- Comparable store sales growth of 2.0%, or 3.8% excluding impact of calendar shift, for the fourth quarter of Fiscal 2020
- Comparable store sales growth of 4.3% for full-year Fiscal 2020
- Full-year Fiscal 2020 guidance met on all key metrics
"We are pleased with our comparable store sales growth and particularly the strong increase in store traffic and transaction size in Fiscal 2020. Our performance in these key metrics demonstrates the effectiveness of our sales, merchandising and operational strategies in a context of limited price inflation, and the enduring strength of
"The strong momentum of the fourth quarter carried over into early Fiscal 2021 and then we experienced a surge in transactions as customers stocked up on everyday essentials due to COVID-19. This was followed by lower traffic as a result of public health measures directing Canadians to stay home as much as possible. In the current unprecedented situation, we cannot predict how shopping patterns will evolve, but as an essential business, we remain committed to maintaining well-stocked stores and the same compelling value proposition that has made
"I would like to thank all our employees, especially our store associates and field management team, for their incredible efforts and dedication in helping Canadians through these difficult times. With our direct sourcing platform, and robust supply chain and logistics operations, we will do everything possible to provide Canadian consumers with a safe and reliable supply of everyday products in the weeks and months ahead.''
Financial and Operating Highlights
Comparable Store Sales:
- Comparable store sales(2) (on a comparable 13-week basis) grew 2.0% in the fourth quarter of Fiscal 2020, or 3.8% excluding the impact of the calendar shift, over and above a 2.6% growth for the same period in the previous year;
- Comparable store sales(2) (on a comparable 52-week basis) grew 4.3% in Fiscal 2020, over and above a 2.7% growth in Fiscal 2019.
Fiscal 2020 Fourth Quarter Results Compared to Fiscal 2019 Fourth Quarter Results (13 weeks compared to 14 weeks):
- Sales increased by 0.5% to
$1,065.2 million (or by 6.3% on a comparable 13-week basis); - Gross margin(1) was 44.7% of sales, compared to 45.3%(2) of sales;
- EBITDA(1) increased by 0.9% to
$329.3 million , or 30.9% of sales, compared to 30.8%(2) of sales; - Operating income grew 1.4% to
$266.1 million , or 25.0% of sales, compared to 24.8%(2) of sales; and - Diluted net earnings per common share increased by 7.5%, to
$0.57 from$0.53 (2).
During the fourth quarter of Fiscal 2020, the Corporation opened 20 net new stores compared to 33 net new stores during the corresponding period last year.
Fiscal 2020 Results Compared to Fiscal 2019 Results (52 weeks compared to 53 weeks):
- Sales increased by 6.7% to
$3,787.3 million (or by 8.5% on a comparable 52-week basis); - Gross margin(1) was 43.6% of sales, compared to 44.6%(2) of sales;
- EBITDA(1) increased by 3.0% to
$1,110.9 million , or 29.3% of sales, compared to 30.4%(2) of sales; - Operating income grew 2.7% to
$868.1 million , or 22.9% of sales, compared to 23.8%(2) of sales; and - Diluted net earnings per common share increased by 7.2%, to
$1.78 from$1.66 (2).
During Fiscal 2020, the Corporation opened 66 net new stores, compared to 65 net new stores during the previous fiscal year.
(1) | We refer the reader to the notes in the section entitled "Selected Consolidated Financial Information" of this press release for the definition of these items and, when applicable, their reconciliation with the most directly comparable GAAP measure. |
(2) | Comparative financial information and ratios have been restated to reflect the full retrospective application of IFRS 16 for lease accounting. |
All comparative figures in this press release are for the fourth quarter and fiscal year ended
These results and the Corporation's audited annual consolidated financial statements reflect the adoption of IFRS 16, "Leases", on
Throughout this press release, EBITDA, EBITDA margin, total debt and net debt, which are referred to as "non-GAAP measures", are used to provide a better understanding of the Corporation's financial results. For a full explanation of the Corporation's use of non-GAAP measures, please refer to footnote 1 of the "Selected Consolidated Financial Information" section of this press release.
