Dollarama Inc. Case Study

DOLLARAMA INC.

Financial Analysis Report

Fall 2016

Introduction Section:

Dollarama is Canada’s biggest dollar store chain. The first Dollarama store opened in 1992 in Matane, Quebec under Larry Rossy’s leadership where every item was being sold for only one dollar. It later opened more stores in other provinces as well. In 2001, Dollarama was able to acquire sixty locations from a retail chain bankruptcy. In 2004, after they opened three hundred thirty-five stores in six provinces, Bain Capital L.P. bought a majority stake in Dollarama. In 2009, They introduced three other price points $ 1.25, $1.50, and $ 2. This was a significant step for the company as it enabled the company to expand the range of their products and their quality which accordingly could better respond to customers’ needs and expectations. Dollarama became a public company in the same year.

In 2012, Dollarama added two more price points $ 2.50 and $ 3 which was intended to provide customers with a wider and better product collection and value. In 2013, Dollarama expanded it activities beyond Canada by sharing its business and experience with One Dollar a similar store as Dollarama in El Salvador and tried to expand its business in other countries in Central America. Dollarama opened its one thousand’s store in 2015. In 2016, they added the price point of $3.50 and $4 in the categories which are supposed to make Dollarama a unique value destination.

Dollarama currently has more than one thousand stores located in Canada. These stores are all corporately operated and owned. Dollarama offers different kinds of consumer products, general merchandise and some seasonal products which are all located in great convenient locations such as metropolitan areas, mid-sized cities and towns. It sells its merchandise both in individual and multiple units.

Some of the major competitors in the dollar and variety retail industry include other giants like Big Lots, Walmart and Dollar Tree.

The financial statements for Dollarama are audited and prepared by Price Water House Coopers Inc., popularly known as PWC. The Fiscal year for Dollarama ends on the Sunday closest to January 31st and the year is comprised of 52 weeks. The statements are prepared using the International Financial Reporting Standards (IFRS) as put forth by the International Accounting Standards Board (IASB).

Financial Analysis Section:

Liquidity ratios: