Dollarama to Provide Business Expertise to Central American Dollar Store Chain Dollar City

Dollarama Inc.  announced  that it has, through a wholly-owned subsidiary, entered into an agreement to share its business expertise and provide sourcing services  to Dollar City, a Central American dollar store chain looking to expand its activities in Central America, Colombia, Peru and Ecuador . Dollar City currently operates 15 locations in the Region.
"Dollarama is as much an importer as it is a retailer. Our business isn't just based on growing our network of stores; it's also based on the continued development of our low-cost direct sourcing platform," said Larry Rossy, Chairman and CEO of Dollarama.
As per the terms of the Agreement, Dollarama will share its business and operational expertise with Dollar City as well as leverage its direct sourcing and importing expertise to provide their growing network of stores with a compelling product offering. Dollarama will not be taking on any operational responsibilities with respect to Dollar City or making any capital commitments. The Agreement has a term of eight years and contains key financial performance indicators at specified milestones throughout the term. It also includes an option to acquire a majority interest in Dollar City as of the beginning of the seventh year of the term.
"Dollarama's unique dollar store concept and compelling product offering continues to be very successful with Canadian consumers. Our objective is to test the potential of the Latin American market in a way that minimizes risk, capital and time investment and we believe that we have found the right strategic approach and the right partners to achieve this," added Mr. Rossy.
While Dollarama does not expect the Agreement to have a material operational or financial impact on the Corporation in the medium term, it believes that the Latin American market holds long-term potential.
Latin America: An Attractive Retail Environment for the Long Term
Latin America is the world's second-largest emerging market, with a gross domestic product (GDP) of US$5.6 trillion, representing approximately 9 percent of global GDP, and more dynamic growth rates compared to developed regions such as the U.S. and Canada. The spending habits of Latin America's young and increasingly urban population of over 589 million people are similar to those of North Americans, with a high level of penetration of U.S. imports and North American brands. This dynamic is also observed in Central America and Andean Pact countries where Dollar City operates which, coupled with its smaller scale, makes the Region a strategic entry point into Latin America.
The retail landscape in many regions of Latin America, including Central America and Andean Pact countries, is increasingly modern, with a growing presence of global retailers with global brands. Despite the presence of many global retailers and a retail landscape similar to North America's, the dollar store market is underdeveloped and underserved, providing for significant growth potential.
"As we continue to explore opportunities to extend the reach of our concept, Latin America stands out as an increasingly attractive market. This collaboration with Dollar City will provide us with a timely window and a strategic entry point to participate in the long-term potential of this dynamic emerging market. Furthermore, we believe that our product offering can be easily adapted to appeal to local tastes as well as offer consumers tremendous value," added Mr. Rossy.
Focus Remains on Canadian Growth Strategy
Dollarama remains focused on the execution of its Canadian growth strategy, driven by the densification of underpenetrated markets. The Canadian market continues to have significant growth potential which Dollarama plans to capture with its usual disciplined approach to site selection and product sourcing as well as a focus on execution.
"We are committed to unlocking the significant untapped value that is available in the Canadian retail market and expanding our footprint, with 80 new locations set to open in fiscal 2014. While we look forward to this new endeavour in Latin America, we remain focused on strengthening our leading market position here in Canada," concluded Mr. Rossy.
Conference Call Details
Dollarama's Chief Executive Officer, Mr. Larry Rossy, and Chief Operating Officer, Mr. Stéphane Gonthier, will hold a conference call today, at 2:00 p.m. EST to discuss this business venture. They will be joined on the call by Mr. Michael Ross, Chief Financial Officer and Secretary, and Mr. Neil Rossy, Chief Merchandising Officer.  In addition to the Corporation presentation on the call, there will be a question and answer session at which investors and financial analysts are invited to ask questions.  Media may participate in the call on a listen-only basis.
To participate on, or listen to the call, please dial (514) 392-1478 or (866) 223-7781 and indicate that you would like to participate in the Dollarama conference call.
This conference call will be recorded and available for replay beginning two hours after the end of the call and will be available through March 5, 2013. To access the replay, please dial (514) 861-2272 or (800) 408-3053, then the access number 2273658#.
About Dollar City
Dollar City is a Central America-based dollar store chain.  It is operated by a well-established and reputable group of investors with extensive management and business experience in Latin America. Dollar City currently owns and operates 15 stores in El Salvador and Guatemala and is looking to expand its activities in the other countries of Central America, Colombia, Peru and Ecuador.

on February 8, 2013