Throughout this press release, all references to "Fiscal 2019" are to the Corporation's fiscal year ended
Fiscal 2020 Fourth Quarter Financial Results
The fourth quarter of Fiscal 2020 was comprised of 13 weeks whereas the fourth quarter of Fiscal 2019 was comprised of 14 weeks. Sales in the fourth quarter of Fiscal 2020 increased by 0.5% to
On a 13-week basis, comparable store sales grew 2.0%, over and above a 2.6% growth in the same quarter last year. Comparable store sales growth for the fourth quarter of Fiscal 2020 consisted of a 2.4% increase in average transaction size, including an increase in the number of units per basket, and a 0.4% decrease in the number of transactions. The number of transactions was negatively impacted by the calendar shift caused by a 52-week fiscal year in Fiscal 2020 following a 53‑week fiscal year in Fiscal 2019. For the purposes of a period-over-period comparison, the shift resulted in one less pre-holiday week in the fourth quarter of Fiscal 2020, a historically strong sales week, and an additional week at the end of January, a historically low sales week. This is in addition to three less
Gross margin was 44.7% of sales in the fourth quarter of Fiscal 2020, compared to 45.3% of sales in the fourth quarter of Fiscal 2019. Gross margin is lower primarily due to a slight decrease in product margins and higher sales of lower margin items, as well as a slight increase in logistics costs.
General, administrative and store operating expenses ("SG&A") for the fourth quarter of Fiscal 2020 totaled
For the fourth quarter of Fiscal 2020, the Corporation's 50.1% share of Dollarcity's net earnings for the period from
Financing costs decreased by
Net earnings increased to
Fiscal 2020 Financial Results
Fiscal 2020 was comprised of 52 weeks whereas Fiscal 2019 was comprised of 53 weeks. Sales in Fiscal 2020 increased by 6.7% to
On a 52-week basis, comparable store sales grew 4.3% in Fiscal 2020, over and above a 2.7% growth in Fiscal 2019. Comparable store sales growth for Fiscal 2020 consisted of a 3.4% increase in average transaction size and a 0.9% increase in the number of transactions. The increase in the number of transactions was mainly driven by in-store merchandising initiatives.
In Fiscal 2020, 70.9% of sales originated from products priced higher than
Gross margin was 43.6% of sales in Fiscal 2020, compared to 44.6% of sales in Fiscal 2019. Gross margin is lower primarily due to a slight decrease in product margins and higher sales of lower margin items, as well as a slight increase in logistics costs. Gross margin includes sales made by the Corporation to Dollarcity, as principal, which represented approximately 1% of the Corporation's total sales in Fiscal 2020, and a nominal markup margin. Consequently, these sales had a minimal impact on gross margin in Fiscal 2020 and Fiscal 2019.
SG&A for Fiscal 2020 totaled
For Fiscal 2020, the Corporation's 50.1% share of Dollarcity's net earnings for the period from
Financing costs increased by
Other income for Fiscal 2020 includes a one-time, non-recurring gain of
Net earnings increased to
Fiscal 2020 Results versus Guidance Reaffirmed in | ||||
(as a percentage of sales except net new store openings | Guidance Under IFRS 16 | Actual Results | Guidance Under IAS 17 | Actual Results |
Net new store openings | 60 to 70 | 66 | 60 to 70 | 66 |
Gross margin | 43.25% to 43.75% | 43.6% | 38.0% to 38.5% | 38.1% |
SG&A | 14.25% to 14.75% | 14.6% | 14.25% to 14.75% | 14.6% |
EBITDA margin (i) | 28.50% to 29.50% | 29.3% | 23.25% to 24.25% | 23.7% |
Capital expenditures(ii) |
(i) | Includes the Corporation's 50.1% share of Dollarcity's net earnings for the period from |
(ii) | Includes additions to property, plant and equipment, computer hardware and software. |
Fiscal 2021 Guidance and COVID-19 Impact
The momentum in the fourth quarter of Fiscal 2020 was maintained into the first few weeks of Fiscal 2021. As the COVID-19 outbreak ramped up in late February and early
Due to the exceptional circumstances stemming from the global COVID-19 pandemic,
At this point in time, it is impossible to forecast the impact of the pandemic on the Canadian economy, the duration and scope of measures imposed by various levels of government in an attempt to curb the spread of the virus and the Corporation's future performance in this unprecedented context. The Corporation offers essential everyday products through a broad store network across
Similarly, in the Latin American markets in which Dollarcity operates (
As at
Normal Course Issuer Bid
The total number of common shares repurchased for cancellation during Fiscal 2020 under the 2019‑2020 normal course issuer bid amounted to 7,089,040 common shares, at a weighted average price of
Dividend
On
Adoption of IFRS 16 – Leases
In January of 2016, the IASB issued IFRS 16, "Leases", which replaces IAS 17, "Leases". The new standard is effective for fiscal years beginning on or after
The Corporation's financial reporting is impacted by the adoption of IFRS 16. Certain lease-related expenses previously recorded in occupancy costs are now recorded as a depreciation expense for right-of-use assets and as an interest expense for related lease liabilities. The depreciation expense is recognized on a straight-line basis over the term of the lease, while the interest expense declines over the life of the lease as the liability is paid off.
