand recognition and reputation for delivering value • Unrivaled presence across Canada in convenient locations • Destination store appealing to broad customer base • Consistent in-store shopping experience 12
Slide 13: Growth Strategies
Growth Strategies — > e LETTER SIZE i FORMAT LETTRE | MONUMENTS O05 >) “
Slide 14: Strategies for driving growth and creating value
Strategies for driving growth and creating value • Grow store network in Canada in a disciplined manner • Target of 1,700 Dollarama stores by 2027 • Leverage strengths to stimulate sales • Maintain low-cost operating model • Develop second growth • platform in Latin America • Acquisition of 50.1% in
Slide 15: Significant potential for additional growth in Canada
Significant potential for additional growth in Canada Thousands of People per Dollarama Store Average of 66 net new stores per year over last 42 10 fiscal years 28 24 23 Eastern Canadian market not saturated Western Ontario Quebec Atlantic Dollarama underpenetrated Provinces in Ontario and Western C
Slide 16: Disciplined approach to growth
Disciplined approach to growth • Efficient capital model • $650K in leasehold improvements, fixtures and inventory for new Dollarama store • Quick sales ramp-up • Average sales ramp-up to $2.3M within 2 years • Rapid payback of about 2 years • Low maintenance capex Strong profitability, low capital
Slide 17: Leverage strengths to stimulate Dollarama sales
Leverage strengths to stimulate Dollarama sales • Effective and flexible Industry leading merchandising • Refresh 25-30% of same-store sales merchandise every year 10-year 10-year 10-year • Zonogram by department (vs. 3500 Store CAGR Sales CAGR SSS Average 11.0% fixed planogram) 8.1% 12.5% 5.8% 10.0
Slide 18: Maintain low-cost operating model
Maintain low-cost operating model • Continuous in-store • Efficient supply chain productivity improvements • DC, warehouse and • POS systems transportation logistics • Kronos advanced scheduling • NCR point of sale terminals • Lean overhead • WIFI and mobile-driven projects • operations 18
Slide 19: Dollarcity transaction overview
Dollarcity transaction overview Acquisition of 50.1% interest in Dollarcity 20181 sales of US$236M, EBITDA2 of US$36.6M (16% EBITDA margin) Estimated purchase price of US$85-95M3; payment of US$40M made upon closing on August 14, 2019 Immediately accretive to DOL EPS (+CA$0.02-0.03 per share i
Slide 20: Dollarcity, a 'localized' Dollarama
Dollarcity, a ‘localized’ Dollarama MERCHANDISE MIX1 (As at respective year ends) Dec. 31, 20183 Feb. 3, 2019 (based on annual retail value) NUMBER 169 1,225 35% 41% OF STORES 47% 43% CA$309 million SALES CA$3,549 million (US$236 million) 18% 16% PRICE POINT US$0.69-$3.00 General or equivalents in C
Slide 21: Dollarcity's growth trajectory
Dollarcity’s growth trajectory ‘Localized’ Dollarama concept Target of initially tested and established in 600 El Salvador and Guatemala Dollarcity stores Guatemala Since 2017, network expansion has 56 Dollarcity stores1 been mainly focused on Colombia, Local warehouse a compelling retail ma
Slide 22: Dollarama Financial Metrics
Dollarama Financial Metrics
Slide 23: Robust financial performance
Robust financial performance IFRS 16 IAS 17 SECOND QUARTER ENDED(1) Y-O-Y FISCAL YEAR ENDED(1) Y-O-Y (in millions of dollars, except per share amounts) AUG. 4, 2019 JULY 29, 2018 GROWTH FEB. 3, 2019(2) JAN. 28, 2018 GROWTH % OF % OF % OF % OF Sales $946 SALES $868 SALES 9.0% $3,549 SALES $3,266 SALE
Slide 24: Balanced approach to operating margin
Balanced approach to operating margin 23.2 LTM EBIT Margin (%) 22.0 9.4 8.3 7.2 6.3 6.1 5.1 4.4 2.8 DOL(1) DOL(2) Canadian Tire Metro North West Loblaw Couche-Tard Empire Dollar Dollar General Tree Canadian retailers with product offering US dollar overlap with Dollarama stores Source: Company websi
Slide 25: Strong organic growth with low capital requirements
Strong organic growth with low capital requirements 10% 8% Last Three Fiscal Years Store Count CAGR 6% 4% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cash Flow After Capex(1) Source: Company websites; Walmart Canada figures not available (1) (EBITDA – CAPEX) / EBITDA 25 (2) Reflects the adoption
Slide 26: Strong key metrics growth since IPO
Strong key metrics growth since IPO IAS 17(1) (1) These figures do not reflect the adoption of IFRS 16 - Leases 26
Slide 27: Continuous margin improvement since IPO
Continuous margin improvement since IPO Cost structure, with 80-85% of operating costs being variable, allows for scaling benefits arising from top line growth IAS 17(1) (1) These figures do not reflect the adoption of IFRS 16 - Leases 27
Slide 28: Balanced debt structure
Balanced debt structure 68% fixed rate debt, 32% floating rate debt(1) $639M available liquidity ($139M cash + $500M undrawn credit facility) (1,2) 2.67% weighted average cost of debt(1) 2.5 years weighted average time to maturity(1) 5-Year Fixed $600 2.337% 5-Year Fixed $525M 3.550% $500M $500 $400
Slide 29: Total shareholder return
Total shareholder return Performance Graph Since January 31, 2011 1250 1150 1050 Dollarama 950 (Total Cumulative Return of a $100 investment) TSX Capped Consumer Discretionary Index 850 750 650 550 450 350 250 150 50 31-Jan-11 31-Jan-12 31-Jan-13 31-Jan-14 31-Jan-15 31-Jan-16 31-Jan-17 31-Jan-18 31-
Slide 30: Disciplined execution of our growth plan
Disciplined execution of our growth plan Disciplined execution of our Canadian growth plan Open 60-70 net new Dollarama stores in FY2020 Target of 1,700 stores in Canada by 2027 Sustain attractive same-store sales growth Maintain balanced operating margins Development of our LATAM growth pla
Slide 31: Thank you
Thank you Te i. aun” zien oY a. nan Bf _aiinined iv
Slide 32: A seasoned board and management team
A seasoned board and management team BOARD OF DIRECTORS OFFICERS Stephen Gunn Nicholas Nomicos Neil Rossy Chair of the Board Managing Director President & Chief Executive Corporate Director Nonantum Capital Partners Officer Joshua Bekenstein Neil Rossy Michael Ross, FCPA, FCA Managing Director Presi