The table below sets out the impact of the change in accounting policy for the quarter and the year ended
IFRS 16 | IAS 17 | ||||||
13-Week | 14-week | 13-Week | 14-week | ||||
Periods Ended | Periods Ended | ||||||
(dollars in millions, except per share amounts) |
|
| Change |
|
| Change | |
Gross margin | ( | ( | |||||
As a percentage of sales | 44.7% | 45.3% | (0.6%) | 39.8% | 40.4% | (0.6%) | |
SG&A | |||||||
As a percentage of sales | 14.6% | 14.5% | 0.1% | 14.7% | 14.6% | 0.1% | |
EBITDA | |||||||
As a percentage of sales | 30.9% | 30.8% | 0.1% | 25.9% | 25.8% | 0.1% | |
Diluted net earnings per common share |
(i) | Restated to reflect the adoption of IFRS 16. |
(ii) | Presented as if IFRS 16 had not been adopted, for illustration purposes only. |
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. 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 conditions and the competitive environment within the retail industry in
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
The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
About
Selected Consolidated Financial Information | |||||||
13-Week | 14-Week | 52-Week | 53-Week | ||||
unaudited | |||||||
Periods Ended | Years Ended | ||||||
(dollars and shares in thousands, except per share amounts) |
|
|
|
| |||
$ | $ | $ | $ | ||||
Restated (5) | Restated (5) | ||||||
Earnings Data | |||||||
Sales | 1,065,201 | 1,059,714 | 3,787,291 | 3,548,503 | |||
Cost of sales | 588,739 | 579,925 | 2,134,933 | 1,964,516 | |||
Gross profit | 476,462 | 479,789 | 1,652,358 | 1,583,987 | |||
SG&A | 155,683 | 153,334 | 551,699 | 505,420 | |||
Depreciation and amortization | 63,247 | 63,937 | 242,785 | 233,378 | |||
Share of net earnings of equity-accounted investment | (8,556) | - | (10,263) | - | |||
Operating income | 266,088 | 262,518 | 868,137 | 845,189 | |||
Financing costs | 25,238 | 26,878 | 100,605 | 94,597 | |||
Other income | - | - | (2,835) | - | |||
Earnings before income taxes | 240,850 | 235,640 | 770,367 | 750,592 | |||
Income taxes | 62,133 | 64,634 | 206,328 | 205,606 | |||
Net earnings | 178,717 | 171,006 | 564,039 | 544,986 | |||
Basic net earnings per common share (4) | |||||||
Diluted net earnings per common share (4) | |||||||
Weighted average number of common shares outstanding (4): | |||||||
Basic | 312,057 | 318,074 | 313,910 | 324,460 | |||
Diluted | 314,750 | 321,032 | 317,185 | 328,404 | |||
Other Data | |||||||
Year-over-year sales growth | 0.5% | 13.0% | 6.7% | 8.7% | |||
Comparable store sales growth (2) | 2.0% | 2.6% | 4.3% | 2.7% | |||
Gross margin (3) | 44.7% | 45.3% | 43.6% | 44.6% | |||
SG&A as a % of sales (3) | 14.6% | 14.5% | 14.6% | 14.2% | |||
EBITDA (1) | 329,335 | 326,455 | 1,110,922 | 1,078,567 | |||
Operating margin (3) | 25.0% | 24.8% | 22.9% | 23.8% | |||
Capital expenditures | 39,813 | 56,729 | 140,622 | 180,807 | |||
Number of stores (4) | 1,291 | 1,225 | 1,291 | 1,225 | |||
Average store size (gross square feet) (4) | 10,277 | 10,217 | 10,277 | 10,217 | |||
Declared dividends per common share | |||||||
As at | |||||||
|
| ||||||
$ | $ | ||||||
Restated (5) | |||||||
Statement of Financial Position Data | |||||||
Cash | 90,464 | 50,371 | |||||
Inventories | 623,490 | 581,241 | |||||
Total current assets | 764,497 | 688,520 | |||||
Property, plant and equipment | 644,011 | 586,027 | |||||
Right-of-use assets | 1,283,778 | 1,208,461 | |||||
Total assets | 3,716,456 | 3,359,669 | |||||
Total current liabilities | 1,092,484 | 443,234 | |||||
Total non-current liabilities | 2,716,168 | 3,233,819 | |||||
Total debt (1) | 1,883,407 | 1,907,383 | |||||
Net debt (1) | 1,792,943 | 1,857,012 | |||||
Shareholders' deficit | (92,196) | (317,384) |
(1) | In this press release, EBITDA, EBITDA margin, total debt and net debt are referred to as "non-GAAP measures". Non-GAAP measures are not generally accepted measures under GAAP and do not have a standardized meaning under GAAP. EBITDA, EBITDA margin, total debt and net debt are reconciled below. The non-GAAP measures, as calculated by the Corporation, may not be comparable to those of other issuers and should be considered as a supplement to, not a substitute for, or superior to, the comparable measures calculated in accordance with GAAP. |
We have included non-GAAP measures to provide investors with supplemental measures of our operating and financial performance. We believe that non-GAAP measures are important supplemental metrics of operating and financial performance because they eliminate items that have less bearing on our operating and financial performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on GAAP measures. We also believe that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers, many of which present non-GAAP measures when reporting their results. Our management also uses non-GAAP measures in order to facilitate operating and financial performance comparisons from period to period, to prepare annual budgets, and to assess our ability to meet our future debt service, capital expenditure and working capital requirements. |
13-Week | 14-Week | 52-Week | 53-Week | ||||
unaudited | |||||||
Periods Ended | Years Ended | ||||||
(dollars in thousands) |
|
|
|
| |||
$ | $ | $ | $ | ||||
Restated (5) | Restated (5) | ||||||
A reconciliation of operating income to EBITDA is included below: | |||||||
Operating income | 266,088 | 262,518 | 868,137 | 845,189 | |||
Add: Depreciation and amortization | 63,247 | 63,937 | 242,785 | 233,378 | |||
EBITDA | 329,335 | 326,455 | 1,110,922 | 1,078,567 | |||
EBITDA margin (3) | 30.9% | 30.8% | 29.3% | 30.4% | |||
As at | |||||||
A reconciliation of long-term debt to total debt is included below: |
| 2019 | |||||
$ | $ | ||||||
Senior unsecured notes bearing interest at: | |||||||
Fixed annual rate of 3.55% payable in equal semi-annual instalments, maturing | 500,000 | 500,000 | |||||
Fixed annual rate of 2.203% payable in equal semi-annual instalments, maturing | 250,000 | 250,000 | |||||
Fixed annual rate of 2.337% payable in equal semi-annual instalments, maturing | 525,000 | 525,000 | |||||
Variable rate equal to 3‑month bankers' acceptance rate (CDOR) plus 27 basis points payable quarterly, maturing | 300,000 | 300,000 | |||||
Variable rate equal to 3‑month bankers' acceptance rate (CDOR) plus 59 basis points payable quarterly, repaid on | 300,000 | 300,000 | |||||
Unsecured revolving credit facility | - | 25,000 | |||||
Accrued interest on senior unsecured notes | 8,407 | 7,383 | |||||
Total debt | 1,883,407 | 1,907,383 | |||||
A reconciliation of total debt to net debt is included below: | |||||||
Total debt | 1,883,407 | 1,907,383 | |||||
Cash | (90,464) | (50,371) | |||||
Net debt | 1,792,943 | 1,857,012 |
(2) | Comparable store sales growth is a measure of the percentage increase or decrease, as applicable, of the sales of stores, including relocated and expanded stores, open for at least 13 complete fiscal months relative to the same period in the prior fiscal year. |
(3) | Gross margin represents gross profit divided by sales. SG&A as a percentage of sales represents SG&A divided by sales. Operating margin represents operating income divided by sales. EBITDA margin represents EBITDA divided by sales. |
(4) | At the end of the period. |
(5) | Restated to reflect the adoption of IFRS 16. |
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